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New Mountain Capital is nearing a deal to buy a large stake in healthcare software provider Office Ally from rival private equity group Francisco Partners that values the business at about $1.8bn, according to people familiar with the matter.
The New York-based private equity group, which has $55bn of assets under management, beat other bidders in a competitive auction process, the people said. A deal was expected to be announced in the coming week unless any last-minute issues arose.
As part of the deal, New Mountain and Francisco Partners will jointly control Office Ally, allowing Francisco Partners to cash out part of their stake.
If a deal is clinched, it would be the latest in a series of successful sponsor exits, which contrast with a dry spell for mergers and acquisitions more broadly as market turmoil undermines dealmaking.
This week, Insight Partners sold drug development software company Dotmatics to Siemens AG for $5.1bn and Brookfield secured a deal to buy lab equipment supplier Antylia Scientific from GTCR for $1.4bn. There are also several other sponsor-backed companies on the block.
Dealmaking where private equity groups sell assets between each other has also been boosted by their need to offload long-held portfolio companies and others’ excitement to invest newer funds.
New Mountain and Francisco Partners declined to comment. Office Ally did not respond to requests for comment.
Founded in 2000, Office Ally serves as a clearing house for healthcare insurance claims, verifying patient details and submitting claims. The company processes nearly 1bn transactions a year for 6,000 payers across the US, having handled more than $250bn of transactions in its history.
Francisco Partners, which specialises in technology investments, bought the business in 2021 for an undisclosed amount. Last month, Francisco Partners struck a $2.4bn deal, including debt, for energy software company Quorom.
In the first quarter of this year, there were 406 total private equity exits in the US with a combined deal value of $194.1bn, compared with 332 exits at a value of $88.2bn during the same period last year, according to data tracker PitchBook. Meanwhile, wider M&A activity during the first quarter slipped to decade lows.