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Growth Equity
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Investments

42

Portfolio Exits

8

Service Providers

1

About H.I.G. Growth Partners

H.I.G. Growth Partners is the dedicated growth capital investment affiliate of H.I.G. Capital, a leading global private equity investment firm with $21 billion of equity capital under management*. We seek to make both majority and minority investments in strong, growth oriented businesses located throughout North America, South America and Europe. We will invest $5 million to $30 million in equity in a given company and target investments in profitable growth-oriented businesses with between $10 million and $100 million in revenues. We consider investments across all industries, but focus on certain high-growth sectors where H.I.G. has extensive in-house expertise such as technology, healthcare, internet and media, consumer products and technology-enabled financial and business services. H.I.G. Growth Partners strives to work closely with our management teams to serve as an experienced resource, providing broad-based strategic, operational, recruiting and financial management services from a vast in-house team and a substantial network of third-party relationships.

H.I.G. Growth Partners Headquarter Location

1450 Brickell Avenue 31st Floor

Miami, Florida, 33131,

United States

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Expert Collections containing H.I.G. Growth Partners

Expert Collections are analyst-curated lists that highlight the companies you need to know in the most important technology spaces.

Find H.I.G. Growth Partners in 1 Expert Collection, including Fitness Tech.

F

Fitness Tech

227 items

We define fitness tech as companies leveraging software and technology to augment approaches to developing or maintaining physical fitness. Companies in this category develop tools and services including workout apps, wearables, and connected fitness equipment.

Latest H.I.G. Growth Partners News

Investors Beware: Private Equity Firms Continue to Face Potential Liability Under the False Claims Act for Their Portfolio Compa...

