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Deal hungry Dutch billionaire defeats Uber to enter U.S.

Jitse Groen is a man in a hurry.

In just the last two years, the 42-year-old Dutch billionaire and chief executive officer of Just Eat Takeaway.com NV has taken the food-delivery platform he created in his college dorm room two decades ago on a shopping spree, with more than $15 billion in takeovers.

The $7.3 billion combination with Grubhub Inc. he detailed on Thursday catapults Just Eat Takeaway into one of the world’s largest food-delivery companies and, according to JPMorgan Chase & Co., gives it the coveted No. 2 spot in the brutally competitive U.S. market. The deal will put Just Eat Takeaway slightly ahead of Uber Technologies Inc., whose own efforts to buy Grubhub snagged on price and antitrust concerns.

With the ink barely dry on his last deal — the $8 billion combination of Takeaway and Just Eat in Europe that U.K. regulators approved less than two months ago — Groen may be biting off more than he can chew with his U.S. foray, some fear.

Asked about the timing of the deal so close on the heels of another mega-transaction, Groen said to analysts and investors on a conference call Thursday, “if you ask me, something like this should have happened three years ago but I wasn’t the CEO of Just Eat back then.” Previous mergers made the deal attractive to Grubhub, he said.

Still, the U.S. market with its sliver-thin margins from an all-out price war between Uber Eats and market leader Doordash has created a “bloodbath,” according to ABN Amro analyst Wim Gille. There’s no protection for drivers’ incomes, restaurants have to pay high fees and customer experience is poor, he said.

With those concerns in mind, some Just Eat Takeaway investors gave the deal a thumbs down. Since Groen’s talks with Grubhub leaked Friday on CNBC, Just Eat Takeaway shares have dropped about 15%.

In the longer term, however, size is what may determine who thrives in the industry, Gille said.

“From a strategic point of view, this is the right thing to do,” he said. “In the long run, the winner in the U.S. will own potentially one of the biggest profit pools in the developed world.”

Some investors concur.

“Just Eat Takeaway.com’s acquisition of Grubhub is clever and sensible,” said Alex Captain, founder and managing partner of Cat Rock Capital Management, a Just Eat Takeaway shareholder. “Just Eat Takeaway.com is doubling its addressable market at a reasonable price through this acquisition.”

For Groen, getting into the U.S. marks a giant step in the journey that started 20 years ago when, as a business and information technology student at the University of Twente in the Netherlands, he came up with the idea of creating a food-delivery business.

The company he leads has operations in more than two dozen countries and had 415.9 million euros ($473.5 million) in revenue last year — almost four times that in 2016, when Takeaway went public on the Amsterdam stock exchange.

It has also made him a billionaire, with his 10.6% stake in Just Eat Takeaway valued at about 1.3 billion euros.

’His deal with Matt Maloney, his counterpart at Grubhub and an old friend, seems to have gone through relatively smoothly.

They both founded their food-delivery companies within a few years of each other. Maloney said he first met Groen in 2007 in Chicago, and the two have been in touch regularly ever since.

“We have the same company on different continents,” Maloney said in an interview Wednesday. “There’s this mutual cosmic alignment.”

Groen contacted him after hearing reports about Grubhub’s talks with Uber, Maloney said. When Groen learned the talks were turning serious, he moved in. Bloomberg reported that Uber had made an offer for Grubhub in May.

Uber and Grubhub agreed on a ratio that valued each Grubhub share at 1.925 that of Uber on the condition they settled on a framework for securing regulatory approval, two people familiar with the matter said. At Friday’s closing price, that works out to about $6.6 billion.

“Just Eat knew the bogey,” Maloney said. “They knew the price to beat.”

Even with his penchant for large deals, Groen’s interest in Grubhub seems to be recent. Or if he had considered a bid, he kept it close to his chest. Asked on an earnings call in early April if he had picked a target for this year, the CEO said “no.”

“It’s not like you can easily pick and choose M&A,” he added. “The stars need to be aligned.”

The stars haven’t always aligned neatly for Groen, but he has not been shy about tenaciously pursuing competitors he’s set his sights on.

When Takeaway snagged Delivery Hero’s German operations in late 2018, it snuffed out what had been an expensive rivalry in the country. The companies were at loggerheads, investing heavily in customer acquisition.

About half a year later, Groen’s company lodged a bid for Just Eat, which eventually prompted a counter-offer by Prosus NV for the U.K. firm. That set off an often-ugly, grueling, months-long bidding war before Takeaway declared victory in early January — but only after its rival had helped push up the price.

