How to set the FTC on yourself

Welsh Carson caught up in antitrust suit

Happy Sunday.

This week, the U.S. Federal Trade Commission sued Welsh Carson Anderson & Stowe and portfolio company U.S. Anesthesia Partners (USAP), accusing the group of purposefully suppressing competition and raising prices.

The Background

It’s an unusual move from the FTC, which has historically shied away from targeting private equity owners in favor of focusing on their portfolio companies.

Welsh Carson launched the USAP platform in 2012 with the acquisition of a large Houston anesthesiology practice, after which it completed twelve add-on acquisitions of smaller Texas-based practices. Berkshire Partners and Singapore sovereign wealth fund GIC are also on the cap table.

The FTC says the roll-up followed a three-part strategy:

  1. Consolidate every provider of scale in Texas

  2. Negotiate price-setting agreements with remaining independent practices

  3. Strike a deal with a publicly-traded competitor to keep them out of USAP’s territory

A Roll-up and Then Some

Roll-ups are a classic private equity strategy, particularly for healthcare providers. It’s a common sense approach that seeks to consolidate back office administrative functions while strengthening negotiating power against payors and suppliers.

Less common are market-wide pricing agreements with competitive practices; likely what pushed this case over the edge.

USAP struck deals with independent practices that it couldn’t acquire, such as academic-affiliated groups, in which USAP would bill payors for anesthesia services provided by the independent partner. The arrangements increased partners’ reimbursement rates to match those of USAP — nearly double the median rate of other Texan anesthesia providers, per the FTC.

When billing, USAP used its own provider and tax identification information, appearing to payors as if it was the one providing care.

USAP then passed on payment to the independent practices, pocketing a portion of the incremental revenue for itself. The arrangements were characterized in contracts as “collaboration,” “professional services,” or “independent contractor agreements.”

USAP’s own executives expressed concern with the unusual approach, noting that it appeared “odd from a compliance standpoint” and fearing that the strategy “might possibly compromise” USAP by breaching its payor contracts.

Industry Implications

The FTC’s action coincides with its increasingly aggressive public stance toward private equity, but shouldn’t scare investors too much.

Goodwin’s antitrust team highlighted the points below to clients:

- It appears that the FTC brought this particular action given the very high market share (~70% by revenue) combined with other anticompetitive conduct.

- The lawsuit is not in the context of a proposed acquisition, but rather the result of a conduct investigation. Roll-ups could be scrutinized, but the likelihood of investigation is greater with any price fixing allegations, competitor side agreements, or other non-compete issues which could bring unwanted attention.

- The lawsuit follows highly-publicized 2021 litigation between USAP and United Healthcare over reimbursement rates and anticompetitive behavior.

Basically, Welsh Carson managed to write the playbook on what not to do if you’re at all worried about antitrust intervention.

The Last Word on Regulatory Actions

If there’s one takeaway for private equity, it’s that you should continue to stress the importance of discretion for both investment professionals and portfolio company executives.

Your emails and deal materials will be subpoenaed, and no one wants to be the one responsible for dishing up a headline that regulators (and the media) could only dream of — the FTC’s complaint is riddled with quotes from the Welsh Carson deal team and ran with an internal note from a USAP exec who was unable to contain his excitement over an add-on facilitated rate increase: “Awesome! Cha-ching!”


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1. Cisco nabs Splunk in its largest ever acquisition.

Cisco (Nasdaq: CSCO) has agreed to buy cybersecurity and observability company Splunk (Nasdaq: SPLK) for around $28 billion in cash. That works out to a ~30% premium and and a ~7.0x revenue multiple, an attractive outcome for Splunk relative to recent comps like New Relic (5.0x revenue).

• The announcement isn’t a complete surprise following rumored interest back in February. Cisco also had cash to spend, needed a high-growth acquisition, and had separately hinted that something was coming.

• It’s a solid deal for Cisco. Differing sales channels and minimal client overlap provide reasonable cross-sell certainty while furthering Cisco’s goal of recurring software growth (+$4 billion ARR on today’s $24 billion). It also complements an existing Cisco/Splunk analytics partnership, as well as certain Cisco offerings that are actually built on Splunk (read: solid cost synergies).

2. Microsoft nears U.K. approval for Activision.

• U.K. antitrust regulators signaled approval of Microsoft's (Nasdaq: MSFT) $69 billion purchase of videogame publisher Activision Blizzard (Nasdaq: ATVI) after Microsoft agreed not to purchase Activision’s cloud gaming business and to sell licenses for Call of Duty, a hit Activision franchise, to rival Ubisoft.

• The U.K. is the last remaining regulatory hurdle for the deal, which has already overcome objections from both U.S. and EU authorities. All three bodies expressed concern over the nascent cloud gaming industry, a small but potentially attractive corner of the market which Microsoft threatened to corner.

• The U.K. hasn’t formally approved, but typically follows its early guidance. Microsoft and Activision have said they’re targeting an October 18th close, hoping to put an end to a process that’s dragged on since January 2022.

