Professional services firm Aon announced April 25 that it has completed its acquisition of NFP, expanding the firm’s presence in the large and fast-growing middle-market segment.
The deal comprises funds affiliated with NFP's main capital sponsor, private-equity firm Madison Dearborn Partners (MDP), and funds affiliated with HPS Investment Partners, for an enterprise value of $13 billion, including $7 billion cash and assumed liabilities, as well as $6 billion in equity in the form of 19 million Aon shares.
The acquisition of NFP also includes the pick-up of more than 7,700 professionals and added capabilities across property and casualty brokerage, benefits consulting, wealth management and retirement plan advisory, the announcement notes.
“It is a historic day for our firm as we welcome NFP to Aon and work together to help clients address increasing volatility across risk and people issues,” Aon CEO Greg Case said in a statement. “With high performing teams and leading content and capability—further enabled by our Aon Business Services operating platform—we will create more value for our clients, while also enhancing long-term shareholder value creation for investors.”
As an Aon company, NFP will operate as an “independent and connected” platform delivering Risk Capital and Human Capital capabilities from across Aon and will continue to be led by NFP CEO Doug Hammond, who will report to Aon President Eric Andersen, the announcement further explains.
“The idea of being 'independent and connected' is key to how we will collaborate and create more options for clients across our Risk Capital and Human Capital capabilities,” stated Andersen. “Doug and his team have built an exceptional client-centered business and we are focused on using our Aon Business Services platform to scale delivery of new capabilities to small and middle market clients across Aon and NFP.”
“With Aon's acquisition of NFP now complete, we are starting an exciting new chapter in our company's history,” added Hammond. “Aon's diverse resources and global reach enhance our ability to serve the dynamic risk, workforce, wealth management and retirement needs of our clients. We remain focused on both advancing a culture colleagues want to be part of and working together to contribute to our collective growth and success.”
The faster-than-anticipated close date is also expected to contribute to accretion and free cash flow benefit realization a year earlier than modeled, Aon notes.
When the deal was first announced, Wise Rhino’s Dick Darian had observed that it is a “next step” in the evolution of the retirement plan space, where aggregation firms themselves begin to aggregate.
“Aon as an aggregator makes sense for a number of reasons, including the need to go down market in retirement consulting and their historical acumen in building out participant engagement solutions,” he explained. “Importantly, [there is the] need for a larger organization with more/better talent to assist a firm like NFP with engaging and monetizing the participant—a challenge for all the retirement aggregators.”
UBS Investment Bank served as the financial advisor to Aon on the transaction. Citi served as a financial advisor and advised Aon on the transaction financing. Evercore functioned as lead financial advisor to NFP, with support from Barclays, BofA Securities, Inc., Deutsche Bank Securities Inc., Jefferies LLC and TD Securities.
