Aon sells HR BPO business to Blackstone for up to $4.8 billion
Aon in February 2017 sold its human resources business process outsourcing (BPO) platform and operations to private equity firm and alternative asset manager Blackstone for $4.3 billion plus an additional $500 million earn-out based on future performance. Closing is expected by the end of the second quarter of 2017.
The sale, according to Aon’s website, is a “natural extension of the strategy the firm has pursued over the last decade.”, which begs the question why the disposal of that unit has not happened earlier. Aon will allocate part of the proceeds from this transaction to increase its share repurchase program by $5.0 billion, bringing the total amount currently authorized to approximately $7.7 billion. Furthermore, the exit from a TPA activity reinforces the firm’s focus on risk, retirement, and health; going forward, some of the available capital may be allocated to external growth initiatives in emerging areas such as cyber risk advisory and health brokerage solutions.
The new company now owned by Blackstone is the largest benefits administration platform in the United States, and a leading services provider for cloud-based HR management systems. It serves approximately 15 percent of the U.S. working population across more than 1,400 companies. The new, standalone team of 22,000 people is led by Chris Michalak, who since 2012 was Aon Hewitt’s Global Chief Commercial Officer. Previously, he had been C.O.O. of Aon Hewitt’s consulting business in the Americas; Chief Commercial Officer of Aon’s U.S. Consulting division; Executive Managing Director at Buck Consultants; Principal at Mellon Financial and at Towers Perrin; and a Consultant at Holden International and Accenture. He holds a B.A. in Marketing from Michigan State University and an M.B.A. from Northwestern University – Kellogg.