United BioSource Opens Sluice Gates for Berkshire Partners. 10/8/09 Private Placement. In a transaction that has similarities with the TEOCO one, United BioSource Corporation of Bethesda took in a massive $125M “growth equity” investment from Berkshire Partners. United BioSource plays an interesting and potentially lucrative role in the Pharma industry by helping develop and commercialize products through providing evidence of safety, efficacy and value. This investment is similar to TEOCO’s because of the size being such that only two local funds (NEA and Carlyle) could play. [Although this is twice the size of the TEOCO investment, we are more accustomed to Biotech-related investments having larger cash requirements. TEOCO still stands out on a relative basis as a tech investment.] Similar because Berkshire is another historic, Boston-based mega-fund reaching into the Mid-Atlantic. Similar because Berkshire like TA is technically a “buyout” fund, but this investment is labeled growth equity and the previous investors will “retain their equity positions.” That’s where the similarity ends. Prior to Berkshire, Oak, J.H. Whitney and, to a lesser extent, Grotech had put an unimaginable $222M into United BioSource over six years and multiple rounds. When $222M is not enough to bake a cake, just add another $125M. These funds from the previous rounds did not join Berkshire in this round. We are not sure what “retain their equity positions” means, but it does not sound positive. (“Too bad you didn’t win the RV, but you still get to keep the toaster.”) And also unlike TEOCO, it is hard to imagine what is the remaining equity position of the founders with this avalanche of investments on top of them.
