Kohlberg & Company to acquire majority stake in Engage PEO

Lightyear Capital and Engage Management Team Retain Minority Ownership Stakes


Kohlberg & Company, LLC (“Kohlberg”) today announced a strategic partnership with Engage PEO (“Engage” or “the Company”), a leading professional employer organization (“PEO”) providing HR outsourcing solutions to small and mid-sized businesses across the U.S., providing a critical competitive advantage. As part of this transaction, Kohlberg will acquire a majority stake and partner with existing investor Lightyear Capital LLC (“Lightyear”), and the Engage management team, both of which will retain a minority investment, to further accelerate the company’s strong growth trajectory.

Engage was founded in 2011 by Chief Executive Officer Jay Starkman to build a new kind of PEO focused on the client experience and quality of service across all aspects of the organization, with an innovative business model and unique approach to HR delivery that also embraces brokers and agents creating a partnership that translates to added value for their mutual clients.

In an environment where talent is more important than ever, Engage has successfully helped its clients navigate an increasingly complex HR and regulatory landscape. Engage has helped improve the efficiency and cost-effectiveness of HR and safety functions, ensure compliance with the labyrinth of regulations employers face today, and open doors to a strong suite of HR benefits and services, all of which help clients become an employer of choice for top talent within their respective industries and drive cost savings.

“This transaction marks a significant milestone for Engage and our clients and we are excited to partner with the Kohlberg team for our next phase of growth,” said Jay Starkman, Chief Executive Officer of Engage. “The Kohlberg team brings substantial value to Engage’s growth strategy, specifically with their deep network and experience across the insurance brokerage channel, as well as their track record partnering with management teams to accelerate organic and M&A driven growth. Our focus has been and will remain client-centric, ensuring we continue to serve as a trusted partner and co-employer and help streamline HR processes by managing increasingly complex employee-related matters such as payroll, tax compliance, health benefits, workers compensation and safety, and HR compliance. We are grateful for the role that Lightyear has played in our growth and look forward to their continued engagement in our success going forward.”

Over its 36-year history, Kohlberg’s investments have been made in companies with leading positions in growing markets, in partnership with world-class management teams. Financial and outsourced businesses services have long been a focus for Kohlberg, and the firm has executed numerous successful investments in the sector over the past decade.

“Engage provides a truly differentiated PEO service offering that delivers unique value to its clients and channel partners,” said Alex Forrey, Managing Director at Kohlberg & Company. “We believe the value proposition Jay and his team have built solves many of the critical issues businesses face in today’s complex operating environment and we are excited to be partnering together.”

“Kohlberg has studied the PEO industry and business model for over a decade, and the key drivers of growth for PEOs align squarely with the long-term themes within our Financial & Compliance Services Core Practice Area,” said Seth Hollander, Partner at Kohlberg & Company. “We look forward to collaborating with Jay and Lightyear to continue driving Engage’s industry leading organic growth and further strengthen its transformative M&A strategy.”

Mark Vassallo, Managing Partner of Lightyear, added, “Our investment in Engage is a great example of Lightyear’s thematic sourcing and partnership approach. Our successful investment in Engage has expanded our investment thesis into the broader human capital management sector. We are excited to remain a partner in the business and to continue to capitalize on the strong industry tailwinds.”

“Lightyear proactively identified Engage as an asset within the PEO space that was poised for substantial growth, and we were excited to see that our thesis came to life during our ownership,” stated Jay Comerford, Managing Director of Lightyear. “We collaborated with the company on a number of key strategic initiatives including expanding the sales organization, launching a workers’ compensation program, and scaling the business by completing four add-on acquisitions. Overall, these efforts led to approximately four-times growth on the bottom line.”

BofA Securities served as financial advisor to Engage and Davis Polk & Wardwell LLP served as legal counsel to Engage and Lightyear. Piper Sandler & Co. served as financial advisor and Ropes & Gray LLP acted as legal counsel to Kohlberg.

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