Private equity firm takes majority ownership of health IT firm CNSI

Private equity firm Alvarez & Marsal Capital has taken majority ownership in Rockville, Maryland-based federal health care IT contractor CNSI as part of efforts to further expand across federal and state markets.

Terms of the transaction were undisclosed. CNSI said Wednesday the investment comes after a recent streak of contract wins they see as solidifying their presence among federal agencies.

Those include a $166 million contract with the Department of Labor’s Office of Workers’ Compensation Programs, a $44 million award with the Department of Veterans Affairs’ Financial Services Center, and a $35 million win with the Centers for Medicare & Medicaid Services.

Founded in 1994, CNSI develops, implements, operates and maintains systems for health care and other human services agencies at the federal and state levels. CNSI designs its technologies for use in claims processing, provider enrollment, data visualization and predictive analytics.

CNSI started the U.S.’ first cloud-based modular Medicaid Management System for the state of Michigan last year and are seeking to expand that type of offering across additional federal and state government customers.

Baird’s government services group and Houlihan Lokey’s health care group advised CNSI on the transaction. Kirkland & Ellis provided legal counsel to A&M Capital.

Greenwich, Connecticut-based A&M Capital manages $1.1 billion in capital and typically invests between $30 million and $100 million in middle market businesses that are either undergoing a transition in management or ownership, seeking capital for growth or seeking expertise in corporate carve-outs, consolidation strategies, special situations or wanting to address specific operational issues or management needs.

A&M Capital’s investments also are geared toward companies that generate $10 million-$75 million earnings before interest, taxes, depreciation and amortization expenses. Their enterprise values are typically between $75 million and $750 million.