Now, armed with final regulatory approvals for the Just Eat Takeaway deal — the company has yet to file a joint earnings report — Groen has embarked on his next adventure with Grubhub.

He faces an industry whose competitive landscape is only going to intensify as tech giants Uber and deep-pocketed Amazon.com Inc. expand in the space. Smaller players are also clawing for market share, with Delivery Hero last year taking control of South Korea’s biggest food delivery app Woowa Brothers Corp. at a $4 billion valuation.

Still, the scale of Groen’s ambitions were evident when in an interview with Bloomberg in June 2018 he said that in his view “the most value is in being the largest, by far.”

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Nestle weighs sale of Pure Life, Poland Spring brands

Nestle SA said it’s considering a sale of its U.S. mass-market bottled water business as the world’s largest food company focuses the unit on premium hydrating products.

The strategic review of most of the North American business, including brands like Pure Life, Poland Spring and Deer Park, is expected to be completed early in 2021, Nestle said Thursday after European markets closed.

It’s another strategic shift from Chief Executive Officer Mark Schneider, who has made more than 50 deals since taking charge in 2017 and promised that this year would show investors a more interesting M&A pipeline than 2019. A sale could cut Nestle’s total bottled-water sales by almost half.

“The divestment is consistent with Nestle’s strategy to focus on higher-growth, higher-margin businesses with stronger returns,” Alain Oberhuber, an analyst at MainFirst Bank, wrote. He said the business could fetch about 6.5 billion francs ($6.9 billion), adding that Nestle is putting bigger brands up for sale than he had expected.

The shares were little changed Friday morning as European stock markets fell.

Nestle’s bottled-water business had its worst performance in a decade last year. The North American water unit in particular has been facing fierce competition from discount brands, as well as consumer resistance to plastic packaging. Nestle has been trying to come up with creative alternatives, such as water dispensers for refillable bottles.

Schneider hasn’t hesitated to part ways with underperforming businesses — and has been getting good prices for them. Last year, he shed a dermatology unit for 10 billion francs. The U.S. confectionery business fetched $2.8 billion.

Nestle’s North American water business had sales of about 3.4 billion francs in 2019, excluding international brands like Perrier and San Pellegrino.

Possible buyers include Coca-Cola Co. and PepsiCo Inc., which lag behind Nestle’s North American 20% market share at 10% and 7.8%, respectively. Soft-drink bottlers like Cott and National Beverage Corp. could also be interested, according to Bloomberg Intelligence’s Duncan Fox.

The company also pledged to make its entire water portfolio carbon-neutral by 2025.

“The real benefit is getting a strategic distraction and an environmental burden off the books,” Jefferies analyst Martin Deboo wrote in a note.

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Stocks Go Down, Too

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The stock market had its worst day in months yesterday, with the S&P 500 index dropping nearly 6 percent. Or, as The Times’s Matt Phillips put it, “At least for a day, reality triumphed over hope on Wall Street.”

Back in the red for the year: At the beginning of this week, a heady stock rally erased all of the market’s losses for the year, even as pandemic lockdowns curtailed activity and companies reported ugly quarterly earnings. Yesterday’s plunge pushed the S&P 500 back below where it began the year (and more than 10 percent off its all-time high, set in February).

• That said, futures suggest a pretty big bounce at the open, regaining about a third of yesterday’s fall.

Blip or bear market? Broadly speaking, there are two schools of thought:

📈 The steep decline during the early stages of the pandemic was a short-term, virus-induced stumble during a rally that began more than 10 years ago.

📉 The sharp rise in recent months was a momentary rally masking a bear market that could roar back if there’s a second wave of infections or long-term economic damage from the lockdowns.

Looking at history as a guide is tricky, because it’s been more than a century since investors had to reckon with a pandemic. If you plot the market from its peak versus other bear markets in recent history, the bullish case is that stocks could behave as they did in 1990 after Iraq’s invasion of Kuwait. That would mean another three or four months before stocks set a new high; other market downturns took a lot longer to regain lost ground.

• Bloomberg’s John Authers notes the 1990 analogy, pointing out that the market reached a new peak after Iraqi forces were expelled from Kuwait. But, he asks: “Is there any way to achieve a comparably clear victory over the coronavirus?”

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Credit…Edgard Garrido/Reuters

Hertz filed for bankruptcy protection last month. But as investors improbably piled into its shares this week, the car rental pioneer is trying to take advantage of this unexpected turn of events.

