The Deal: Thoma Bravo Profits on Flip of Digital Insight

NEW YORK (The Deal) -- Private equity firm Thoma Bravo is exiting portfolio company Digital Insight in a sale to strategic player NCR Corp. (NCR) for $1.65 billion only four months after acquiring the target from Intuit (INTU). The deal was announced late Monday, Dec. 2.

That could mean the PE owner will recoup about 3.4 times the equity it used to finance its acquisition, assuming it took out no dividends and that the company does not pay down debt before the deal closes.

In October, Standard & Poor's said the private equity firm put in "roughly 47%" of equity to finance the $1.025 billion deal when it acquired Digital Insight from Intuit. The deal included $620 million in debt financing provided by Jefferies Group.

And though the holding time for the PE firm was inordinately short, a source said it wasn't Thoma Bravo's intention to flip the company; rather, NCR approached the firm directly about a deal.

NCR's acquisition of Digital Insight is expected to close in the first quarter of 2014.

Moody's Investors Service assigned a B3 rating to Digital Insight with positive outlook in October after Thoma Bravo finalized the acquisition of the company, but pointed out the target ended up with "very high initial leverage" of "well over 7x." The ratings agency also said it expected the company to cut its leverage down to 6 times by the end of fiscal year 2015.

In a conference call held to discuss the deal, NCR said that the transaction is valued at a multiple of 15.7 times pro-forma EBITDA of $105 million for the 12 months up to July 31.

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