GTCR and Recognize to Acquire TRANZACT

Rhea-AI Summary

GTCR and Recognize have announced an agreement to acquire TRANZACT, a leading direct-to-consumer insurance services company, from WTW PLC (NASDAQ: WTW) for $632.4 million. TRANZACT, headquartered in Fort Lee, NJ, provides marketing, sales, and technology solutions for insurance carriers. The company currently serves as the platform for several large insurance carrier partners and is the agent of record for over one million active insurance policies.

Andy Nelson, current President of TRANZACT, will become CEO of the standalone business after the acquisition. GTCR and Recognize plan to implement a strategy to drive continued innovation and expand TRANZACT's services. The transaction is expected to close by the end of 2024, subject to regulatory approvals and customary closing conditions.

Positive

• Acquisition value of $632.4 million indicates strong market position
• TRANZACT is agent of record for over one million active insurance policies
• Existing management team, including Andy Nelson, will continue to lead the business
• Potential for expansion and enhancement of services with additional capital
• Strong partnerships with recognized insurers position TRANZACT for continued market share growth

Negative

• Transition from being part of a larger company (WTW) to a standalone business may present challenges
• Regulatory approvals could potentially delay the closing of the transaction

Insights

Financial Analyst

The acquisition of TRANZACT by GTCR and Recognize for $632.4 million is a significant development for WTW. This divestiture will impact WTW's balance sheet and future revenue streams. The deal's value represents about 2.1% of WTW's current market cap, which is substantial but not transformative.

Key points to consider:

• The sale allows WTW to streamline its operations and potentially focus on core businesses.
• The cash influx could be used for debt reduction, share buybacks, or reinvestment in growth areas.
• Investors should watch for guidance on how WTW plans to allocate the proceeds and adjust earnings forecasts.
• Long-term impact will depend on TRANZACT's contribution to WTW's revenue and profitability, which isn't disclosed in the article.

While the divestiture might slightly reduce WTW's market presence in direct-to-consumer insurance services, it could lead to improved operational efficiency and capital allocation. The market's reaction will likely hinge on WTW's strategy for reinvesting or returning the capital to shareholders.

Insurance Industry Expert

This transaction highlights the evolving landscape of insurance distribution and marketing services. TRANZACT's position as a platform of choice for large insurance carriers, with over one million active policies, underscores the importance of direct-to-consumer channels in the insurance industry.

Key implications:

• The deal reflects the growing value of data-driven marketing models in insurance customer acquisition.
• TRANZACT's independence may allow for more agile innovation and partnerships across the industry.
• The focus on Medicare Advantage and Supplement markets aligns with demographic trends and the growing senior market.
• The involvement of private equity (GTCR) and a tech-focused investor (Recognize) suggests potential for technological advancements in insurance distribution.

For the broader insurance sector, this move may signal increased competition in digital customer acquisition and service delivery. Insurers not partnered with platforms like TRANZACT may need to reassess their direct-to-consumer strategies to remain competitive in an increasingly digital marketplace.

Innovative Leader in Insurance Distribution and Marketing Services to be Run by Existing Management Team, including Current President Andy Nelson

CHICAGO, Oct. 1, 2024 /PRNewswire/ -- GTCR, a leading private equity firm, announced today that it has signed a definitive agreement to acquire TRANZACT, a leading direct-to-consumer insurance services company, in a corporate carve-out from WTW PLC ("WTW", NASDAQ: WTW), a leading global advisory, broking and solutions company. GTCR is investing in TRANZACT alongside Recognize, a technology services investment platform. Andy Nelson, President of TRANZACT, and the existing management team will continue to lead the business and partner with GTCR and Recognize. The transaction values TRANZACT at $632.4 million.

Headquartered in Fort Lee, NJ, TRANZACT provides a full suite of capabilities across marketing and demand generation, sales execution, post-sales engagement and technology solutions. The business currently serves as the platform of choice for several large insurance carrier partners and is the agent of record for over one million active insurance policies across Medicare Advantage, Medicare Supplement and Life & Supplemental insurance markets.