Aug 2, 2022

To embed, copy and paste the code into your website or blog: <iframe frameborder="1" height="620" scrolling="auto" src="//www.jdsupra.com/post/contentViewerEmbed.aspx?fid=4de50c34-7342-4c03-9efb-4c98c5130bbb" style="border: 2px solid #ccc; overflow-x:hidden !important; overflow:hidden;" width="100%"></iframe> Two years ago, the U.S. Department of Justice announced a focus on enforcing the False Claims Act against private equity firms based on their portfolio companies’ conduct. [1] That government focus remains strong: Private equity firms, and particularly those invested in health care and pharmaceutical businesses, continue to face exposure simply for knowing about — or recklessly disregarding — their portfolio company’s potential False Claims Act violations. Three recent cases illustrate the risks to private equity firms and demonstrate why they should engage in careful diligence — both at the time of acquisition and afterward — of any portfolio companies that do business with the government. The False Claims Act The False Claims Act is a civil statute that imposes liability for knowingly or recklessly submitting, or causing or conspiring in the submission of, materially false claims for payment, or making false statements material to a false claim. § 3729(a)(1). Claims for payment can be made directly to the federal government or its agents, or to entities that receive federal funds, such as states. Many states also have their own false claims statutes. False Claims Act suits can be brought by the government directly or, more commonly, by whistleblowers, called “relators,” on behalf of the government, in what are called “qui tam” cases. These qui tam cases are filed under seal, often unbeknownst to the defendant for years, while the government investigates whether any wrongdoing occurred. After its investigation, the government can intervene and take over the case or leave it to the relator to litigate with private counsel in exchange for a share of any judgment. If either the government or the relator prevails, the defendants face liability up to treble the government’s actual damages, plus penalties for each claim submitted and attorney’s fees. And in some cases, the defendant may be barred from doing further business with the government. False Claims Act cases can be extremely costly for defendants. We know from previous analyses that more than 75% of cases brought directly by the government (or where it intervenes) end in a settlement or judgment. And while most cases that settle do so for under $5 million, settlements regularly reach into the hundreds of millions or even billions of dollars. Further, even if the defendant prevails, the legal fees to defend the government’s investigation and subsequent litigation can be significant, with most cases lasting at least a couple of years and some far longer. Recent Cases Against Private Equity Firms One recent case involved whistleblower allegations that Therakos, an immunotherapy company, promoted unapproved uses for its cancer treatments. [2] The whistleblower also sued private equity firm The Gores Group, which acquired Therakos in January 2013 and sold it to Mallinckrodt Inc. a few years later. The claims against The Gores Group rested on two core allegations: (i) that the improper promotion continued while The Gores Group owned Therakos and (ii) that The Gores Group hired as its CEO a former Therakos employee. The case settled in November 2020, eight years after the whistleblower first filed the case. Therakos paid $10 million, and The Gores Group paid $1.5 million. A second set of cases likewise stems from alleged conduct that started before the private equity firm’s investment and continued after the investment. In those cases, [3] the government alleged that medical testing company Alliance Family of Companies LLC ran a scheme involving kickbacks and fraudulent billings. The government also sued private equity firm Ancor Holdings LP — a minority shareholder of Alliance that held two seats on Alliance’s board and received monthly fees from Alliance under a management services agreement. The government alleged that, during pre‑investment due diligence, Ancor had discovered Alliance’s illegal scheme but acquired Alliance anyway. The government contended that Ancor caused false claims when it allowed Alliance’s conduct to continue. Last summer, Alliance and Ancor settled these claims with the government for $13.5 million and $1.8 million, respectively. [4] A final case is similar. Last October, private equity firms H.I.G. Growth Partners and H.I.G. Capital (collectively, H.I.G.) paid almost $20 million to settle a case based on alleged failure to stop pre-investment misconduct after investing. [5] In that case, a private whistleblower alleged that South Bay Mental Health Center had fraudulently billed federal and Massachusetts health care programs for services by employees whose qualifications and supervision did not comply with federal and state requirements. [6] The whistleblower also sued H.I.G. — the majority shareholder of an entity (known as C.I.S.) formed to acquire South Bay. The whistleblower alleged that, during the pre‑investment due diligence process, H.I.G. learned of South Bay’s misconduct and knew (or should have known) that the conduct continued after the acquisition. The Commonwealth of Massachusetts joined the suit to pursue parallel claims under the Massachusetts False Claims Act. H.I.G.’s settlement of the federal and state claims followed its failure to shake the case at the motion‑to‑dismiss and summary‑judgment stages. When declining to dismiss the case, the district court cited two key sets of allegations: first, that “H.I.G. members and principals formed a majority of the C.I.S. and South Bay Boards, and were directly involved in the operations of South Bay”; [7] and second, that the relator and others had “expressly informed the CEO and Boards of C.I.S. and South Bay” about the regulatory violations and had suggested ways “to fix the problem” but “that the recommendation was rejected.” [8] Because “[a] parent may be liable for the submission of false claims by a subsidiary where the parent had direct involvement in the claims process,” the district court concluded, those allegations were enough to overcome a motion to dismiss. [9] When denying summary judgment, the district court held that there was sufficient evidence showing H.I.G.’s “direct involvement in the claims process” or its “knowing ratification” of South Bay’s “prior policy of submitting false claims.” [10] In particular, the court cited evidence that two H.I.G. employees sitting on the C.I.S. board had received reports showing that a South Bay working group’s two‑year‑old recommendations for addressing the regulatory violations were not implemented. That evidence, the court concluded, suggested that “H.I.G. had the power to fix the regulatory violations which caused the presentation of false claims but failed to do so.” [11] Takeaways These cases demonstrate that private equity firms remain tempting targets for both whistleblowers and government agencies seeking to expand the scope of potential False Claims Act liability. Accordingly, private equity firms must consider potential False Claims Act risk at every stage of their involvement with government contractors or government-regulated businesses. Private equity firms should scrutinize a prospective investment for potential government regulatory and reimbursement concerns during the diligence process, including by engaging regulatory and False Claims Act counsel if appropriate. They should examine their existing portfolio companies’ operations and policies for possible compliance failures. They should review their portfolio companies’ compliance programs, ensuring that internal reporting systems, audit practices and investigative abilities are robust and follow best practices. And firms that identify compliance issues should ensure that the portfolio company documents its investigation and remediation, and assess whether the portfolio company has mandatory reporting obligations. These and other protective measures can help private equity firms improve their odds of avoiding and (if necessary) defeating a False Claims Act suit. [1] See Principal Deputy Assistant Attorney General Ethan P. Davis delivers remarks on the False Claims Act at the U.S. Chamber of Commerce’s Institute for Legal Reform, U.S. Dep’t of Justice (June 26, 2020), https://www.justice.gov/civil/speech/principal-deputy-assistant-attorney-general-ethan-p-davis-delivers-remarks-false-claims . [2] Former Owners of Therakos, Inc. Pay $11.5 Million to Resolve False Claims Act Allegations of Promotion of Drug-Device System for Unapproved Uses to Pediatric Patients, U.S. Dep’t of Justice (Nov. 19, 2020), https://www.justice.gov/usao-edpa/pr/former-owners-therakos-inc-pay-115-million-resolve-false-claims-act-allegations . [3] These six cases, all from the U.S. District Court for the Southern District of Texas, are: United States ex rel. Mandalapu v. Alliance Family of Companies Inc., No. 17-cv-00740; United States ex rel. Fuller v. Respiratory Sleep Solutions, No. 17-cv-01197; United States ex rel. Calcanis v. Alliance Family of Companies Inc., No. 19-cv-1497; United States ex rel. Jane Doe v. Alliance Family of Companies LLC, No. 19-cv-1213; United States ex rel. McKay v. Alliance Family of Companies LLC, No. 18-cv-1949; and United States ex rel. Krasnov v. Alliance Family of Companies LLC, No. 19-cv-4886. [4] EEG Testing and Private Investment Companies Pay $15.3 Million to Resolve Kickback and False Billing Allegations, U.S. Dep’t of Justice (July 21, 2021), https://www.justice.gov/opa/pr/eeg-testing-and-private-investment-companies-pay-153-million-resolve-kickback-and-false . [5] Private Equity Firm and Former Mental Health Center Executives Pay $25 Million Over Alleged False Claims Submitted for Unlicensed and Unsupervised Patient Care, Office of the Massachusetts Attorney General (Oct. 14, 2021), https://www.mass.gov/news/private-equity-firm-and-former-mental-health-center-executives-pay-25-million-over-alleged-false-claims-submitted-for-unlicensed-and-unsupervised-patient-care . [6] See United States ex rel. Martino-Fleming v. S. Bay Mental Health Ctr., Inc., No. 15-cv-13065-PBS (D. Mass), Dkt. No. 201 (Amended Complaint). [7] United States ex rel. Martino-Fleming v. S. Bay Mental Health Ctr., Inc., No. 15-cv-13065-PBS, 2018 WL 4539684, at *5 (D. Mass. Sept. 21, 2018). [8] Id. at *4. [9] Id. at *5 (citing United States ex rel. Hockett v. Columbia/HCA Healthcare Corp., 498 F. Supp. 2d 25, 62-63 (D.D.C. 2007); United States v. Bestfoods, 524 U.S. 51, 68 (1998)). [10] United States ex rel. Martino-Fleming v. S. Bay Mental Health Ctrs., 540 F. Supp. 3d 103, 130 (D. Mass. 2021).

