MSPE exits Creative Circle in $570m sale

MSPE's exit from Creative Circle marked the latest realisation for the firm's fifth fund

Morgan Stanley Global Private Equity (MSPE) has exited its stake in Creative Circle after selling the Los Angeles-based recruitment company to California-based On Assignment  for $570 million, according to a statement from the firm. The deal includes a potential $30 million in additional common stock consideration if the company achieves certain milestones in 2015.

MSPE, a New York-based unit of its parent company's merchant banking and real estate investing group that focuses on middle market companies, did not disclose the return from the sale of the company. The Morgan Stanley private equity group acquired Creative Circle three years ago through its Morgan Stanley Capital Partners V fund in a deal valued at $230 million.

While officials from MSPE did not return calls by press time, MSPE managing director and chief investment officer Aaron Sack said in a statement about its portfolio company: “In Creative Circle, we found exceptional management talent and founder/owners focused on choosing the right partner for growth.”

During its part ownership period under MSPE, Creative Circle has achieved a three-year compounded annual growth rate of 26% since 2011, based on a press release issued by publicly traded On Assignment on Monday. In 2014, the company said Creative Circle posted $226 million in revenues, according to a statement by On Assignment on Monday. 

“Our two companies share a common goal of putting people to work in challenging roles and the timing could not be better as the lines between IT and marketing departments are starting to converge as consumers demand real time content from any device anywhere in the world,” said Peter Dameris, CEO of On Assignment, in a statement.

Creative Circle will operate as a division of On Assignment and maintain its existing brand name.

Wells Fargo Bank is providing a $975 million credit facility to On Assignment.  

MSPE typically invests $75 million to $150 million equity stakes in its deals, which are generally valued between $100 million and $1 billion in enterprise value, according to its website.

The private equity unit of Morgan Stanley has experience in the staffing industry, having previously invested in Atlanta-based industrial personnel provider EmployBridge, a business that it harvested in January after a four year hold period through its sale to private equity-backed Select Family of Staffing Companies. Select Family is a portfolio company of Anchorage Capital Group and BlueMountain Capital Management.

Wells Fargo Securities served as financial advisor to MSPE, while Debevoise & Plimpton attorneys Jeffrey Cunard, Jyotin Hamid, Jeffrey Ross, Kyra Bromley and Rafael Kariyev provided legal advice.

Sullivan & Cromwell and Latham & Watkins  provided counsel to On Assignment.