decor decor
"The first wealth is health."

-Ralph Waldo Emerson

Aetna to Acquire bswift for $400 million

martinwolf Transaction Analysis

Financial Information

  • Enterprise Value: $400 Million

Transaction Facts

  • Health insurer Aetna, Inc. (NYSE:AET) announced today that it was acquiring insurance exchange technology company bswift for $400 million.
  • Aetna, the US’s third-largest health insurer, is heavily invested in healthcare exchanges – the company currently sells insurance on public exchanges created by the US healthcare reform law in 18 states as well as on various private exchanges.
  • This transaction announcement comes just seven months after bswift received a $51 million investment from Great Hill Equity Partners in April, and at the time news articles reported that the Chicago-based company had been growing at more than 40 percent annually for the past four years. Access to significant private equity capital is often a sign for presumptive acquirers that valuations will rise quickly.

Strong Positioning Means High Value Creation 

  • Success Leads to Flexibility: Since the US healthcare reform law was signed in March 2010, Aetna’s share price has risen almost 140 percent, creating approximately $20 billion of equity value for Aetna shareholders. This transaction amounts to a small fraction of that number and helps secure Aetna’s continued access to the new customers who sign on to the healthcare exchanges each season.
  • Preparing for Premium: bswift’s high growth journey began when it was selected in 2009 as the technology provider for Utah’s state health exchange (which, along with that of Massachusetts became the basis of the broader US healthcare reform act). Though bswift ended its role in the marketplace in July 2013, the experience positioned bswift for success once the US healthcare law created exchanges on a nationwide scale.
  • Leadership Premium:  Like Benefitfocus (Nasdaq:BNFT), bswift is a recognized leader in its space and commands a premium. Benefitfocus, which currently trades at 5.6x revenue, is a relevant comparable and, for Aetna, a warning sign of how high bswift’s valuation may get if Aetna were to wait and try to acquire it later.
  • M&A as a Constant: In 2011-12, there was a wave of M&A in the HCM, or human capital management, space (including SS&C’s acquisition of BenefitsXML and Accel-KKR’s investment in Infinisource). Now that the healthcare reform law has been in effect for a full year and isn’t going anywhere, we expect a new wave of M&A as providers adapt to changing demand.

For more information, view the press release by clicking here.

martinwolf was not the advisor in this transaction.

 

previous post Back to Articles next post

13 May 2021

NWN Corp. Acquires Carousel Industries

Financial Information ($USD) Not Disclosed Transaction Details NWN Corporation, a leading Cloud Communications Service Provider (CCSP), announced yesterday that it will acquire fellow solutions provider Carousel Industries. Financial terms of the deal were not disclosed. New State Capital Partners, majority stakeholder of NWN since 2015, is backing the transaction which will form a combined company...

13 May 2021

Softchoice Files for IPO

Announcement Details Softchoice Corporation, a leading technology solutions provider in North America, announced yesterday that it has filed a preliminary prospectus for an initial public offering. Softchoice’s common shares will be traded on the Toronto Stock Exchange, although the number of shares and price have not yet been disclosed. Before Toronto-based Softchoice was taken private in...

15 Apr 2021

KKR to Acquire Ensono in $1.7 Billion Deal

Financial Information ($USD) Enterprise Value:    $1.7 Billion Transaction Details Global investment firm KKR & Co, Inc. (NYSE: KKR) is acquiring leading hybrid IT services provider Ensono from private equity firms Charlesbank Capital Partners and M/C Partners. While financials have not been disclosed, the transaction is valued at $1.7 billion inclusive of debt, according to Reuters....