GTCR and Recognize's investment will build on TRANZACT's strong performance and target areas of growth amongst its insurance carrier partners. Together, GTCR, Recognize and TRANZACT will implement a strategy to drive continued innovation, with additional capital available to help fund the expansion and enhancement of its services across this unique customer acquisition platform. As an independent company, TRANZACT will continue to focus on delivering best in class, reliable services and solutions across the insurance industry. 

"We are excited to partner with Recognize, Andy and the talented team at TRANZACT and continue to build on their innovative platform," said David Donnini, Managing Director and Head of Business & Consumer Services at GTCR. "We have known Andy for many years and have always admired TRANZACT and their truly unique, data-driven marketing model for the insurance industry. Over the years, TRANZACT has developed deep, trusted partnerships with some of the industry's most recognized insurers and, along with its strong brand, has positioned itself well to continue to gain share as we look to expand and enhance its offering. Importantly, they have also established a reputation for exceptional service and quality to the end consumers."

"As the insurance marketplace evolves, TRANZACT will continue to play a critical role in helping carriers deliver quality service to their customers and better react to their evolving needs," said David Wasserman, Co-Founder and Managing Partner of Recognize. "We are thrilled with the opportunity to partner with GTCR, and alongside Andy and this management team, which we have known for many years. Their ongoing leadership at TRANZACT will be invaluable as we look to further develop the company's capabilities, particularly their unique and specialized services offerings for the insurance markets."

Mr. Nelson, President of TRANZACT, will become CEO of the standalone business at closing, alongside the rest of the management team who will continue in their current roles. Mr. Nelson has been a senior executive with TRANZACT since 2003, President since 2016, and has spent his entire career in direct-to-consumer marketing and building deep expertise and relationships in the insurance sector.

GTCR has a longstanding relationship with Mr. Nelson, who currently serves as an independent director on the Board of Consumer Cellular, another portfolio company of the firm. Likewise, the Recognize leadership team was part of a group that had previously invested in TRANZACT before it was sold to WTW in 2019 and worked with Mr. Nelson closely during that time.

"Today marks an important milestone in TRANZACT's journey and we are excited about our future together with our new partners at GTCR and Recognize," said Mr. Nelson. "Over the last two decades, the TRANZACT team has worked tirelessly to build a leading insurance marketplace platform, known for quality service and innovative solutions. We are confident that in becoming an independent company, we will be able to continue to meet the needs of our insurance carrier partners and the consumers and drive growth across our business. We are incredibly grateful for the team at WTW for their support of our strategy and their partnership over the past five years."

"TRANZACT is a high-quality business, a leading provider in an area of the insurance market that we have followed for the last several years and know well," said Tom Ehrhart, Managing Director at GTCR. "Along with our partners at Recognize, we believe that TRANZACT's suite of services are well positioned for continued growth across the insurance landscape. Andy and his team are dynamic leaders, and we believe they are the right team to bring this company forward in a new chapter of independent growth."

The transaction is expected to close by the end of 2024, subject to regulatory approvals and customary closing conditions.

About GTCR
Founded in 1980, GTCR is a leading private equity firm that invests behind The Leaders Strategy™ – finding and partnering with management leaders in core domains to identify, acquire and build market-leading companies through organic growth and strategic acquisitions. GTCR is focused on investing in transformative growth in companies in the Business & Consumer Services, Financial Services & Technology, Healthcare and Technology, Media & Telecommunications sectors. Since its inception, GTCR has invested more than $25 billion in over 280 companies, and the firm currently manages $40 billion in equity capital. GTCR is based in Chicago with offices in New York and West Palm Beach. For more information, please visit www.gtcr.com. Follow us on LinkedIn.

