Strada acquired by HIG Capital

H.I.G. Capital officially finalizes the corporate carve-out of the Payroll and Professional Services Business from Alight, Inc., commanding an enterprise value of $1–10bn. Completed on July 12, 2024, the transaction transforms the former Alight, Inc. division into a newly independent company operating under the name Strada. The financial architecture of the buyout dictates a highly structured payment mechanism totaling up to 1.2 billion dollars, consisting of 1 billion dollars in upfront cash and a 50 million dollar seller note issued at closing. Furthermore, the purchase agreement includes a contingent note of up to 150 million dollars directly tied to Strada achieving specific financial targets during the 2025 fiscal year. Based on projected 2023 financial performance, this leveraged buyout translates to an EV/EBITDA multiple of 10x–18x and a valuation multiple of 1x–3x. To finance the transaction, H.I.G. Capital secured committed capital directly from its dedicated investment vehicle, H.I.G. Middle Market LBO Fund IV, L.P. The strategic rationale behind this divestiture allows the selling parent, Alight, Inc., steered by Chief Executive Officer Stephan Scholl, to reallocate capital toward its core employee wellbeing and benefits platform. Alight, Inc. formally announced its intention to utilize the transaction's net cash proceeds to substantially reduce its corporate debt, specifically targeting a pro forma net leverage ratio below three times, while allocating remaining funds to active share repurchases. For H.I.G. Capital, this investment isolates a highly embedded infrastructure asset capable of addressing complex global compliance mandates. The deal execution navigated a stringent regulatory landscape, successfully obtaining formal antitrust clearance from the European Commission on May 28, 2024. To orchestrate this complex cross-border transfer of control, H.I.G. Capital mandated a financial advisory consortium comprising Guggenheim Securities and Truist Securities, alongside Kirkland & Ellis and AZB & Partners for legal structuring. Conversely, the board of directors at Alight, Inc. retained J.P. Morgan Securities to manage the financial evaluation, with Simpson Thacher & Bartlett providing exclusive legal counsel.

The acquisition of Strada is part of the growth strategy of HIG Capital, which already has several external growth operations under its belt, notably DX Group in 2024.