Favorite Healthcare Staffing. The iconic ETA success story
A 1980s search-fund acquisition that compounded into a 9-figure exit
The deal. Sara Cohen acquired Favorite Healthcare Staffing. A small Kansas City-based healthcare staffing firm. In 1992, financed through a combination of bank debt, seller financing, and equity from search-fund-style investors. At acquisition, the company had limited geographic reach and was focused on temporary nurse staffing for local hospitals.
The thesis. Healthcare staffing was a fragmented, growing industry. Hospitals increasingly needed temporary clinical labor due to nurse shortages and variable patient volumes. Cohen's thesis was operational excellence at the practice level (recruiting, scheduling, payroll) combined with steady geographic expansion and service-line broadening (eventually adding allied health and physician staffing).
What she did. Over 22 years, Cohen built Favorite Healthcare Staffing through both organic growth and strategic acquisitions. She invested in technology (proprietary scheduling platform, mobile applications for clinicians), expanded into 30+ states, and added allied health and physician staffing service lines. She built a culture focused on clinician satisfaction and retention. Recognizing that her employee base was her competitive advantage.
The outcome. AMN Healthcare acquired Favorite Healthcare Staffing in 2014 for approximately $120 million. Generating returns to Cohen and the original search-fund investors estimated at 25x+ on the original equity check. The deal became one of the most widely-discussed individual ETA success stories, particularly notable for being a female founder in a male-dominated PE world and for the 22-year hold period that allowed compounding to fully play out.
Best practices for VantageOS users. First, hold periods in well-run search-fund acquisitions can extend for decades. The compounding through Year 15-20 often exceeds anything generated in earlier years. Don't force premature exits when the underlying business is still compounding. Second, healthcare staffing and other "essential labor" services have benefited from sustained demand growth and pricing power. But require deep operational capability in recruiting, scheduling, and clinician relationships that's genuinely hard to replicate. Third, founder-operators like Cohen who stay engaged for the full hold period often outperform PE firms that rotate professional management. Direct accountability to outcomes is a powerful alignment mechanism.