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GALEN PARTNERS, $ 100 MIL. MANAGEMENT BUYOUT FUND

Executive Summary

GALEN PARTNERS, $ 100 MIL. MANAGEMENT BUYOUT FUND for small to mid-sized health care firms, is being established under the leadership of ex-J&J Vice Chairman David Collins. The risk capital fund is looking to make investments in ongoing health care companies with revenues in the $ 5 mil. to $ 100 mil. range, a pool estimated by Galen to include about 700 companies. In a Sept. 7 description of the fund objectives, the company defines three target groups: private companies, public companies trading at deep discounts and "divisions of major health care companies that management has determined are non-strategic." Collins has an arrangement with a New York City health care consulting firm. The Wilkerson Group, to locate potential investments. The Galen Fund describes the arrangement as a long-term consulting contract to identify investment candidates and "to conduct opportunity assessments and strategic reviews." The Wilkerson Group is a 20-year-old consulting organization specializing in the health care field. Based in New York City, the consulting firm, formerly Channing, Weinberg, has 67 employees. During the three years 1985-1987, the firm says it conducted "well over" 100 due diligence reviews for investment decisions totaling more than $ 5 bil. Among its recent projects, the Wilkerson Group lists a technology and competition analysis for an infusion pump manufacturer and a study of financing alternatives for the developer of a non-invasive method of detecting coronary artery disease. Collins left the second spot at J&J at the beginning of this year after over 25 years with the company ("The Pink Sheet," Jan. 4, T&G-1). At J&J, he had a broad range of senior management responsibilities spanning a variety of health care segments from OTC drugs to medical devices. He also was active in the major trade association. Through Galen, Collins intends to take an active role in management of the companies in which the fund invests. The description of the fund states that "rather than limit their input to finances and financial advice," the Galen partners intend to "work proactively with the portfolio company managements in the areas of operations, management and strategic planning." In addition to Collins, a senior Galen partner will be William Grant, chairman of New York Life International Investment. Grant, who has been a SmithKline Beckman board member since the beginning of 1974, was also previously the chairman of MacKay-Shields Financial Corp. and president of Smith Barney.

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