Association of Corporate Growth honors Morgenthaler founder, 2 Cleveland health firms

The Association for Corporate Growth Cleveland will give both of its corporate Deal Maker Awards to health care companies this evening.

The local chapter for middle-market merger and acquisition, and corporate growth professionals also will honor David Morgenthaler with a Deal Maker award for lifetime achievement.

Morgenthaler is the retired chairman and founder of Morgenthaler, the venture capital and buyout firm in Cleveland and Menlo Park, Calif. Widely considered a pioneer of modern venture capital, Morgenthaler also has been an outspoken champion of entrepreneurship.

After selling his venture capital-backed business to an international company, Morgenthaler started his firm in 1968 to invest in private technology companies in the United States. Today, Morgenthaler Partners manages investments of $3 billion in several venture capital and buyout funds. In addition to offices in Cleveland and Menlo Park, the firm has offices in Boston; Boulder, Colo.; and Princeton, N.J.

As president of the National Venture Capital Association during the 1970s, Morgenthaler testified before Congress to get the capital gains tax reduction instituted in 1978. A year later, he helped pass the Employee Retirement Income Security Act, better known as ERISA, which allowed pension funds to invest in private equity for the first time.

Whole Health Management and PartsSource LLC will also be honored tonight.

Whole Health Management provides on-site and near-site employer-sponsored clinics, health and wellness centers, pharmacies, health coaching, and other services to employees and their families. Jim Hummer started the company in 1987.

In May when drug store company Walgreens bought Whole Health for undisclosed terms, the company employed more than 800 people in 72 clinics in the United States and Guam. Annual revenues were $60 million and had grown at an average rate of between 20 percent and 25 percent, according to Cleveland ACG.

Today, Whole Health, still based in Cleveland, operates as part of Walgreens’ Take Care Health Employer Solutions division.

Foundedin 2001, PartsSource in Aurora is the fast-growing supplier of replacement parts for hospital imaging and biomedical equipment. In August, PartsSource got $50 million from investors led by Polaris Venture Partners in Waltham, Mass, for a 30-percent stake in the company, according to Cleveland ACG. Primus Capital in Mayfield Heights participated in the investment.

PartsSource distributes new, used and refurbished parts for 2,500 makes, models and types of medical equipment to hospitals worldwide. The company has annual revenues of more than $100 million and employs more than 200 people, the local ACG chapter said.

PartsSource used its investment to buy equity from the company’s current shareholders and employees, the company’s chief executive, Ray Dalton, said at the time. Dalton remains majority shareholder of PartSource.

Dalton hopes the investment and venture capitalist involvement that comes with it can help take his company public in 2012.

Private equity firms getting Deal Maker Awards this evening are:

• Riverside Co., the leveraged buyout firm in Cleveland and New York City that bills itself as the largest global private equity firm focused on the smaller end of the middle market. Celebrating its 20th anniversary, Riverside has grown to manage $3 billion in nine funds and to employ 190 people in 18 offices around the world, according to ACG Cleveland.
• Resilience Capital Partners in Beachwood is a private equity firm that specializes in investing in companies in smaller end of the middle market in a broad range of industries. Resilience principals invest mostly in companies that find themselves in special situations: underperformance, corporate divestitures, turnarounds and orphan public ownership.