SAN FRANCISCO: W2O has received an investment from private equity firm New Mountain Capital.
The New York-based private equity firm is replacing W2O’s previous investor Mountaingate Capital. Financial details of the investment were not disclosed.
Mountaingate took a stake in W2O in 2016 with a five-year growth plan in place. W2O CEO Jim Weiss said that the agency has already met its obligations under the five-year plan after only three years with Mountaingate.
"Since that time we’ve approximately doubled in size in terms of revenue," Weiss said. "We’ve done in three years what we planned to do in five, and we wanted to find a partner that could continue that momentum. New Mountain Capital has a very similar mindset in terms of how to work with a partner and has a track record of consistent investment."
Weiss said partnering with New Mountain would help the agency bolster its capabilities and scale. He is particularly focused on continuing to expand W2O’s digital and analytics offering and geographic reach.
In the wake of Mountaingate’s 2016 investment, W2O acquired three agencies: analytics and media agency Sentient, research analytics firm Marketeching and health consultancy Pure Communications. W2O has nearly doubled in both staff size and revenue since that investment.
In 2018, the firm reported $177 million in revenue. Leadership at W2O will remain in place. Weiss will continue to serve on W2O’s board of directors and W2O president Jennifer Gottlieb will join the agency’s board.
New Mountain Capital has more than $20 billion in assets and a number of healthcare investments. Mountaingate, by contrast, typically invests in smaller companies generating between $5 million and $25 million in profits.
"We’ve been looking for additional support to grow. [New Mountain is] not a mid-lower middle market investor, but a high-growth private equity firm at the top end of the environment," Weiss said. "We know that they can be the partner we’re looking for to support our aggressive growth plans. The goal is to become the best partner for our healthcare clients."
Expanding the firm through private equity investments allows W2O to maintain both its independence and its culture, which is what makes the approach particularly appealing to Weiss.
"Private equity creates a unique partnership that incentivizes, vests and financially and strategically aligns management and top performers," Weiss explained. "The structure it creates provides the necessary business discipline, but also supports investment in culture, innovation and people. It maintains that spirit of independence and entrepreneurship that we’ve nurtured for so long here and will continue to evolve as our clients’ needs expand and evolve."