NEW YORK Private equity firm New Mountain Capital LLC is exploring a sale of OneDigital, which could value the U.S. employee benefits and insurance broker at more than $2 billion, including debt, people familiar with the matter said on Friday.
A deal would mark the latest example of a buyout firm cashing out of its investment in an insurance brokerage. Private equity firms take over these companies, enlarge them through acquisitions, and then sell them, typically to other buyout firms, for a big profit.
Companies which help businesses outsource services, such as employee benefits, have also been attractive buys for private equity, as the outsourcing trend accelerates in corporate America and boosts the provider's profits.
OneDigital generates around $150 million of 12-month earnings before interest, tax, depreciation and amortization, the sources said.
The sources requested anonymity to discuss nonpublic information. New Mountain declined to comment. OneDigital did not respond to a request for comment.
Last year, private equity firm GTCR acquired insurance brokerage AssuredPartners from buyout firm Apax Partners for $5.1 billion, including debt, while Carlyle Group Inc (CG.O) purchased Hilb Group, another insurance brokerage, from buyout firm Abry Partners for more than $1 billion, including debt.
OneDigital focuses on providing small and medium-sized businesses with benefits packages for its employees that include healthcare and insurance, as well as human resources and compliance services.
Earlier this month, it expanded into wealth management by acquiring Overland Park, Kansas-based Resources Investment Advisors, a move which OneDigital said would allow it to combine retirement planning and healthcare services for its customers.
Based in Atlanta, OneDigital is used by more than 50,000 employers in the United States, according to its website. It generated revenue of $428 million through the end of September 2019, according to Moody's Investors Service Inc.
New Mountain bought a majority stake in OneDigital in 2017 for $560 million from Fidelity National Financial Ventures.
(Reporting by David French and Joshua Franklin in New York; Editing by Richard Chang)