Facility Health Inc.’s sale to a North Carolina software solutions provider is another example of a startup company backed by local investors in West Michigan that led to a successful exit.
Grand Rapids-based Michigan Capital Network and Wakestream Ventures LLC were among the investors in Facility Health, which was acquired by Dude Solutions Inc. in Cary, N.C., a provider of operations management software.
The sale toward the end of 2021 generated a successful exit and return for Michigan Capital Network that investors can use to further invest in promising startups, CEO and Managing Director Paul D’Amato said.
“It’s a very successful exit and we’re very happy with the outcome,” D’Amato said. “It’s really a great success story and a great model of what we’re trying to create here.”
Michigan Capital Network invested in Facility Health through its venture capital fund. Individual angel investors who are with Michigan Capital Network’s affiliates invested in the company as well. Other Michigan investors were Invest Detroit Ventures and the Ann Arbor-based Michigan Angel Fund.
The sale returns capital to investors and “most of those investors are angel investors and they’re likely to continue to invest in local companies,” D’Amato said.
“It’s a good result all the way around. It shows that we are able to bring in high-quality deals that investors are interested in participating in,” he said.
Terms of the sale were undisclosed.
Founded in 2016, Facility Health developed software for health care providers to monitor and maintain their facilities and equipment. Facility Health, which employs 30 people, will retain operations in Belmont.
The company’s Origin Decision HUB software uses artificial intelligence and predictive analytics to help clients plan their capital budgets and decide when to upgrade or replace equipment or infrastructure such as heating and cooling systems. That can help them avoid breakdowns and costly disruptions, as well as mitigate risk, particularly for clinical areas such as operating rooms when medical equipment goes out and forces a shutdown for repairs.
The company has recorded more than 80-percent growth in revenue year-over-year during the pandemic and increased its customer base 30 percent, said founder, President and CEO Christian Fernando.
Facility Health was raising a new capital round when introduced to Dude Solutions. The connection ultimately led to the transaction, Fernando said.
The deal combines Facility Health with a company that has an “exceptional market reputation and strategic asset management expertise” and is “a highly successful global organization (with a) much deeper and broader product portfolio,” he said.
“We all know how prudent it is to keep and nurture these connections for possible future ventures, partnerships, or acquisitions. From the beginning, there was a clear and strategic fit as we were both in the (enterprise asset management) space and the health care vertical. DSI was also strong in many other verticals, including but not limited to, manufacturing and food and beverage, where we had a Fortune 500 client,” Fernando wrote in an email to MiBiz.
“Along with our board’s guidance and our market research, it led us to seriously consider the buyout offer. As much as the A-round would have given us the dry powder needed to get to the next revenue stage and growth metrics, the hurdle was go-to-market,” he said. “We as a management team and also the board agreed to be acquired to accelerate market capture and vertical diversification.”
Dude Solutions has a client base of more than 12,000 organizations in education, government, health care, senior living and manufacturing that uses its asset management software.
Dude Solutions acquired Facility Health with the backing of Clearlake Capital Group L.P., an investment firm in Santa Monica, Calif., that has more than $55 billion in assets under management.
“We believe Dude Solutions will leverage the product investments Facility Health has made in its proprietary Health Index solution and further expand the company’s go-to-market solutions and deliver on its mission of supporting the enterprise asset management industry,” Clearlake partner and Managing Director Prashant Mehrotra said in an announcement on the sale.
Facility Health previously raised $1.3 million from investors in 2020.
Koenig, Oelsner, Taylor, Schoenfeld & Gaddis PC served as Facility Health’s legal counsel and Blais Halpert Tax Partners LLP and Plante Moran PLLC were financial advisers.