Alight Announces Agreement to Sell Payroll and Professional Services Business for up to $1.2 Billion

Alight, Inc. (NYSE: ALIT), a leading cloud-based human capital technology and services provider, today announced that it has signed a definitive agreement to sell its Professional Services segment and its Payroll & HCM Outsourcing businesses within the Employer Solutions segment (the “Payroll & Professional Services business”) to an affiliate of H.I.G. Capital for up to $1.2 billion, subject to certain adjustments. This values the Payroll & Professional Services business at a multiple of approximately 10 times its estimated 2023 adjusted EBITDA and 24 times its estimated unlevered free cash flow.

Following the transaction, Alight and the Payroll & Professional Services business will establish a commercial partnership to bolster their collective competitiveness, coupling world-class service capabilities with a compelling value proposition for clients.

The transaction is a pivotal step, accelerating Alight’s evolution into a more simplified and focused employee wellbeing and benefits platform company. The Alight Worklife platform is optimally positioned to help clients enhance employee engagement and achieve cost savings through advanced solutions. By concentrating resources on strengthening its platform, service capabilities, and go-to-market strategy, Alight will be even better positioned to drive improved cost, experience and productivity outcomes for its clients.

Throughout its transformation, Alight has delivered strong growth while building a robust pipeline and record backlog of revenue under contract. Alight’s focus over the last four years around standardization, automation, and Cloud migration has significantly enhanced the margin profile of the remaining core business. As a result, Alight will achieve nearly 300 basis points of adjusted EBITDA margin expansion upon deal closing. Additionally, the Company is increasing its mid-term adjusted EBITDA margin target to 28%, which would mark a total of 600 basis points of potential margin expansion versus 2023. Alight also expects to accelerate the achievement of other mid-term financial objectives including higher cash generation and a de-levered balance sheet with net leverage ratio expected to be below three times. This will enable continued strategic investment in the business and the return of excess capital to shareholders.