insideARM Perspective on Today’s Announcement Regarding Ontario Systems

Today insideARM published the press release from Ontario Systems (Ontario) announcing that the company had been acquired by Arlington Capital Partners, a Washington, DC-based private equity firm that has managed $1.5 billion of committed capital via three investment funds and focuses on investing in regulated industries and their adjacent markets.

In August of 2006 the company was previously acquired by a group of Indiana investors that included Ontario co-founders and the private equity clients of Oxford Financial Group Ltd of Indianapolis. insideARM had reported on that transaction. That group held their investment for 12 years, an unusually long hold period for most private equity investments.

We believe this latest transaction is a positive announcement for the industry. The ARM industry is heavily regulated. Arlington Capital focuses on investing in regulated industries. The acquisition appears to be a great fit and one that could provide synergistic opportunities for Ontario.

We asked the Ontario team for some further comment on potential synergies. Ron Fauquher, Ontario Systems co-founder and CEO commented:

“The most energizing part of the new relationship is indeed the great synergies between Ontario Systems and Arlington Capital. We are both growth oriented.  We both believe strongly in and hold dear our commitment to our customers in bringing them the best in innovation, quality and service to help them succeed. And we both believe it is important to serve our industries and our communities in giving back to those key constituencies.

Ontario Systems has strived for a long time to be our industry’s leader in expertise and innovation around the issues of compliance and regulation in our markets. Arlington Capital is a demonstrated leader in helping companies grow in regulated industries and we are pleased to be able to capitalize on that expertise and capability.”

We also asked the Ontario team to comment on what drew the two grew groups together. Casey Stanley, Ontario’s Vice president of Marketing responded:

“Arlington is excited about our markets, appreciative of the compliance and regulatory nature of what we do and valued our company culture and all that it means. They’ve long had interest in the ARM industry, they have substantial experience in the revenue cycle industry, and they bring a lot of focus and experience to the table when it comes to technology companies supporting the ARM, revenue cycle, and business process outsourcing industries.

Ontario is thrilled to be partnering with someone that has such a strong track record of partnering with the companies they acquire to catalyze healthy and exciting growth. Our core values, including ‘community,’ ‘service,’ and ‘innovation’ are familiar to Arlington, and they demand the highest levels of integrity from those they work with. It is a great fit for us.”

Finally, company growth is a key component for any successful private equity investment. We asked Mr. Fauquher about post-transaction growth strategies for Ontario.  He responded:

“We have been fortunate to grow primarily organically over the years by focusing on serving our client’s needs and helping them to grow as well. That strategy is one we expect to continue in an aggressive way.   That being said, the Arlington Capital partnership brings us the opportunity to consider non-organic growth strategies and we look forward to evaluating those opportunities as well in the future.”

insideARM congratulates the Ontario management team for entering into a transaction with a Private Equity group that appears to provide great opportunity to the company.  It confirms that Private Equity is still interested in the ARM industry.