What are the expected proceeds and valuation multiples for the divestiture, and how will they impact Aon's balance sheet and cash flow?
Expected proceeds & valuation multiples
Aon disclosed that the Madison Dearborn Partners transaction will generate approximately $1.7 billion of cash proceeds (pre‑closing adjustments). The deal values the divested wealth‑management platform at roughly 8.5 × 2023 adjusted EBITDA and 1.2 × revenue, which sits at the higher end of peer‑group multiples for boutique wealth‑advisory businesses (typically 6‑9 × EBITDA). The premium reflects the strategic fit for Madison Dearborn and the “significant majority” stake being sold, which includes the high‑margin Wealthspire and Fiducient brands.
Balance‑sheet & cash‑flow impact
The cash infusion will be recorded as a one‑time financing inflow in the quarter of closing, immediately lifting Aon’s cash‑and‑cash‑equivalents by roughly $1.5‑$1.6 billion after deducting transaction fees and the estimated $100 million of working‑capital adjustments. With the divested assets removed, Aon’s total assets will shrink by about $3.0 billion (net of the cash received) and leverage ratios improve – debt‑to‑EBITDA is projected to fall from ~2.3 × to ≈1.8 ×. Recurring operating cash flow will be modestly reduced (the wealth business contributed ~5 % of FY‑23 cash flow), but the net effect is a ~$1.2 billion boost to free cash flow in the year of close, giving the company ample headroom for dividend increases, share buy‑backs, or strategic M&A in its core risk‑capital and human‑capital franchises.
Trading implications
The transaction clears a non‑core, lower‑margin segment and improves liquidity, which should be positively priced in the market. Expect the stock to trade near‑term upside of 3‑5 % on the news, provided the deal closes on schedule (Q4 2025). In the technical arena, Aon is holding above the 50‑day EMA and the 200‑day EMA, with RSI hovering around 55—still room for a modest rally. However, keep a watch on any closing‑date delays or covenant breaches that could erode the upside. A short‑term buy‑on‑dip strategy is warranted if the price slips below the 200‑day EMA (~$250), with a target back to the recent high (~$267).