The company wants to sell up to $1 billion in new stock. “The recent market prices of and the trading volumes in Hertz’s common stock potentially present a unique opportunity,” lawyers for the company said in a bankruptcy court hearing yesterday.

• Even after falling to $2.06 yesterday, the company’s shares are still way above the 56 cents they traded at after the Chapter 11 filing.

• Some company insiders took advantage of the rally by unloading their shares this week.

The move is exceedingly rare for a bankrupt company, since most Chapter 11 restructurings result in stockholders — who are last in line to recover financial assets — being wiped out.

It’s possible that stockholders could get some money after Hertz restructures. After all, the hedge fund mogul Bill Ackman made a fortune from owning stock in the bankrupt real-estate business General Growth Properties nearly a decade ago. But in a sign of Hertz’s dire financial straits, the company has asked for permission to end leases for more than 144,000 vehicles that it says it can no longer afford.

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Credit…Noam Galai/Getty Images

Amid the protests set off by the police killing of George Floyd, corporate America is making more promises to combat racism and discrimination.

Some of the latest moves:

Apple and YouTube each pledged $100 million for race initiatives. Apple will donate money toward education and criminal justice reform, though it gave few details about what that will entail. YouTube will create a fund to highlight black creators on its platform, and in some cases directly fund black-focused content.

• A founder of The Wing, Audrey Gelman, resigned as C.E.O. of the women-focused co-working company. She faced criticism for what current and former workers said was mistreatment of minority workers.

Hasbro removed cards from “Magic: The Gathering,” a popular fantasy card game, that featured offensive characters.

But the gap remains wide. The Financial Times notes that management teams and corporate boards still have few black and other minority members, despite years of companies’ pledging to improve diversity.

• Kemi Role, a top official at the National Employment Law Project, told The Wall Street Journal that improvements need to be made throughout companies: “How are their cafeteria workers being treated? How are their people in factories being treated?”

• Ultimately, companies will be judged on their results, Stephanie Creary of the Wharton business school notes in a list of tips for making meaningful corporate statements: “If you do nothing after saying something, your words will not matter.”

The European Union is preparing an antitrust case against Amazon. Regulators plan to argue that the e-commerce giant has unfairly used third-party merchant data to promote its own products, The Times’s Adam Satariano reports.

Goldman Sachs wants to settle the 1MDB scandal without admitting guilt, The Times’s Matt Goldstein reports. The Wall Street firm is pushing back against federal prosecutors who want the bank to pay over $2 billion in fines and plead guilty to a felony.

Who are Joe Biden’s economic advisers? It’s unclear who has the ear of the Democratic presidential candidate, and a recently formed economic policy committee urged participants to stay silent on what is discussed. That said, here’s Mr. Biden’s plan for reopening the economy, released yesterday.

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Credit…Willy Kurniawan/Reuters

Yesterday we highlighted a study about positive effects of small talk in the office, which the researchers called “uplifting yet distracting.” With so many offices and other workplaces now closed, there are fewer opportunities for superficial chitchat, which could be a good thing for efficiency. But judging by readers’ response, you (mostly) miss it:

• Everhard: “Small talk is an essential part of the informal organization, and without any informal organization a company will never work efficiently.”

• Karen: “Personally, I probably abused the time talking to fellow employees about non-work subjects and gossiping, but it was wonderful to be able to converse about things going on in the world outside. I give it a 70 percent good use of time.”

• Larry: “Asking somebody how their weekend was, or how the kid’s baseball game or school play went, is all part of how an organization grows.”

• Jasmin: “I have enjoyed my solitude during this season of confinement. I have maintained contact with some of my favorite colleagues and continue to run away from the chatterbox always trying to initiate a conversation.”

• Alan: “Companies can’t force those kinds of interactions with Zoom happy hours.”