3. Blackstone and Permira partner up to go after Adevinta.

Blackstone and Permira offered to acquire European classifieds business Adevinta (Oslo: ADE), currently trading at a $9.7 billion market cap.

• Discussions are still early, but Oslo-based Adevinta said its largest shareholders, eBay and Norwegian media group Schibsted ASA, are in support of the deal and would retain their minority stakes.

• Backstory: Adevinta bought eBay’s classifieds business in 2021 for $9.2 billion, beating out competing bids from Blackstone and Permira. Following that deal, Permira was able to pick up a minority stake after eBay sold down part of the position it had maintained.

• Adevinta shares have lost more than half their value since a 2021 peak, prompting speculation that private equity might make a move.

The rest of the deal sheet…

Discover Financial Services (NYSE: DFS) is considering a sale of its student loan business, including a $10.2 billion loan portfolio.

Advent International hired Morgan Stanley to lead the sale of publicly-traded CCC Intelligent Solutions (Nasdaq: CCCS), a $7.1 billion market cap auto insurance software provider in which Advent holds a 56% stake.

CVC is evaluating exit options for Finland-based Mehilainen, a healthcare services business that could be valued at €5 billion in either a sale or IPO.

Hg and Permira are seeking a buyer for workforce software provider Personal & Informatik, targeting a sale of more than €2 billion.

Hitachi (Tokyo: 6501) is offering to sell certain European assets to win EU antitrust approval for its €1.7 billion purchase of Thales' (Paris: PCFP) railroad signal business.

TGS agreed to buy Oslo-based rival PGS in an all-stock deal that would value the combined business at around $3.3 billion.

B.Grimm Group is selling a minority stake in its Taiwan coal-based power generation portfolio, targeting proceeds of up to $2 billion.

Unilever (LSE: ULVR) hired Morgan Stanley and Evercore to sell a portfolio of personal care brands including Q-Tips and Impulse.

Salesforce (NYSE: CRM) agreed to acquire low-code platform, backed by Salesforce Ventures, EQT Ventures, Accel, Emergence Capital Partners, and Valor Equity Partners.

Nippon Television Network Corp. (Tokyo: 9404) acquired a control stake in Japanese animation company Studio Ghibli.

Ares completed a $500 million investment in Premier League club Chelsea FC, backed by Clearlake and Todd Boehly.

Gemspring acquired a majority stake in human capital management software business ClearCompany.

Waldorf Production, an offshore oil exploration company, has hired Citi to evaluate a potential sale of the business.

XFL and USFL, two second-tier U.S. professional football leagues, are reportedly in advanced talks over a potential merger.

Lindsay Goldberg acquired engineering firm Kleinfelder from Wind Point Partners.

Gryphon Investors acquired Big Chief, a distributor of industrial temperature control products.

KKR agreed to acquire a 20% stake in Singtel's regional data center business for $800 million, with an option to increase its holding to 25% by 2027.

Ontario Teachers' Pension Plan agreed to acquire environmental markets investment platform GreenCollar from KKR.

Quad-C Management acquired trenchless infrastructure business Vortex from Platform Partners.

The Honey Pot, a feminine hygiene products business backed by VMG Partners and Sundial Brands, is seeking a buyer in a deal that could be worth around $500 million.


Hotelbeds, a Spanish travel platform, hired Evercore and Morgan Stanley to advise on a potential 2024 IPO that could raise more than €1 billion.

Schott Pharma, a manufacturer of pharma packaging, is targeting a €987 million raise on a €4.3 billion valuation in a Frankfurt IPO.

Neumora Therapeutics, a developer of treatments for brain diseases, raised $250 million in its IPO after pricing in the middle of the range for an initial $2.7 billion market cap.

RayzeBio, a developer of targeted radiopharmaceuticals, raised $311 million in its IPO after pricing at the high end of the range for an initial $1 billion market cap.

Volotea, a Spanish airline, hired Barclays and Morgan Stanley to prepare for a 2024 IPO.


Accel-KKR invested in Appspace, a workplace experience platform whose existing backers include LLR Partners.

Lovell Minnick Partners completed a growth investment in Net at Work, a provider of IT solutions to small business.

Mapbox, a location data platform, raised $280 million led by SoftBank.

Cato Networks, a cloud security platform for remote workforces, raised $238 million at a $3 billion valuation. Lightspeed Venture Partners led, with participation from Adams Street Partners, SoftBank, Sixty Degree Capital, and Singtel Innov8.

CMR Surgical, a developer of surgical robotics, raised $165 million from existing backers SoftBank, Ally Bridge Group, Cambridge Innovation Capital, Escala Capital, LGT, Lightrock, RPMI Railpen, Tencent, and Watrium.

Pryon, a provider of enterprise AI querying solutions, raised $100 million in Series B funding. USIT led, with participation from Aperture Venture Capital, BootstrapLabs, Breyer Capital, Duke Capital Partners, Good Growth Capital, Omnimed Capital, and Revolution Rise of the Rest.

