Vertafore Changes Hands From TPG to Bain Capital and Vista Equity Partners

Vertafore, the latest example of financial investors taking interest in insurance technology suppliers, was acquired by TPG Capital  in 2010 in a leveraged buyout for $1.4 billion.

(Bar at the Beardslee Public House in Bothell, Wash., home of Vertafore.) 

Vertafore (Bothell, Wash.), Vertafore a leader in information and software for the broker community, has announced that Bain Capital Private Equity and Vista Equity Partners have entered into a definitive agreement to jointly acquire the company from TPG Capital under undisclosed terms. The sale is expected to close during the third quarter.

Dormant Horizontal Vendors

The deal is a sign of continuing activity by financial investors in the insurance space, notes Matt Josefowicz, president and CEO of research and advisory firm Novarica (Boston). Financial investors have been more active lately in the insurance technology space, especially as the large horizontal tech firms have become less active in the insurance vertical,” he comments.

Vertafore was acquired by TPG Capital  in 2010 in a leveraged buyout for $1.4 billion. It was earlier acquired by Hellman & Friedman and JMI Equity in 2004.

Tom Scales, Research Director, Celent.

Tom Scales, Research Director, Celent.

“We are thrilled to be working with two great private investors like Bain Capital Private Equity and Vista Equity Partners to fuel the future growth of Vertafore, and are looking forward to a great partnership that will benefit our customers, our employees, and our industry,” comments Jeff Hawn, Chairman & CEO at Vertafore. “We are also thankful for the strong leadership and support from TPG over the past six years and appreciate all they’ve done to prepare us for the next phase of our company’s growth.”

The Vertafore transaction represents a “mega trend” that involves the gamut of insurance technology suppliers from mature software providers to startups, according to Deb Smallwood, founder of research and advisory firm SMA (Boston).  “  Transactions are happening weekly, and P&C distribution and the agent and carrier connectivity are prime targets—so the Vertafore acquisition by Bain and Vista is unsurprising,” she comments.

Fueling the Digital, Connected World

“As we see the unfolding of the omnichannel promise, the transformative solutions for small commercial processing, and the explosion of customer engagement from all angles—this investment will fuel the digital connected world for brokers, agents, and carriers,” Smallwood adds. “It will be interesting to watch the roadmap for the focus and investments in such a hot and changing market place.”

Vertafore’s acquiring companies cite its mission critical product offerings, compelling business model and large customer base in their comments about the deal.

“The company has been at the forefront of product innovation and bundling solutions to help make agency management more efficient. We look forward to partnering with Vertafore to drive further growth and customer satisfaction,” comments Ian Loring, a Managing Director at Bain Capital Private Equity.

“Vista is enthusiastic about Vertafore’s software and information solutions, employees, and the vast customer base they serve today,” says Brian Sheth,  Co-Founder and President of Vista. “We’re eager to work with the team to continue to develop best-in-class products and services for the insurance industry, grow the business, and expand market share.”

Deb Smallwood, Founder, SMA.

Deb Smallwood, Founder, SMA.

TPG Capital partner Bryan Taylor noted  Vertafore’s tremendous growth over the last six years. “Vertafore has become a clear leader in the industry by expanding its product line, strengthening its workforce, and putting increased resources toward R&D,” he comments. “Today’s announcement is the result of many years of hard work and the culmination of a great partnership with Jeff and the Vertafore management team.”

Win-Win Transaction

“Having worked with Vertafore and Sircon for a number of years, this seems like a win-win for all companies involved,” observes Tom Scales, Research Director, Celent (Boston). “Vertafore is complimentary with others vendors in the industry and have a broad range of partners. This transaction likely brings in fresh capital to both expand their offerings and improve their current product set.”

BofA Merrill Lynch is serving as the exclusive financial advisor and Ropes & Gray LLP as the legal advisor to Vertafore and TPG in connection with the transaction, according to a Vertafore statement. Credit Suisse is providing the financing commitments and acting as financial advisor to Bain Capital Private Equity and Vista. Kirkland & Ellis LLP is acting as legal counsel and EY LLP is serving as accounting advisor to Bain Capital Private Equity and Vista.

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Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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