Michael Dell’s family office leads $7.7bn deal to take insurance broker private

An investor consortium led by the family office of technology billionaire Michael Dell is nearing a $7.7bn take-private deal for insurance broker The Baldwin Group.

A go-private deal for Baldwin is set to be announced as soon as Monday, provided it does not hit any last-minute snags, according to people familiar with the matter. The transaction is co-led by Dell’s DFO Management and Sequence Holdings, a venture capital-backed tech group investing in the service economy, they added.

The Dell-led consortium prevailed over several large private equity groups in its pursuit of Baldwin, showing how the tech world is increasingly encroaching on Wall Street as it tries to import AI-enabled tech to the real economy.

The potential deal is expected to value Baldwin at $32.50 a share, or an enterprise value of $7.7bn, the people said. That price tag equates to a nearly 90 per cent premium to its valuation in June, when reports first emerged that Baldwin was exploring a sale.

Baldwin specialises in commercial insurance brokerage, advising midsized and large companies shopping for insurance policies for everything from cyber security to employee benefits to real estate.

Shares in Baldwin are up by nearly 25 per cent since the start of the year off the back of speculation about a go-private deal, giving it a market capitalisation of $4.1bn, as of Friday’s close. Baldwin had net debt of $2.3bn as of the end of June this year.

A potential take-private deal comes on the heels of Aon buying KKR-backed brokerage firm USI Insurance at the end of last month for $17bn, in a sale which is set to generate the New York-based private equity giant $3.3bn.

A takeover of Baldwin would be a rare full-blown leveraged buyout led by DFO, one of the world’s largest family offices, which manages tech billionaire Dell’s money. DFO’s predecessor, MSD Capital, played a major role in the $24.9bn leveraged buyout of Dell Technologies alongside Silver Lake Capital Management in 2013.

Sequence launched earlier this year with the aim of deploying tech to boost the performance of service businesses, making its first minority investment in privately held community lender BankSouth. Sequence, which deploys its team of engineers to work alongside management, has backing from Silicon Valley VC firms including 8VC, Lux Capital and Conviction, as well as DFO.

DFO was recently a minority equity investor in the Silver Lake-led consortiums buying social media app TikTok’s US business and taking entertainment giant Endeavor Holdings Group private. DFO also invests in public equities.

Tampa, Florida-based Baldwin traces its roots back to 2006. Its co-founder Lowry Baldwin is still among the group’s largest shareholders and serves as chair of the board.

The historically fragmented industry of insurance brokerage is in the midst of a wave of consolidation as companies are seeking scale and greater market share.

DFO, Sequence and Baldwin did not immediately respond to requests for comment.