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Fieldglass sells majority stake

September 28 2010

Private equity firm Madison Dearborn Partners LLC is investing more than $200 million to acquire a majority stake in Fieldglass Inc.

Management will retain a "significant" minority stake in the company, according to Fieldglass. The deal is signed but expected to formally close in the next few months.

Fieldglass ranked as the largest vendor management system for temporary and contract staffing services with approximately $5.1 billion in spend worldwide in 2008, according to Staffing Industry Analysts' 2009 VMS and MSP supplier competitive landscape report.

"I think this will just help us think bigger and accelerate a bit faster the vision we've always had," Fieldglass Founder and CEO Jai Shekhawat said in an interview today. That a private equity firm such as Madison Dearborn invested in Fieldglass, represents a "very strong statement on our business model and underlying economics," he said.

Part of the investment pays off existing investors, but it will also help fuel Fieldglass' push into Europe and Asia, Shekhawat said.

For Fieldglass' clients, it will be business as usual with no changes, Shekhawat said. Internal staff -- which numbers 135 -- will not change, though the company may step up hiring.

Fieldglass' clients include American Airlines, CVS Caremark, GlaxoSmithKline, Johnson & Johnson, Monsanto and Verizon.

The company did not release how much Madison Dearborn is paying for the majority stake, only saying that it is more than $200 million and that the deal is an all equity transaction set to close with no debt. Fieldglass also does not release annual revenue numbers, but Shekhawat said the top line revenue number is slated to rise by 50% in 2010.

Overall, the future of VMS and the segment as a whole are looking very strong, said Shekhawat, who ranked as the seventh most powerful person in staffing by SI Review magazine.

"I think it's extremely promising, it's very strong," Shekhawat said. "I do think there are businesses to be built serving smaller customers ... for the large global deals, the marketplace has really clarified."

Madison Dearborn, based in Chicago, has raised more than $18 billion in capital since it began in 1992 and invested in more than 100 companies. Some of its investments include CDW, MetroPCS, Nuveen Investments, PayPal, TransUnion, Univision and Yankee Candle.

Madison Dearborn was previously an investor in Team Health Holdings, a provider of outsourced medical services and healthcare staffing, but sold its stake in 2005. Team Health ranked No. 8 on Staffing Industry Analysts' 2010 list of largest healthcare staffing firms.

Fieldglass' initial investors are exiting the firm under the deal with Madison Dearborn. Investors who funded Fieldglass during its initial stages of growth included StarVest Partners LP, Grotech, Blustream Ventures, HLM and Prism Opportunity Fund. The initial investors "have done a wonderful job supporting us up to this point," Shekhawat said.

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