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MidOcean to quadruple its money with System One sale: source

MidOcean Partners scored another strong return with the sale of System One to Thomas H. Lee Partners.

THL on Sept. 20 said it agreed to invest in System One and buy MidOcean’s stake. Terms weren’t disclosed. New York-based MidOcean expects to make 4.1x its money with the sale, a source familiar with the transaction said.

System One, Pittsburgh, is a professional staffing firm with more than 6,000 employees. It provides staffing services to sectors including engineering, clinical/scientific, IT and legal.

MidOcean acquired a majority of System One in December 2012. The enterprise value of the deal was estimated at less than $130 million, press reports said.

Under MidOcean’s ownership, System One completed several tuck-in deals including the buys of Joule, Aecom Quality Program, Precision Resource Company and Alta IT Services.

The System One transaction comes roughly a week after the sale of Penton. Informa on Sept. 15 agreed to buy Penton for $1.56 billion from MidOcean and Wasserstein & Co. MidOcean expects to make a 3.5x return on the Penton sale, Buyouts reported.

In 2015, MidOcean sold Global Knowledge, a provider of IT and business skills training, to Rhone Capital. MidOcean made a 5.5x return with the sale, the source said.

All three deals — System One, Penton and Global Knowledge — are from MidOcean’s third fund, which closed on $1.25 billion in 2007. Fund III generated a 9.7 percent net internal rate of return and a 1.9x investment multiple as of June 30, the source said.

Fund III has been challenged. MidOcean made several investments before Lehman Brothers collapsed in fall 2008, which hurt the pool’s early performance, Buyouts has reported. One of those deals, Sbarro, the pizza chain, fell into bankruptcy in 2011.

MidOcean in October 2015 closed on a $300 million bridge fund, Preqin said. The pool gave MidOcean time to harvest investments from its third flagship fund before coming to market with its next major pool, Buyouts reported.

System One could not be reached for comment.

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