One Equity Partners’ exit of business process outsourcing (BPO) and customer relationship management company OneLink Holdings announced last week registered at approximately 5x the private equity firm’s investment. Senior managing director Greg Belinfanti tells Mergers & Acquisitions how his fund notched the win by executing on an organic growth strategy.
“We wanted a customer base in higher growth, tech companies,” Belinfanti says. OneLink, a call center hub fielding Spanish language inquiries for other corporates, had a highly concentrated customer roster when One Equity invested.
“The growth nature of these companies means they valued our services more as an extension of their customer acquisition engine and are better paying. We wanted to grow with those companies,” Belinfanti explains. “Candidly, it became a case of success begets success: we got Lyft then a gaming company called Supercell, Mercado Libre, the eBay of Latam, and Rappi, the Uber Eats in Latam. With each new economy customer that we got, the others looked at us and said, ‘OneLink knows how to cater to our demographic because they are also a high growth company.”
OneLink’s initial allure was grounded its culture as well as its focus on a high growth segment of the customer relationship management market, Belinfanti says. The Latin America-based portfolio company’s call center employees receive English lessons to expand their skill sets and worked in campuses with amenities unmatched by competitors: on-site athletic facilities, periodic movie nights for families, cafeteria invites for relatives of employees to sell food on-site. The moves drove an attrition rate 40% lower than OneLink’s peers.
These cultural draws took on added relevance given One Equity’s thesis on OneLink’s core markets.
“We’ve spent a lot of time looking at the BPO and customer experience sector, and we thought Latam nearshoring to the U.S. was going to become increasingly important,” says Belinfanti. “A demographic shift is taking place in the U.S. It’s clear to us we’ll need more Spanish-speaking and bilingual agents. And the technology and telephony capabilities in Latam have increased dramatically making it more competitive with places like the Philippines and India with significantly less travel.”
The cost effectiveness of OneLink’s nearshore offerings and revenue growth created a significant opportunity on exit: the company’s sale to strategic Webhelp came in at a double digit multiple to trailing earnings before interest, depreciation, and amortization, and represents an internal rate of return of 65% according to a source familiar with the matter.
That return is all the more compelling given that it was driven by organic growth, a departure from One Equity’s usual buy and build strategy.
“The biggest impediment to acquisitions was management bandwidth,” says Belinfanti. “The company is growing so quickly that to dilute management’s focus on acquisitions didn’t make as much sense because we were seeing [strong] organic growth. We, at One Equity Partners, tend to be biased toward acquisitions, but given the growth pattern we decided the best use of resources was to double down on organic growth.”
Current portfolio company ResultsCX should continue to benefit from the same tailwinds, Belinfanti notes. As U.S. companies look for added call center capacity closer to home, this market could continue to generate strong returns.