Openly, a homeowners insurance startup, raised $100 million in Series D funding. Eden Global Partners led, with participation from Gradient Ventures, Clocktower Technology Ventures, and Trinity Capital.

Writer, a generative AI platform for enterprises, raised $100 million in Series B funding. Iconiq led, with participation from WndrCo, Balderton Capital, Insight Partners, and Aspect Ventures.

Dragos, a cybersecurity startup focused on industrial controls, raised $74 million in Series D extension funding led by WestCap (prior close was $200 million on a $1.7 billion valuation, led by Koch Disruptive Technologies).

Curve, an app that connects a user's credit and debit cards into one, raised £58 million in Series C extension funding from Britannia, IDC Ventures, Cercano Management, Cohen Circle, and Outward VC.

DuckDB, a data analytics platform, raised $52.5 million in Series B funding. Felicis led, with participation from Andreessen Horowitz, Madrona, Amplify Partners, Altimeter, Redpoint Ventures, and Zero Prime.

Bolttech, an insurtech, raised $50 million in new Series B funding from LeapFrog Investments.

JOKR, an instant grocery delivery startup focused on Latin America, raised $50 million in Series D funding at an $800 million post-money valuation (down from $1.3 billion in February) led by Convivialité Ventures. Other backers include Lombard Odier, G Squared, GGV, Balderton Capital, Monashees, Greycroft, and Tiger Global.

Vivante Health, a digital medicine startup focused on gut health, raised $31 million in Series B funding. Mercato Partners led, with participation from Health Catalyst, Intermountain Ventures, SemperVirens, 7wireVentures, Human Capital, and Distributed Ventures.

Corti, an AI assistant for health care clinicians raised $60 million in Series B funding. Prosus Ventures and Atomico co-led, with participation from Eurazeo and EIFO.

Magnet Biomedicine, a biotech focused on molecular glues, raised $50 million in Series A funding co-led by Newpath Partners and Arch Venture Partners.

ReCode Therapeutics, a genetic medicines developer, raised $50 million in Series B extension funding from Solasta Ventures, Bioluminescence Ventures, and existing backers OrbiMed Advisors, AyurMaya, Leaps by Bayer, Vida Ventures, MPM Capital, Pfizer Ventures, EcoR1 Capital, Sanofi Ventures, Amgen Ventures, and Osage University Partners.

Mottu, a motorcycle rental company and last-mile delivery marketplace, raised $50 million in Series C funding. QED Investors and Bicycle Capital co-led, with participation from Endeavor Catalyst and Caravela.

Legit Security, a cybersecurity startup focused on application delivery, raised $40 million in Series B funding. CRV led, with participation from Bessemer Venture Partners, Cyberstarts, and TCV.

Inbound Health, a provider at-home skilled nursing solutions, raised $30 million in Series B funding, per Axios Pro. HealthQuest Capital led, with participation from existing backers Flare Capital Partners and McKesson Ventures.

Darrow, a data engine for class action litigation, raised $35 million in Series B funding. Georgian led, with participation from Entrée Capital and NFX.

Tabular, a data automation platform, raised $26 million. Altimeter Capital led, with participation from Andreessen Horowitz and Zetta Venture Partners.

Bastion, a web3 infrastructure startup, raised $25 million in seed funding. A16z crypto led, with participation from Laser Digital Ventures, Not Boring Capital, Robot Ventures, and Alchemy Ventures.


Goldman Sachs raised more than $15 billion across two funds targeting private equity secondary investments.

Keensight Capital raised €2.8 billion for a growth-stage fund.

Quadria Capital is targeting $1 billion for its third healthcare-focused fund.

EcoBridge is targeting between $1 billion and $2 billion for a new climate tech fund.

Blockchain Capital raised a combined $580 million for its fifth early-stage fund and first opportunity fund.

Lowercarbon Capital has raised over $550 million across two new venture funds focused on climate tech startups.

Interlock Equity closed on an oversubscribed $390 million debut fund.

Astanor Ventures raised €360 million for a new food and ag-focused fund.

Unfold Ventures launched with a debut $300 million fund.

AiiM Partners is raising up to $250 million for its second climate tech fund.

Play Time Ventures is targeting up to $200 million for its debut fund.

Global Frontier Technology Ventures raised $140 million for its debut fund focused on early-stage AI investments.

Hartford Funds launched Hartford Schroders Private Opportunities Fund (HSPOF), a new fund for accredited investors focused on private equity.


1. Startup equity isn’t all that.

• Compensation in a cushy FAANG job might not be that bad: Instacart’s IPO, one of the year’s biggest, didn’t translate to a very good outcome for all but its earliest employees. Check it out: Prospect.

2. Peek behind the curtains at Microsoft.

• Recently released emails detail Microsoft’s internal discussion of a potential TikTok acquisition in 2020. An interesting view at what executives are thinking behind the scenes. Check it out: Twitter.

3. A rare look at Renaissance Technologies.

• RenTech CEO Peter Brown sat down to chat with Goldman in a wide-ranging conversion that touched on the firm’s origin, his career, and quantitative strategies. Check it out: Goldman.


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