About Recognize
Recognize is an investment platform exclusively focused on the digital services industry. The firm provides operational expertise, industry insights and strategic capital to innovative companies in this sector. To learn more, visit www.recognize.com. Follow us on LinkedIn.

About TRANZACT
TRANZACT specializes in addressing consumers' insurance needs through our comprehensive direct-to-consumer marketing, sales, servicing, and technology capabilities. We leverage our expertise in distribution solutions to actively engage consumers and deliver a best-in-class experience. Our innovative approach allows us to partner with leading insurance brands to serve customers with the highest level of care and attention.

For GTCR
Andrew Johnson
212-835-7042
andrew.johnson@gtcr.com

For Recognize
Chris Tofalli Public Relations
Chris Tofalli
914-834-4334
chris@tofallipr.com

This communication contains "forward-looking statements" within the Private Securities Litigation Reform Act of 1995. Any statements contained in this communication that are not statements of historical fact, including statements about GTCR, Recognize and TRANZACT's ability to consummate the proposed transaction and the expected benefits of the proposed transaction, may be deemed to be forward-looking statements. All such forward-looking statements are intended to provide management's current expectations for the future of TRANZACT based on assumptions relating to TRANZACT's business, the economy and other future conditions. Forward-looking statements generally can be identified through the use of words such as "believes," "anticipates," "may," "should," "will," "plans," "projects," "expects," "expectations," "estimates," "forecasts," "predicts," "targets," "prospects," "strategy," "signs," and other words of similar meaning in connection with the discussion of future performance, plans, actions or events. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Such risks and uncertainties include, among others: (i) the timing to consummate the proposed transaction, (ii) the risk that a condition of closing of the proposed transaction may not be satisfied or that the closing of the proposed transaction might otherwise not occur, (iii) the risk that a regulatory approval that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated, (iv) the diversion of management time on transaction-related matters, (v) risks related to disruption of management time from ongoing business operations due to the proposed transaction, (vi) the risk that the proposed transaction and its announcement could have an adverse effect on the ability of TRANZACT to retain customers and retain and hire key personnel and maintain relationships with its suppliers and customers, (vii) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the acquisition agreement, (viii) unexpected costs, charges or expenses resulting from the proposed transaction, (ix) worldwide economic or political changes that affect the markets that TRANZACT's businesses serve which could have an effect on demand for TRANZACT's products and impact TRANZACT's profitability and (x) disruptions in the global credit and financial markets, including diminished liquidity and credit availability, changes in international trade agreements, including tariffs and trade restrictions, cyber-security vulnerabilities, foreign currency volatility, swings in consumer confidence and spending, raw material pricing and supply issues, retention of key employees, increases in fuel prices and outcomes of legal proceedings, claims and investigations. Accordingly, actual results may differ materially from those contemplated by these forward-looking statements. Forward-looking statements are neither statements of historical fact nor guarantees or assurances of future performance.

These forward-looking statements speak only as of the date of this communication, and GTCR, Recognize and TRANZACT do not assume any obligation to update or revise any forward-looking statement made in this communication or that may from time to time be made by or on behalf of GTCR, Recognize or TRANZACT.

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SOURCE GTCR

FAQ

What is the acquisition value of TRANZACT from WTW (NASDAQ: WTW)?

GTCR and Recognize are acquiring TRANZACT from WTW (NASDAQ: WTW) for $632.4 million.

Who will lead TRANZACT after the acquisition?

Andy Nelson, the current President of TRANZACT, will become CEO of the standalone business after the acquisition, and the existing management team will continue in their current roles.

When is the TRANZACT acquisition expected to close?

The acquisition of TRANZACT is expected to close by the end of 2024, subject to regulatory approvals and customary closing conditions.

How many active insurance policies does TRANZACT manage?

TRANZACT is the agent of record for over one million active insurance policies across Medicare Advantage, Medicare Supplement, and Life & Supplemental insurance markets.