Diana Marszalek 29 May 2019 // 5:54PM GMT
SAN FRANCISCO —W2O Group has sold a piece of the company to New York investment firm New Mountain Capital, marking the second round of funding the company has received to further its expansion.
In announcing the deal, healthcare-focused W2O said it partnered with New Mountain Capital “to accelerate continued growth and scale of the company to meet the evolving needs of its clients to most effectively and efficiently communicate with and influence their key stakeholders in an increasingly digital and mobile world.”
"We are trying to live that integrated model," founder and CEO Jim Weiss told Holmes Report, adding that clients continue to ask for new services, capabilities and geographical reach.
The current W2O management team will remain in place, and Weiss and president Jennifer Gottlieb will serve on the board of directors. Financial terms were not disclosed. The transaction is expected to close in the first half of W2O’s fiscal year 2019 once approvals and conditions are met.
Growing W2O's 100-person data and analytics team, either through hires or acquisitions, is among the primary goals, Weiss said, adding that boosting those offerings is a critical component of keeping pace with the sector that most of its client operate in. "We believe healthcare will probably be the industry most impacted by technology, analytics and data over the next five years," he said.
In turn, Mountaingate Capital, the private equity firm that first partnered with W20 in 2016, will be ending its relationship with the agency. W2O Group used Mountaingate’s investment to fund its strategic growth, which included three acquisitions — Pure Communications, Marketeching and Sentient — as well as expanding staff and offerings. Since that time, the firm as doubled its revenue from $100m to more $200m and its staff, which is up to nearly 800 people, according to the firm.
“We achieved in three years what we planned to do in five, so we were looking for a new partner that could help us maintain our momentum while preserving our dynamic, entrepreneurial culture that provides consistent career growth, innovation, and learning and development opportunities for our people,” said Weiss.
“New Mountain is the right partner for this next inflection point in our evolution, one that aligns with an inflection point in healthcare as the sector continues to be impacted by technology at an unprecedented pace," he added. "Working with New Mountain, we will continue building and acquiring talent and companies with capabilities that clients have told us they need and want, and facilitate expansion in key markets overseas and in the US.”
He noted, there are no active acquisitions at the moment.
The move is not unexpected, given typical workings of private equity deals and W2O reaching its 5-year goals ahead of schedule. That is in line with the double-digit growth streak W2O has been on for 15+ years — which has shown no signs of slowing down. In 2018, the agency reported 22% organic growth. The firm has maintained a roster of long-standing healthcare clients, including Roche (since 2002), Genomic Health (since 2003), Pfizer (since 2006), Merck (since 2009), UnitedHealthcare (since 2014), AstraZeneca (since 2014), and abbvie (since 2014).