A syndicate of public and private investors recently bought a majority stake in Ann Arbor-based HistoSonics, valuing the medical device company at $2.25 billion. This deal keeps HistoSonics private and marks one of the largest exits in Michigan since DuoSecurity’s $2.35 billion sale to Cisco in 2018. Paul D’Amato, CEO and Managing Director of Michigan Capital Network, emphasized the importance of this sale for local investors.
“This will return a lot of money to investors in Michigan and will be very important. In most cases, that money will go into new innovation,” he said. HistoSonics develops ultrasonic medical devices for noninvasive tumor treatment.
The company was founded in 2009 and is headquartered in Plymouth, Minnesota, and Ann Arbor. The acquisition was led by a group of investors including San Francisco-based K5 Global, Jeff Bezos’ Bezos Expeditions, and Boston-based Wellington Management. The deal closed on August 5.
The HistoSonics sale is seen as a significant milestone for venture capital in Michigan.
Major venture capital milestone in Michigan
D’Amato views it as legitimizing Michigan as an innovator in various industries.
“This form of transaction was more attractive to the board because it allowed current investors to cash out and reap the positive returns of their investments or reinvest in the company for a potential IPO or acquisition in the future,” said Jim Adox, chairman of the HistoSonics board and executive managing director of Venture Investors Health Fund. The consortium that purchased HistoSonics now owns about two-thirds of the company. President and CEO Mike Blue noted, “The thesis here is that as a private company, we can accelerate the growth of our enterprise value while de-risking additional clinical applications, which we think will be beneficial at the time of the IPO.”
HistoSonics has raised $320 million in venture capital.
In 2023, the company received FDA De Novo clearance for its targeted, non-invasive tumor treatment and made its first sale of the Edison Systems to the Cleveland Clinic. Moving forward, HistoSonics plans to extend its focus beyond liver tumors to include kidney, pancreas, and prostate conditions. The company aims to expand its reach to a wide range of clinical applications, treating both benign and malignant conditions.
Following the transaction, HistoSonics will continue to invest in its Ann Arbor facility and grow its Michigan presence. Blue underscored the broader implications of the sale. “(The transaction) represents the meaningful work that is happening at the University of Michigan and throughout the state,” he said.