ABRA expected to make new MSO acquisition despite auction announcement

In the wake of the announcement that it is putting itself up for sale, we expect it will announce another MSO acquisition in the next few days. True-Quality is the intended target, an 11-unit, $30 million MSO in Southwest Ohio. While technically ABRA is putting itself up for auction, it is really just Palladium selling the rest of its interest to a new private equity group (PEG) "sponsor" with deeper pockets and a later stage investment approach. ABRA will also reload its bank account to pay off loans incurred to acquire Wilburns, CCA and this as-yet-unannounced acquisition. Its management team is expected to remain.   If this transaction is like the typical PEG deal, its current majority owner, Palladium, will realize an enormous return on its original investment of approximately $55 million.  Management will get to take some profits as well and then get a new set of incentives to grow.  The new "sponsor" will put up a new chunk of equity, probably some debt to go with it and ABRA will go back into acquisition mode with even deeper pockets than before. While ABRA hasn't officially announced its investment banker, it is Harris-Williams, based in Richmond, Va.  HW was the lead banker on the Caliber Collision transaction where the bidders were all PEGs. It has a strong practice representing private equity groups and middle market companies that are their targets.  We should expect mostly very large PEGs at this auction as well.