TAMPA — A Cuban-born, Tampa-raised doctor who built a chain of surgery centers, then sold it for $153 million, used to love telling his tale of hard work and "living the American dream."
Now he's warning entrepreneurs instead: Beware of sophisticated financial firms that sign deals to buy your business only to return again and again to demand much of their money back.
We're talking demands of more than $83 million in this case.
"If other entrepreneurs build up their companies and decide to sell, it is now more important to know who you sell your company to," says Dr. Rodolfo "Rudy" Gari. "I do not want others to go through what I am going through."
But that's only half of Gari's problems. The doctor, now 52, has offered to buy back his business and even pay interest on the original price.
The buyer's response? No.
Now Gari's in a Catch-22, caught between a deep-pockets buyer still demanding payback of big bucks two years after acquiring Gari's business but refusing to sell the company back.
"It's not unusual in deals like this to have post-closing adjustments," says Joe Varner, Gari's attorney at Holland & Knight in Tampa. "But a dispute of this size is highly unusual."
"I was blindsided," Gari says. "How can they say I owe them $83 million? I still do not know. That is something other entrepreneurs like myself need to know."
In his lawsuit, Gari claims he is the victim of an elaborate fraud. The firm that bought the surgery centers argues Gari misrepresented their value.
The courts may resolve this dispute. But it's quite possible Gari will never get a straight answer about how this deal soured so badly.
Admits Gari: "I have never done this before."
Gari likes to tell how at age 9 he left a crowded room in downtown Havana shared by eight family members. He flew to Florida on one of National Airlines' last "freedom flights" where every passenger burst into applause when they landed.
He likes to tell how he grew up in Tampa, worked hard through Jefferson High School, the University of South Florida and the University of Miami medical school. The anesthesiologist added an MBA degree along the way.
Gari pays tribute to his late father, also an entrepreneur, who he says taught him that his word is his bond. And he says he made sure to pass on that rule to his two sons, who currently attend Harvard and Stanford.
The Gari family lives on Harbour Island in a 10,000-square-foot, six-bedroom waterfront home. It's a high-end, hard-earned lifestyle, but Gari says the long and expensive fight over his business has been stressful. "It has taken a toll," he concedes.
Gari built his one surgery center on Tampa's Armenia Avenue into a chain with 700 employees. In 2009, as he was about to turn 50, he decided to put his business up for sale.
Several buyers indicated interest in the business. But HIG Capital, a multibillion-dollar investment firm based in Miami that controls more than 200 companies, was the most aggressive suitor. HIG hired powerhouse accounting firm KPMG and investment banking hotshot Goldman Sachs to help assess the value of Gari's chain of surgery centers. Then, two years ago, HIG offered Gari $153 million. The delighted doctor accepted the deal.
Soon his American dream began to fall apart. In short order, HIG was back claiming that the business was not worth what it paid. The deal was renegotiated for $30 million less, dropping the sales price to about $123 million.
Gari agreed to the lower price, but he made a counteroffer:
I think my company is a good one, he told HIG. If I can run it and meet specific performance goals, he proposed, then pay me a bonus.
HIG agreed, capping the potential bonus at $10 million.
The business did well over the next two years. Gari was pleased and, with performance goals met and exceeded, he was ready to receive his bonus.
That's when the other shoe dropped.
This summer, Gari received a letter dated June 16 from HIG. The firm said Gari had misrepresented the surgery center chain's 2009 balance sheet. The firm claimed the chain's accounts receivables — money owed the chain by customers who had not yet paid — were smaller than originally portrayed. And some BlueCross BlueShield payments to the surgery centers should not have been recorded as income, HIG alleged in the letter.
HIG insisted Gari owes it $83 million.
Bottom line? Two years after buying Gari's chain of surgery centers for an initial $153 million, HIG has made several demands to cut the price tag. The first trim was for $30 million, followed by this demand for $83 million for a total of some $113 million.
If HIG gets its way, Gari will end up having sold his business for $40 million. That's 74 percent off the original deal.
Neither HIG nor the Carlton Fields attorneys in Tampa representing the company in this case responded to a request for comment.
Now a dismayed but determined Dr. Gari has a new mission. He has hired not one but two law firms, Tampa's Holland & Knight and St. Petersburg's Englander & Fischer, to represent him.
Why two law firms? Gari says he interviewed each firm and liked both.
"Any time you owe $83 million," Gari says, "you want to be sure you have resources available to defend yourself."
Here's what Gari wants: Either HIG should honor the sales deal, which was entered into after HIG brought in sophisticated firms to review his surgery center books, or HIG should sell the chain back to Gari.
Growing stacks of legal claims and amended complaints have been traded back and forth between Gari's lawyers and HIG's at Carlton Fields.
A trial is scheduled for September 2012.
HIG Capital calls itself a "leading global private investment firm" with more than $8.5 billion of capital under management. It has invested in and controls more than 200 smaller, promising companies — many in health care and finance — that HIG encourages to grow and become more dominant players in their industries.
You might know some of them.
HIG invested millions in Tampa's Ideal Image, a growing chain of laser hair removal services. In 2009, HIG fired Ideal CEO Dean Akers, who said at the time the dismissal was for bogus reasons. Earlier this month, Ideal Image was sold to another company.
HIG also owns Tampa's PMSI, a workers' compensation and managed-care business. Among other Florida businesses HIG controls: insurance services Gould & Lamb in Bradenton; debt-recovery firm Trak America in Naples; finance company First Capital in Boca Raton; and cargo transport provider AmeriJet International in Fort Lauderdale.
Curiously, Gari's former business, now in HIG's hands and called Surgery Center Holdings, found itself in a mood to expand.
Despite HIG's insistence in June that Gari pay back more than $80 million, Surgery Center Holdings this past spring bought a publicly traded Chicago company called NovaMed. HIG called it a "leading operator of ambulatory surgery centers." The deal was valued at more than $200 million.
Court documents in this legal dispute reveal one side arguing Gari is a victim, defrauded by a sophisticated buyer who agreed to a deal only to repeatedly demand Gari pay back tens of millions.
HIG's legal strategy is more subtle. It argues Gari misrepresented the value of his business. And it claims the details of the original sales contract do not give Gari the legal grounds to even make his claim of fraud.
Gari says he's ready and willing to buy his business back. His advisers tell him it is not a $40 million company, as HIG alleges, but closer to a $200 million enterprise.
I'm not sensing compromise ahead. The disputed dollars are too far apart. The entrepreneurial pride is too fresh. The desire to salvage that American dream is too strong.
Robert Trigaux can be reached at email@example.com.