New Mountain Capital has ended discussions over a proposed transaction led by former executive Matt Holt to acquire five of the firm’s portfolio companies, scrapping what would have been a deal valued at about $32bn, according to a report by Bloomberg.
The firm reportedly informed investors in a letter that it declined to proceed with Holt’s proposal after reviewing several revised offers. The latest version of the deal would have generated more than $14bn of proceeds for New Mountain’s funds.
Holt, who joined New Mountain in 2001, announced in December that he was leaving his role as president of private equity to launch a new venture called Thoreau.
The proposed transaction would have combined portfolio companies Datavant, Swoop, Machinify, Smarter Technologies, and Office Ally into a technology platform focused on using artificial intelligence to help reduce healthcare costs.
New Mountain said Holt failed to meet an earlier deadline to finalise the offer and that a revised proposal submitted last week introduced additional concerns, including deferred payments, unresolved governance issues and the structure of the financing. The firm said the prolonged process had also become a distraction for management and portfolio company decision-making.
The deal was expected to include more than $12bn of debt financing from JPMorgan and Goldman Sachs, alongside equity commitments from several other investors. A subsequent revised proposal led by ICG Strategic Equity, which sought to address concerns over deferred payments and governance, was also reportedly rejected.
New Mountain said it may still pursue the strategy of combining some of the healthcare technology companies but without Holt’s involvement, and is considering a range of potential structures and exit timelines.
