In a transaction announced Feb. 4, New Mountain Capital acquired CP Commercial Specialists, an audit company for the insurance sector, from ChoicePoint Inc., for $87 million in cash. The purchase was made at a multiple of 7.5 times EBITDA, which was $11.6 million for the trailing 12 months.
“We make money through growth, not debt,” said Steven Klinsky, founder and CEO of New Mountain. The buyout shop used New Mountain Partners L.P., its $770 million fund closed in July 2001.
With 1,100 employees and 24 offices in the U.S., Canada and Puerto Rico, CPCS provides audits and property surveys to the insurance industry, and inspection services for the U.S. Department of Homeland Security.
As part of ChoicePoint, CPCS was originally spun off from Equifax, the credit-reporting giant. According to CPCS President Bob Wickizer, he joined CPCS in 2000 in an effort to revamp the struggling subsidiary. The company has seen revenue increase an average of 18% per year since his hiring. “Our customer base includes most of the top 20 insurance companies, including Chubb, Travelers, AIG and Nationwide,” said Wickizer.
“Since 2000, we have increased sales from $42 million to $62 million [in 2002], and we are budgeted for $71 million in 2003,” said Wickizer. “ChoicePoint was a good parent company, but New Mountain will provide CPCS the opportunity to make key acquisitions.”