benefitexpress: Talent and M&A as the Cornerstone of Growth

In 2015, the founder and President of benefitexpress decided it was time to step back from her day-to-day leadership role and partner with an investor who could help the business scale and invest in future growth. Benefitexpress was one of the leading benefits administration platforms enabling clients’ employees to shop for, enroll in and manage their benefit plans. There were strong tailwinds to take advantage of, as employers, brokers, insurance carriers and private exchanges were quickly recognizing their need for sophisticated software to manage communications, provide decision support, enroll employees and administer benefits. Yet, benefits administration was still a large unpenetrated market, with regulatory requirements at its back and customer requirements becoming more complex.

Seeing similar opportunities in the market, earlier that year LLR’s experience and network in HR technology led the firm to engage with Michael Sternklar, the former head of Mercer’s North American benefits outsourcing business, to pursue a growth capital investment in the benefits administration sector. Together, they identified benefitexpress as a potential market-leading and uniquely scalable platform, further distinguished by its unique services capabilities and a loyal customer base. With capital and strategic value creation support, LLR and Michael believed benefitexpress could capture a significant growth opportunity.

LLR invested in benefitexpress in March 2016 and Michael Sternklar became its CEO.

Bringing top tier talent to benefitexpress was the cornerstone of its strategy for growth and scale. LLR’s Value Creation Team, deeply experienced in collaborating with companies on leadership hiring and human capital initiatives, combined with Michael’s 30+ years leading benefits administration organizations including Fidelity Investments, Kwasha Lipton and PwC, helped them to activate their networks to attract several new additions to its C-suite. Most notable was COO Jocelyn Purtell, who had held several senior operating roles at global benefits outsourcing firms, including Head of US Operations for Benefits Outsourcing at Mercer and Head of Operations for Benefits and HRO BPO at Hewitt.

Key to capturing the large unvended market was extending benefitexpress’ channel relationships to the broker audience, where it could reach brokers’ loyal customer base of small and mid-sized employers looking for better ways to streamline benefits enrollment and management. Because of the firm’s focus in this space, LLR had previously met broker-centric benefits admin and online enrollment solution, benefitsCONNECT, and was able to quickly align all three parties. Within 6 months after LLR’s initial investment, benefitexpress acquired benefitsCONNECT.

LLR’s Value Creation Team worked with leadership across benefitexpress and benefitsCONNECT to develop a detailed M&A integration plan that helped crystalize key elements of process, timeline and responsibilities, enabling them to extend both companies’ product roadmaps and give the combined company’s clients access to a more diverse suite of solutions for multiple client markets. They also worked together to develop a “strategy budget,” where the central outcome was a tool for Michael and his executive team to plan, measure and monitor growth for their newly acquired broker-focused business unit. The exercise enabled the combined team to unlock the key, strategic growth levers of the business as well as get down to the tactical level of how to execute on them.

“If there’s one thing I’ve learned over the years, it’s that successful benefit administrators need to be easy for brokers to work with and offer reliable, exceptional experiences for brokers’ clients. This means that they need the tools to enable collaboration across key stakeholders and help ensure outcomes that put the employer first. Their go-to partners will be the ones that provide robust portals and reporting functionality, offer an array of value-added technology and services, and not only help them grow but also retain their client base.”

– Michael Sternklar, CEO of benefitexpress

As benefitexpress grew, it became am industry partner to the health division at WEX (NYSE: WEX), a leading financial technology service provider. Culturally, WEX and benefitexpress also shared a strong commitment to client and employee relationships. In June 2021, WEX acquired benefitexpress, creating new opportunities for growth for the benefitexpress team and helping to significantly expand WEX’s offerings in benefits administration across the full, end-to-end needs of employer clients.

Case studies presented herein do not reflect a complete list of LLR investments and are provided for informational purposes only. Certain statements about LLR made by portfolio company executives herein are intended to illustrate the work of LLR’s Value Creation Team with such portfolio companies. Such portfolio companies are controlled by investment vehicles managed by LLR. Portfolio company executives were not compensated in connection with their participation, although they generally receive compensation and investment opportunities in connection with their portfolio company roles, and in certain cases are also owners of portfolio company securities and/or investors in LLR-sponsored vehicles. Such compensation and investments subject participants to potential conflicts of interest in making the statements herein.