H.I.G. Growth Partners Investments

42 Investments

H.I.G. Growth Partners has made 42 investments. Their latest investment was in Fidelity Payment Services as part of their Growth Equity - II on July 7, 2022.

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H.I.G. Growth Partners Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

7/19/2022

Growth Equity - II

Fidelity Payment Services

No

1

5/9/2022

Series E

Pyramid Analytics

Yes

3

4/5/2022

Growth Equity

myKaarma

Yes

1

1/14/2022

Series E

Subscribe to see more

$99M

Subscribe to see more

10

12/9/2021

Series D - II

Subscribe to see more

Subscribe to see more

10

Date

7/19/2022

5/9/2022

4/5/2022

1/14/2022

12/9/2021

Round

Growth Equity - II

Series E

Growth Equity

Series E

Series D - II

Company

Fidelity Payment Services

Pyramid Analytics

myKaarma

Subscribe to see more

Subscribe to see more

Amount

$99M

New?

No

Yes

Yes

Subscribe to see more

Subscribe to see more

Co-Investors

Sources

1

3

1

10

10

H.I.G. Growth Partners Portfolio Exits

8 Portfolio Exits

H.I.G. Growth Partners has 8 portfolio exits. Their latest portfolio exit was AdTheorent on December 23, 2021.

Date

Exit

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Acquirer

Sources

12/23/2021

Reverse Merger

$99M

8

11/11/2021

IPO

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$99M

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10

8/13/2021

Acquired

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$99M

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10

1/21/2020

Acq - Fin

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$99M

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10

12/16/2019

Acquired

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$99M

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10

Date

12/23/2021

11/11/2021

8/13/2021

1/21/2020

12/16/2019

Exit

Reverse Merger

IPO

Acquired

Acq - Fin

Acquired

Companies

Subscribe to see more

Subscribe to see more

Subscribe to see more

Subscribe to see more

Valuation

$99M

$99M

$99M

$99M

$99M

Acquirer

Subscribe to see more

Subscribe to see more

Subscribe to see more

Subscribe to see more

Sources

8

10

10

10

10

H.I.G. Growth Partners Acquisitions

1 Acquisition

H.I.G. Growth Partners acquired 1 company. Their latest acquisition was Telescope on December 11, 2012.

Date

Investment Stage

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Total Funding

Note

Sources

12/11/2012

$99M

Management Buyout

1

Date

12/11/2012

Investment Stage

Companies

Valuation

$99M

Total Funding

Note

Management Buyout

Sources

1

H.I.G. Growth Partners Service Providers

1 Service Provider

H.I.G. Growth Partners has 1 service provider relationship

Service Provider

Associated Rounds

Provider Type

Service Type

Lincoln International

Private Equity

Investment Bank

Financial Advisor

Service Provider

Lincoln International

Associated Rounds

Private Equity

Provider Type

Investment Bank

Service Type

Financial Advisor

Partnership data by VentureSource

H.I.G. Growth Partners Team

1 Team Member

H.I.G. Growth Partners has 1 team member, including current Managing Director, Steven R. Loose.

Name

Work History

Title

Status

Steven R. Loose

Managing Director

Current

Name

Steven R. Loose

Work History

Title

Managing Director

Status

Current

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