Liazon Corp., the 6-year-old Buffalo-based startup that operates private health insurance exchanges, has been sold for $215 million, a dramatic win for its founders and for the city where it was born.

Towers Watson, a global consulting company, is paying cash for the firm with 120 employees on Main Street. The deal, a vindication of the innovative model for an online benefits marketplace, is also a big cash-out for Liazon’s financial backers, including Buffalo-based Rand Capital Corp.

For Buffalo, it marks the third recent example – after Synacor and Campus Labs – of a local “next-generation” company that grew to the point where it was acquired or went public.

Additionally, it offers a significant growth opportunity for Liazon and the city, including added business for the company and increased local hiring to meet the demand that Towers Watson wants to create.

“A big part of our deal was making sure that we were building around what we already had,” said Liazon co-founder and CEO Ashok Subramanian. “They’re looking to be big, to grow, and Buffalo’s going to be a big part of that.”

Liazon has attracted attention in recent years as its model foreshadowed the public benefits exchanges established under the Affordable Care Act. Because it came out much earlier, it gave employers and employees a chance to see how the concept could work.

Others have since followed suit, and many large corporations are already starting to switch to such models for their workers. Rival brokerage firm Mercer has already signed up more than 50 employers for its marketplace, so Towers Watson wants to leverage Liazon to capture that business.

“We were not looking for this. They came to us, and obviously they made a fairly aggressive and attractive offer,” Subramanian said. “We were excited about the ability to continue to grow the company and, frankly, do it a lot faster with Towers Watson than we could do on our own ... We’ll have access to many more resources than a small company like ours has alone.”

New York-based Towers Watson is a $8 billion human resources consulting and professional services firm that employs 14,000 worldwide. It specializes in benefits, talent management, rewards and risk management. Its shares, which closed at $110.95, down 62 cents, Friday, have almost doubled so far this year.

The firm pushed heavily into the benefits exchange business with its June 2012 purchase of Extend Health, which was a leader in private exchanges for retirees, and then sought out Liazon as the leader in exchanges for active workers. In fact, the deal went from the first approach by Towers Watson to closing in just a month.

“It was probably the quickest closing I’ve every been associated with,” said Pete Grum, president of Buffalo-based venture investor Rand Capital Corp., which owned 3 percent of Liazon. “From the time they came to the door, it’s been a month. It kind of makes your head spin.”

Rand invested in Liazon as part of two funding rounds in November 2010 and again in April 2011, paying a total of $1.13 million. Using the current deal’s price, Rand’s stake is now valued at $6.45 million – nearly a sixfold profit. “This is unusually good and unusually quick. This one will pay for some of the ones that didn’t do so well,” Grum said. “It’s a good way to start the holiday season.”

Liazon, which was founded by Buffalo-area natives Subramanian, Tim Godzich and Alan Cohen in 2007, will now become part of Towers Watson’s Exchange Solutions division, which will continue to be led by Managing Director Bryce Williams, former CEO of Extend Health.

Subramanian will join the Exchange Solutions executive team as managing director of Liazon, which will maintain its brand, while its operations will stay intact. All other executives and employees of Liazon, including Cohen, who is chief strategy officer, will retain their jobs and titles.

“The Liazon name will remain in the market, so our partners and brokers and carriers will still be doing business with Liazon. We’ll just be a subsidiary of Towers Watson,” Subramanian said. “All the people are going to be doing the same jobs. It’s business as usual.”

Liazon roughly doubled its staff in the past 12 months, and Subramanian said the company now expects over the next year to add “even more employees than we added this year,” especially for technology, operations and support roles.

Additionally, the company is planning to move early next year to the former Fairmount Creamery Co. building at 199 Scott St., which Ellicott Development Co. is renovating into a $14.7 million mixed-use project with office, residential and retail space. Liazon had planned to occupy the top floor of the eight-story facility as the anchor tenant, but Subramanian said they are now in discussions with Ellicott to add at least one more floor.

The three founders, all health insurance industry veterans, formed Liazon to create a more-efficient and cost-effective way for employers to offer insurance benefits. The goal was to give more freedom of choice to employees, while enabling employers to more accurately budget for the expense each year.

Liazon operates the Bright Choices online benefits “portal,” or marketplace, allowing workers to take a fixed amount of money from their employer and decide how to spend it toward the purchase of an array of benefits.

The company works with more than 2,400 small to mid-sized employer customers in 23 states nationwide, providing benefits to more than 10,000 employees. It works through more than 400 brokers, including nine of the nation’s 10 largest. Clients range from sole proprietors to businesses with 3,500 employees, but Subramanian said Towers Watson now wants to offer the Bright Choices service to its largest corporate clients as well.