UKAT is a residential addiction treatment group that operates over 200 beds across eight residential facilities in the UK.

Sullivan Street Partners believes it can improve professionalism within the "untapped" addiction treatment segment of healthcare and grow the facilities of UK Addiction Treatment Group (UKAT), managing partner Layton Tamberlin told PE Hub.

UKAT, a residential addiction treatment group, operates over 200 beds across eight residential facilities in the UK. It specializes in care and rehabilitation services for alcoholism, substance abuse and wider behavioral health conditions. Based in Hertfordshire, it was co-founded by Daniel Gerrard, CEO, in 2012.

Sullivan Street acquired UKAT earlier this month. The company had fallen into administration following difficulties at previous owner Global Growth, outlined on page 10 of this UK Companies House filing.

Sullivan Street had advised a firm lending to UKAT in 2020, so it was familiar with the name and had kept its eyes on it ever since. That it was willing to buy the business despite that backdrop "tells you how much we like this space," said Tamberlin, who works in Sullivan Street's London HQ.

While healthcare is a "very well-trodden path," Tamberlin said it was unusual to find a space within it that private equity hadn't raked over in the last 20 years. "It's an untapped part of the healthcare market - it's so niche that the Care Quality Commission is still trying to find a category for it," he added, referring to the independent regulator of health and social care in England.

The addiction treatment segment is lagging in terms of professionalization, according to Tamberlin, which Sullivan Street intends to fix. This links with the firm's plan to increase UKAT's facilities. "In terms of facilities, it's more of a gray area," said Tamberlin. "Usually, it's between buying a new one or starting your own - this is kind of in the middle ground."

"You may be buying just the facility; you're not really buying a referral stream," he added. "Maybe you buy a third of a facility and you turn it into a proper treatment facility. It's all about that professionalization."

Private equity's role in healthcare and social care has been scrutinized over the years and accusations of profiteering persist. Earlier this year, affiliate title Private Equity International did a deep dive on PE's impact on US healthcare, looking into whether PE investment in the sector perpetuates health inequity.

Tamberlin does not agree with the criticism. "Honestly, it infuriates me," he said. "You're actually doing fundamental good here and you get criticized for doing it, because you want to get paid for your efforts."

There are "plenty" of private equity firms that will "dress a company for sale and cut the capex to squeeze every last dollar out of the final sale," said Tamberlin. However, this behavior tends to happen in more mature industries. "This industry is not at that stage at all, it's nowhere near it," he said. "This is about investing in the right people who can bring in the correct culture across all of the sites."

Sullivan Street's values as a firm also prevent this, he said. "We're not interested in industries where you're trying to stretch the money, we're interested in genuine transformational industries."

Tamberlin is "super confident" that any vague accusations around profiteering would be gone in five years' time. "They will see a company with better outcomes for more people, better services and more professionalism," he said. "Not only that - it will have raised the bar for the entire industry."