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THL Makes use of Public Cloud to Win Bids and Spice up Portfolio Firms

  • The cloud has transform a key piece of private-equity company THL’s funding playbook. 
  • THL pitches acquisition objectives on lowered prices by way of a transfer to the cloud.
  • The highest exec at the back of the tactic walks us thru how the PE company is the usage of the cloud.

For lots of on Wall Side road, the general public cloud has been about inside transformation. However at private-equity company Thomas H. Lee Companions (THL), the point of interest is somewhat the other. 

Transferring to the general public cloud permits corporations to modernize decades-old generation, save prices by means of offloading IT upkeep, and boost up their information analytics. 

However for THL, the cloud has transform the most important a part of the making an investment large’s playbook for successful over acquisition objectives.

The Boston-based company’s candy spot is making an investment in mid-market corporations within the tech, monetary products and services, and healthcare industries — a few of which have not skilled the industry spice up that the cloud can be offering. Mapping out possible operational financial savings by way of the cloud has transform a key a part of the company’s pitch to corporations it desires to obtain, Mark Benaquista, a managing director at THL, instructed Insider. 

The cloud shall we THL be extra competitive within the bidding procedure

THL, which has invested in and bought masses of businesses, leans at the Strategic Assets Team (SRG) for its externally going through cloud paintings. SRG companions carefully with THL’s deal groups to spot expansion alternatives for portcos with generation. A lot of the strategic and operational paintings is overseen by means of Benaquista and Hitesh Anand, along with leaning on third-party companions, like Amazon and Microsoft, to help in the true execution of the plan.

Mark Benaquista, managing director, THL

Mark Benaquista, managing director, THL.


THL has noticed mounting festival within the funding area, Benaquista mentioned. He likened the due diligence and courtship procedure for founders and CEOs to hurry courting with a host of funding corporations. 

However the cloud, with its promise of price financial savings and simple innovation, helps THL stand out within the bidding procedure, Benaquista mentioned.

“We see some nuance that permits us to be extra aggressive, power efficiencies, or cut back operational price,” which supplies the funding workforce extra flexibility within the aggressive deal procedure, Benaquista added. “In a different way, if you are simply having a look on the EBITDA of an organization, chances are you’ll omit the finer issues of the way the tech stack performs into the optimization alternative,” he mentioned.

The cloud lets in THL to be extra aggressive in bidding wars

In a single case round 2017, THL was once competing with different funding corporations to obtain Ten-X, an internet real-estate market that presented each residential and industrial houses that had prior to now been foreclosed. 

All the way through the courtship procedure, THL had performed some forecasting round price financial savings that would include migrating the corporate to the cloud and shuttering its information facilities. The yearly price to care for the ones information facilities was once kind of $60 million. What was once extra, the knowledge facilities have been short of substitute and would have price greater than $10 million to refresh, Benaquista mentioned. 

THL pitched Ten-X on a wholesale transfer to the cloud, and presented to assist the corporate with the migration. THL gained the deal, and ended up slicing that $60 million-per-year IT infrastructure price to $30 million, Benaquista mentioned. 

Transferring to the cloud would end up to be really helpful past simply the preliminary price financial savings. 

Sooner or later, as a part of the transfer to the cloud, THL was once ready to separate up Ten-X’s industrial and home companies with the purpose of promoting the previous. 

When the pandemic hit and the federal government issued eviction moratoriums, Ten-X’s residential real-estate industry, fueled by means of foreclosed houses, had come to a standstill, Benaquista mentioned. 

As a substitute of bleeding capital, Ten-X was once ready to dial down its operations within the cloud, one thing it could not have performed with on-premise information facilities, and stem the industry from hemorrhaging money, he mentioned. In mid-2020, THL offered the industrial real-estate industry for $190 million.

The cloud is helping portcos develop income whilst preserving back-office prices flat

In every other case, THL used the cloud to modernize back-office operations for a portco that was once concerned about recruiting and hanging touring nurses (the portco was once sooner or later folded into healthcare-staffing company, Ingenovis).  

Previous to THL’s involvement, the corporate would recruit and ramp up nurses according to shoppers’ present open positions and desires. THL carried out a cloud-based answer that concerned self-service registration and credentialing. 

“Assume Uber for nursing,” Benaquista mentioned. 

The brand new operation allowed the portco to deploy nurses inside of 24 hours. All the way through Storm Harvey in 2017, nurses have been ready to reach by way of helicopter to keep away from flood waters.

“Had we now not had that answer in position, it could have taken every week or extra to search out verified nurses,” Benaquista mentioned, including that back-office operations stayed “materially flat” whilst nurses on web page grew by means of six instances.

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