Scoop: New Mountain to buy Emmes for more than $800 million

New Mountain Capital has prevailed in the sale process for Behrman Capital's Emmes, a government-centric contract research organization, three sources familiar with the matter tell Axios.

Zoom in: Two sources say the anticipated deal is valued north of $800 million, implying a more than 20x multiple of the company's EBITDA in the high $30 million range.

• Rothschild led the sale process alongside Baird's government services team, as first reported by Axios in February.
• The process got increasingly competitive in the late stages, sources say, with valuation ticking up from IOIs around the ballpark of $700 million, one source notes.

State of play: The robust valuation commanded in part reflects the scarcity value of scale contract research organizations as private equity remains eager to invest in pharma services.

• Emmes is unique in that a large portion of its work involves government contracts (such as with the National Institutes of Health) — a lower margin but stable customer base, sources say.
• The company under Behrman's backing has diversified with M&A across the Europe and U.S., most recently adding capabilities in rare and orphan disease clinical research via Casimir, its fourth deal.

The intrigue: Emmes' chairman, Salvatore Guccione, is the former CEO of Aceto Corporation, a specialty chemicals platform currently owned by the PE firm.

What we're watching: NMC has a strong track record of business transformation via M&A in health care — ie. CIOX Health/Datavant, R1/CloudMed, Equian, etc. — so as always, we're watching what strategic levers are pulled this time around.

NMC and Behrman Capital declined to comment.