Recent reports suggested that Leicester City saw a £10m bid turned down for Evans earlier this summer, valuing him at double that amount, and O'Neill believes that the 29-year-old is currently as good as any British defender in the Premier League.
"In September after last year's Euros, there was a conference in France for the coaches and Sir Alex was there talking about it and he openly said to me that he could not believe Van Gaal had sold Jonny from United because having seen him come through, he felt Jonny would spend his whole career at United or certainly to the latter stages of his career," the Belfast Telegraph quotes him as saying.
"I think there were a lot of factors why he ended up at West Brom. In the previous two years he had an injury and at Manchester United they had [Rio] Ferdinand and [Nemanja] Vidic and then Jonny and there was a succession plan that didn't happen because of the change in manager.
"At that time he was on the radar of other big clubs. I know that for a fact but they possibly had reservations about him because of the injuries he had and because he maybe hadn't played as much in the previous 18 months.
"That was just unfortunate. When I look around the Premier League and see British centre-backs, I don't see anyone better. I look at Gary Cahill at Chelsea and Chris Smalling at Manchester United - Jonny Evans is every bit as good as them."
Evans had spent 11 years in the United ranks prior to joining West Brom, where he has gone on to make 61 Premier League appearances.