FOCUS:  Mountain Group Capital seeks mid-Tennessee acquisitions

Huntsville-based JIT Services LLC and its owner — Nashville-based Mountain Group Capital (MGC) — are actively exploring an acquisition of an integrated distribution, logistics and value-added company in middle Tennessee. 

According to JIT Services founder and board member Pete Ferrante, the company is also considering acquisition candidates in Louisville, Alabama, Texas and in Mexico, where JIT has two units. In addition to inventory management, logistics, EDI and other services, the expanding network of JIT outsourcing centers will shoulder a wide range of projects, ranging from programming, printing and light assembly, to packaging or quality-assurance sorting. JIT recently expanded operations in Peachtree City, Ga., to be near its OEM customer, Panasonic.

The JIT model may eventually be replicated in the Nashville area. However, MGC Founder Joseph C. Cook Jr. (at left) recently told NashvillePost.com that MGC has reviewed "12 to 15" acquisition candidates in various sectors in middle Tennessee in the past couple of years, thus far with no deal. Cook said he is currently exploring three specific acquisitions in the state.  Ferrante said MGC/JIT are also exploring JIT-linked acquisitions in Louisville, Texas and in Mexico, where JIT currently has two operations.

MGC’s published investment criteria seem clear enough — emphasizing transactions in the $3 million to $15 million range, for Southeastern companies with revenue $5 million to $30 million. Cook recently estimated MGC businesses controlled by Cook and several family members are generating about $15 million in total annual revenue, with a combined workforce of more than 200.

Cook told NashvillePost.com that MGC tends to shy-away from IT pure-plays and services businesses, and currently prefers manufacturing, value-added distribution and medical-device businesses. 

He said prospects often fade away, when would-be sellers learn that MGC has some criteria that don’t fit neatly on a spreadsheet:  The fund tries to buy companies in which the original owners "willing sellers, who are not trying to get the highest dollar" from sale of their firm "and who care about the legacy" they leave to their community. "They want to continue living in the same town and walk into the hardware store and not feel ashamed" about having sold the firm.

Cook’s son, Joe III, a veteran of J. C. Bradford and R. W. Baird investment banking, told NashvillePost.com that deals being brought to Mountain Group by referral sources are increasingly "a good quality-fit for us," as referrers get better at screening-out sellers whose main goal is to "maximize sales price." 

In addition to JIT Services, MGC’s holdings and affiliates include:  Clinical Products LP markets Extendbar, a food product that helps diabetics manage glucose levels, and which Extendbar manufactures via Nashville's Standard Candy.  A third company, Quality Filtration, began operations in Nashville less than a year ago, and now has nine employees. Cook Jr. said recently the filtration firm is not yet profitable.

MGC was founded in 2000 by Cook Jr., now 64.  He remains chairman of Amylin Pharmaceuticals, Inc., the San Diego-based company that Cook once led as CEO during a five-year turnaround effort.  Earlier, he served 28 years with Eli Lilly and Company.  Cook earned his B.S. in Engineering at the University of Tennessee and he is chairman of the UT College of Engineering’s advisory board.  ♦

Tom Tarver likes to have some skin in the game.  So, when he returned to the Lattimore, Black Morgan & Cain PC & Affiliates (LBMC) fold in January 2004 after a five-year absence, he arrived as co-owner of newly formed LBMC eHealth Solutions LLC. 

With the backing of LBMC managing principals David Morgan and Mike Cain, Tarver (pictured above) returned to LBMC with a broad mandate to help LBMC use hosted services to strengthen its presence in eHealth. Tarver initially took nearly a year to shape a two-pronged strategy:  LBMC eHealth would offer physicians ASP-model practice-management solutions, with intelligent-billing capabilities; and, would offer hospitals decision-support (DSS) dashboards that would enable quality- and safety-driven hospital executives to measure "anything that has metrics."

In a statement released earlier this week, Tarver said, "Solutions for practice management can't just consist of software, they must be complete utilities that provide software, detailed payer knowledge and [user interfaces] that a medical practice plugs into, [then] pays a small fee per use, and receives tangible results," in the form of improved revenue-cycle management.

This spring, Tarver announced that LBMC eHealth had entered partnerships with athenahealth, Inc. for medical-group practice-management solutions; and, with Nashville-based eTransX Inc. for executive-dashboard development, the latter being primarily aimed at smaller rural hospitals. 

The LBMC-eTransX offering addresses decision support and benchmarking related to such variables as payer reimbursements, materiel costs, and revenue and billing-reject analysis. Many smaller hospitals need dashboards that can operate independently of the hospitals' often-antequated information systems. LBMC eHealth recently deployed an initial version of LBMC-eTransX dashboard services to 27 hospitals.

Tarver believes the LBMC-athenahealth package is distinguished from those of such competitors as Emdeon Business Services by its combination of web-based ASP model; a robust patient-billing solution, with continually updated payer knowledge, including payment rules; customer charges based only on a percentage of cash collections; plus, options for full outsourcing of bandwidth (typically via DSL), Exchange-server hosting, data and customer-service centers, and other features.

The LBMC eHealth plan also calls for augmenting provider services with services provided, as needed, by other LBMC divisions, including:  information security, backup and recovery; human-resource management; health and medical benefits and 401Ks; accounting, reporting, taxes, HIPAA, valuations and due diligence; and, practice-management audits.

On Tuesday, Tarver told NashvillePost.com that his 29-month-old company is now profitable, employing four full-time dedicated staff and drawing as needed on staffs of other LBMC companies. The entire LBMC group employs 265 persons.

Tarver shares ownership of the eHealth company with LBMC Healthcare LLC and LBMC Technologies LLC (related story, here).  He declined to provide revenue figures, but offered Results Physiotherapy — formerly, Tracy Caulkins Physiotherapy Centers — as a current client (based in Nashville, with Australian ownership).

During Tuesday's interview, Tarver sounded happy to "get back into healthcare." For about five years in the mid-Eighties, Tarver was senior strategic program manager for some of HCA's management-information and automation systems for operating rooms, scheduling, billing, nursing, patient care and other functions.  His subsequent career also included a decade as marketing senior director for a salesforce automation product and program director for global EDI for Nortel, based in Nashville; next, a term as GM and corporate CIO for the Nashville and St. Louis offices of Empower Trainers and Consultants (Kansas City); then, two years with LBMC Technologies in web and commerce development; and, finally, nearly five years as CEO and CTO of Link2Gov.com, before returning to LBMC. At Link2Gov, among other duties, Tarver led design and development of Metro's Nashville.gov site; Metro Public Health's Bridges-to-Care program, and e-payment sites for IRS tax payments via www.Pay1040, among other programs.

Tarver, 52, is a Nashville native who as a youth occasionally surfed the wakes of barges on the Cumberland River. Tarver confesses that on a recent business-and-pleasure trip to Australia, he was so exhausted by moving through 14 time-zones and visiting five cities in 11 days, he couldn't venture forth during a day at Surfers' Paradise, Downunder. Tarver earned his B.B.A., with emphasis on MIS and accounting/finance at Belmont University.  He is a Certified Data Professional. He resides in Hermitage and has an adult son.