Exactech before 2018: founders, shareholders and related parties

analysisWilliam Petty, an orthopaedic surgeon who taught at the University of Florida College of Medicine and chaired its orthopaedic surgery department from 1981 to 1996, founded Exactech in 1985 with the biomedical engineer Gary J. Miller and Betty Petty, his wife. He chaired the board from the start, was chief executive until 2014 and president from 2002 to 2007. Miller led research and development from 1986, as executive vice president from 2000, and sat on the board from 1989 to 2003; Betty Petty was company secretary and, until 1996, treasurer and a director. David W. Petty is their son. ^{1 2 3}

analysisBefore the 1996 initial public offering William Petty held 1,323,271 shares, 44.6%, almost all jointly with Betty Petty, and Miller held 9.6%; a family shareholders agreement gave William and Betty Petty, and then the company, a first right to buy any family member's shares. The company paid royalties to the Hospital for Special Surgery for the Optetrak knee and to members of its design team, including Petty and Miller. In 2010 the couple still owned 29.5%, mostly through Prima Investments, Limited Partnership, Miller owned 4.0%, partly through Millerworks, Limited Partnership, and directors and officers together held 38.3%. ^{1 2}

analysisIn March 2010 William Petty was chief executive and chairman, David W. Petty president, Joel C. Phillips finance chief, Miller head of research and development and Betty Petty corporate secretary. The outside directors included Albert H. Burstein, a former Hospital for Special Surgery scientist, R. Wynn Kearney, Jr., Paul E. Metts, William B. Locander and James G. Binch. The proxy recorded an extra payment to Metts for work on a Department of Defense inquiry whose subject it does not describe. ¹

analysisBrighton Partners, Inc., which supplied raw materials, equipment and licences for Exactech's production, was partly owned by insiders — Burstein 24%, the Pettys 4.6% and Miller 2.8% — and sold Exactech between $1.5 million and $2.2 million of goods a year in 2007–2009. On 24 May 2010 Exactech bought all its shares for $5,500,000 from sellers including Burstein, the Petty family, Miller, Phillips and Timothy J. Seese. The Florida register also lists the Pettys as officers of ExactOrtho, Inc., a company filed in December 2017, between the signing and the closing of the TPG deal, and dissolved in 2019 without any described business. ^{1 2 3 4 5 6}

analysisThe 1996 registration statement disclosed a 1994 personal-injury suit in Pinellas County alleging deterioration of the acetabular components of Exactech's hip system, and a 1995 patent suit by Joint Medical against Exactech and many of its competitors. ¹

response

Exactech said the hip-component action was without merit and that, on its patent counsel's opinion, Joint Medical's claims were without merit.

outcome

The patent action was dismissed as against Exactech on 28 July 1995 under the tolling agreement; the outcome of the Pinellas County action is not in the record.