Pareto Captive Services said to near deal with sponsor

  • Adviser to Pareto: Triple Tree
  • Closely held company founded by CEO Andrew Cavenagh in 2011
  • Process said to have narrowed to one party

Pareto Captive Services, which helps mitigate employee benefit costs for midsize businesses, is in the late stages of its sales process, according to people familiar with the matter.

Triple Tree is providing financial advice to Philadelphia, Pennsylvania-based Pareto, the people said.

The company is projecting 2019 pro forma Ebitda just south of $12 million on approximately $26 million of revenue, one of the people said. The company was marketed off of an adjusted 2019 figure closer to $15 million, a second person with knowledge of the matter added.

A deal for Pareto ought to command a more than $200 million valuation, one of the people suggested.

A third person, who said the process has narrowed to a final bidder, speculated the company would command a 12x to 13x multiple of trailing-12-month Ebitda.

While Pareto has grown rapidly year-over-year, one of the people said questions around margin sustainability caused at least one sponsor to pass.

Founded by CEO Andrew Cavenagh in 2011, Pareto forms and manages employee benefit group captives, allowing self-insuring employers to band together to reduce costs and increase control over their employee benefit programs.

The company targets mid-sized employers with 50 to 500 employees that are fully insured, with entities on average on the lower end of that range.

Pareto has more recently begun opening its own clinics.

In partnership with R-Health, which manages more than 40 practices in New Jersey and Pennsylvania, Pareto last fall opened two wellness clinics in the Kansas City area.

The clinics are available to Pareto captive members within that market, with participating companies offering access to the primary care practices as an employee benefit.

Pareto said it planned to open additional locations in 2019 in the Greater Philadelphia area as demand grows.

Pareto’s Cavenagh and a Triple Tree representative did not return requests for comment on Monday.

Action item: Reach out to Pareto at 215.240.6529