Atlantic Street's Lab Logistics switches gears, keeps buying

Atlantic Street Capital’s Lab Logistics Management acquired The Allied Group, a fulfillment services provider to health care and life sciences organizations, from Compass Group Equity Partners.

Why it matters: 2021 produced a record year of dealmaking, but West Haven, Connecticut’s Lab Logistics is an example of assets that hit the auction block during that robust, high-valuation market but did not trade hands.

• So many assets were up for sale in 2021 that investors were stretched incredibly thin, and therefore pickier about what they spent time chasing.
• The result? Buyers opted out of deals they would have sought in normal times, leading many firms and advisers to take a step back and shift companies focuses to growth.

Catch up quick: A year ago, Atlantic Street hired Lincoln International to advise on the sale of Lab Logistics, Sarah reported at the time.

• Price expectations weren’t clear, but sources ahead of the process estimated EBITDA around the $50 million to $60 million-plus zip-code.
• Not unlike many situations at the time, one source previously cited the company’s big COVID lift, but why a deal never transacted remains unclear.

Details: Lab Logistics provides supplies, kitting and same-day logistics solutions to labs, hospitals and health systems, and CROs.

• The Allied Group, of Cranston, Rhode Island, offers design, print, assembly and the fulfillment of over 2.5 million diagnostic kits annually.
• The Allied Group follows other M&A including Lab Logistics' 2018 acquisitions of Hospital Couriers and Path-Tec from Fulcrum Equity.

What we’re watching: Will Lab Logistics, after doubling down on growth, ultimately end up better positioned as an M&A target? The pipeline is certainly less crowded than it was 18 months ago…

• “We are actively seeking other complementary add-on acquisitions to round out our products and service portfolio,” Andy Wilkins, Lab Logistics Chairman and managing partner at Atlantic Street says in a news release.

• Potential buyers may view Lab Logistics as a good platform to continue to go after more scale and regional density - which is the key to building a strong logistics network, one source told Sarah last year.

Yes, and: The company in April hired Ruth Abdulmassih as CEO from Alternative Biomedical Solutions, where she held the same role. She has previous experience at Stericycle and spent 23 years with Abbott Laboratories.

• Founder and former CEO Brian McArdle transitioned from his role and continues to serve on the board of directors.

The bottom line: The backlog of indefinitely-on-pause sale processes in concert with today's volatile deal environment doesn't paint a clear picture of the future deal landscape.