Alight to sell Payroll & Professional Services business in $1.2B transaction

Alight announced that it has signed a definitive agreement to sell its Professional Services segment and its Payroll & HCM Outsourcing businesses within the Employer Solutions segment to an affiliate of H.I.G. Capital for up to $1.2B, subject to certain adjustments. This values the Payroll & Professional Services business at a multiple of approximately 10 times its estimated 2023 adjusted EBITDA and 24 times its estimated unlevered free cash flow. Following the transaction, Alight and the Payroll & Professional Services business will establish a commercial partnership. Pursuant to the terms of the agreement, an affiliate of H.I.G. Capital will acquire Alight’s Payroll & HCM Outsourcing businesses within the Employer Solutions segment which offer North American payroll services, global payroll services, and HCM outsourcing services and Alight’s Professional Services segment, which offers application management and cloud deployment support for Workday, SAP and Oracle. The sale represents a transaction value of up to $1.2B, in the form of $1B in cash and up to $200M in seller notes, of which $150M is contingent upon the Payroll & Professional Services business’ 2025 financial performance. Alight expects to use the net after-tax cash proceeds to reduce debt, return capital and for general corporate purposes, including reinvestment into growth opportunities. The transaction has been approved by Alight’s board and is expected to close by mid-year 2024, subject to customary closing conditions, including regulatory approvals. The company expects to update its full-year 2024 financial guidance after closing.