Get thee to the Priory

13 March 2007 By Nicole Lee

The Dutch bank outmaneuvered buyout firms to snap up the UK healthcare chain, known for its rehab clinics, for a hefty price in 2005. Now Priory’s CEO and two executives have left. ABN may be learning the hard way that private equity is a tricky business.

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Three senior executives of UK healthcare chain Priory Group, owned by Dutch bank ABN Amro, have resigned, according to a statement on Priory's website. The three are Chai Patel, Priory's chief executive since 2002, David Spruzen, chief financial officer, and Paul Greensmith, chief operating officer.

The Priory was a highprofile acquisition for ABN Amro for several reasons. The £875m deal was done by its investment bank's infrastructure team, which outmanoeuvred other buyout firms, such as Apax Partners, Charterhouse, and Cinven, to win the deal in July 2005. Second, ABN Amro paid a debttoebitda multiple of 18 times 2004 ebitda at a time when a debttoebitda multiple of 10 times was considered aggressive, the Financial Times reported at the time. The multiple was 12.6 times runrate ebitda.

Hans Michels, the current nonexecutive chairman, will become interim chief executive and executive chairman, Priory Group said.

In February, ABN Amro hired investment bank Morgan Stanley to conduct a strategic review of the business, which could include a saleandleaseback of the Priory's property portfolio, the FT said.

Best known for its rehabilitation clinics, The Priory also provides mental healthcare and specialist education services, operating over 2,000 beds across 40 facilities which include hospitals, care homes, and specialist care centres.

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