Daily News: February 1, 2012

Lightyear Acquires Controlling Stake in Paradigm Acquisition


Lightyear Capital, a New York-based private equity firm focused on financial services investing, announced that an affiliated investment fund has acquired Paradigm Acquisition Corp, a nationwide provider of outsourced catastrophic workers’ compensation case management services for insurance companies and self-insured employers. Terms of the transaction were not disclosed.

Paradigm was a portfolio company of Sterling Partners. The transaction closed on February 1, 2012 and was led by Harris Williams & Co.’s Healthcare & Life Sciences (HCLS) Group. Harris Williams & Co. acted as an advisor to Paradigm.

Founded in 1991 and headquartered in Walnut Creek, CA, Paradigm has more than 400 employees and case managers and has created a highly differentiated business model which is designed to dramatically improve clinical outcomes for injured workers and significantly reduce claims costs for workers’ compensation insurance providers.

Paradigm’s specialized network of medical experts and care facilities acts as a hub, connecting people with catastrophic injuries and chronic pain to nationally recognized doctors and specialists with the aim of achieving superior clinical and financial results. Over its 20-year history, Paradigm has built an extensive database, which it has leveraged to address tens of thousands of medically complex cases. With its unique performance-based management model, Paradigm is well-placed to continue to grow within its target market representing a total addressable market opportunity of more than $8.4 billion in workers’ compensation alone.

Jim Hudak, CEO of Paradigm, will continue in his current role and serve on the Board of Directors of the firm, together with Lightyear professionals, who will also serve on the Board.

“We are very pleased to make this investment in Paradigm. The company is a high-quality leader with a great brand name in a complex and specialized industry and will be a strong addition to our portfolio,” said Donald B. Marron, chairman of Lightyear Capital. “We think there are exciting opportunities for Paradigm to expand its business and capture market share in a changing environment.”

“We have been impressed by Jim and the entire management team at Paradigm,” said Mark Vassallo, managing partner of Lightyear Capital. “The company has established itself as a market leader by offering a competitive outsourced solution that improves both outcomes for injured workers and costs for its clients. We look forward to working with this seasoned group to further penetrate the fragmented insurance claims market and utilize Lightyear’s relationships in the insurance industry.”

“We are thrilled to have represented Paradigm and Sterling in this transaction. Paradigm is a unique business that produces better clinical outcomes for severely injured workers at significantly lower medical cost. The transaction exemplifies the demand for companies with innovative business models that drive better results and have the potential to change the cost equation in healthcare,” said Todd Morris, a managing director in Harris Williams & Co.’s San Francisco office.

Lightyear Capital is a private equity firm making primarily control investments in North America-based, middle-market financial services companies.

Harris Williams & Co. is a middle-market investment bank focused on the advisory needs of clients worldwide.