Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

Swedish private equity firm EQT's first American buyout isn't coming cheap. 

That's Rich
EQT is paying roughly 16.7 times Press Ganey's forecast 2016 earnings, which is above the median buy-in multiple paid by private equity firms this year
Source: Bloomberg

The firm on Tuesday agreed to buy Press Ganey, a company that helps health-care providers survey patients, for around $2.35 billion. The price tag represents a steep multiple of 16.7 times Press Ganey's estimated 2016 earnings before interest, taxes, depreciation and amortization, or 14.9 times its forecast 2017 Ebitda. That's well above the median multiple paid in recent leveraged buyouts, but it can be justified in part by Press Ganey's projected double-digit earnings growth. 

Paying the Price
Press Ganey has posted annual earnings growth in excess of 11 percent, which may justify the rich multiple EQT is willing to pay
Source: Company filings

For shareholders, EQT's offer represents a premium so narrow to Press Ganey's closing price Monday that it rounds to zero percent -- but the stock is already trading near record levels. Still, the shares surged as much as 4 percent above EQT's bid, indicating investors are hopeful that another suitor may emerge during the pending "go-shop" period or that they may be able to squeeze a few more cents out of the Swedish firm. 

Quick Buck
Subscribers to Press Ganey's May 2015 IPO have earned a return of 62 percent, outpacing benchmark indexes including the S&P 500
Source: Bloomberg

With cheap deal financing at the ready for rival strategic and private equity suitors, nothing is impossible. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Gillian Tan in New York at

To contact the editor responsible for this story:
Beth Williams at