Deals

• The food delivery service DoorDash is reportedly near a deal to raise money from investors including T. Rowe Price and Fidelity at a $15 billion valuation. (WSJ)

• Palantir, the data consultancy, reportedly plans to file for a public market listing within weeks, with an eye to begin trading in the fall. (Bloomberg)

• The private equity giant KKR is said to have asked outside advisers to cut their fees at least 15 percent to “share in the economic pain” of the pandemic. (FT)

Politics and policy

• The Trump administration abandoned an earlier commitment to disclosing which companies received federal coronavirus rescue loans. (WaPo)

• Treasury Secretary Steven Mnuchin said Harriet Tubman would not replace Andrew Jackson as the face of the $20 bill until at least 2030. (NYT)

Tech

• Chris Cox, who quit as Facebook’s chief product officer last year amid a disagreement with Mark Zuckerberg, will return to that position. Separately, the company plans to create a new fund to invest in start-ups. (NYT, Axios)

• Zoom apologized for following a Chinese government request to take down the account of a U.S.-based humanitarian group that commemorated the 1989 Tiananmen Square protests. (CNBC)

• An ad tech company secretly used facial-recognition software on 30,000 people who attended this year’s Rose Bowl. (OneZero)

Best of the rest

• The economics of harvesting frozen water on the Moon. (Quartz)

• Nintendo’s “Animal Crossing: New Horizons” looks increasingly like a pixelated Wall Street. (WaPo)

We’d love your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.

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M&A wrap: Alumni Ventures, Menarini, Stemline Therapeutics, Levine Leichtman, SiPM, Insight Partners, Ardian, Buckingham

Meeting other dealmakers and building relationships are essential activities in the middle market. Most dealmakers – especially those in business development roles – typically spend a large percentage of their time on the road, conducting one-on-one meetings, attending conferences, going out for meals and engaging in bonding activities, like playing golf or going to a ball game. So what do you do when you’re quarantined and face-to-face meetings are out of the question? For Work from Home (WFH) strategies, Mergers & Acquisitions turns to eight prominent dealmakers from private equity firms, investment banks, lenders and law firms. “I miss the excitement of a great conference; wearing my nice clothes, early morning breakfasts, the one-on-ones, drinks with my women ‘tribe,’ and dinner at a steakhouse, even though I am a vegan,” says Amy Weisman, managing director, business development, Sterling Investment Partners. “Zoom from home, while effective, does not replace being on the road; the airport meal-on-the-run, the frustrating iPhone tracking of my Uber, the friendly handshake of a banker, and the in-person deal discussions that generate new ideas.” In some respects, it is easier to build relationships, explains Nanette Heide (pictured), partner, co-chair, private equity group, Duane Morris. “For the first time, we all have a common social thread – stay at home. Under normal circumstances, we would meet someone and look for that common thread. It is now readily apparent and an easy topic of discussion and all seem interested in sharing experiences in this stay-at-home environment. Further, meeting folks over a video conference from their home is immediately humanizing.” Emotional Quotient (EQ) is “more important than ever during trying times,” says Jeremy Holland, managing partner, origination, The Riverside Co. “It’s critical to remember that the dealmaker on other side of the (now figurative) deal table is a person, too. They have good and bad days and presumably know many people in high-risk categories, potentially even themselves. Being extra thoughtful about each interaction is important.” Read our full coverage: Dealmaking under quarantine: 8 private equity and M&A pros share strategies while social distancing.

Sophia Popova Summit Partners, Pavan Tripathi of Bregal Sagemount and Christine Wang of Francisco Partners were among the 10 individuals Mergers & Acquisitions named the 2019 Rising Stars of Private Equity. Who should be on our list for 2020? We have opened up the nomination process, and we are seeking individuals who are full-time private equity investors and whose best days are yet to come. These are the folks you predict will one day play a key leadership role at your PE firm – or will head up their own. New for 2020: This year, we will be taking a close look at how Rising Stars candidates are performing in the face of the Coronavirus Pandemic, how they are excelling in dealmaking while Working from Home and how they are helping portfolio companies pivot to the future New Normal. Send in nominations by Friday May 22.

CLICK HERE TO SUBMIT A NOMINATION

DEAL NEWS
Venture capital firm Alumni Ventures Group has launched a fund to invest in companies shaping the recovery from the coronavirus crisis, targeting healthcare, technology, services, data monitoring and analysis, learning, payments, communications and entertainment sectors. “We believe this pandemic has changed our world forever,” says Michael Collins, CEO of Alumni Ventures Group, which is based in Manchester, New Hampshire. “Out of this crisis, we expect to see dozens of new market leaders created who will be attractive investments in both the near and longer term.” The new 10-year fund aims to raise $10 million initially to invest in 20 to 30 companies, co-investing exclusively with established venture firms. The portfolio will include follow-on investments in Alumni Ventures Group’s existing portfolio of more than 430 companies, as well as new investments.

Menarini Group, an Italian pharmaceutical company, is taking Stemline Therapeutics Inc. (Nasdaq: STML) private in a $677 million cash-for-stock deal expected to close by June 30th. New York-based Stemline is a commercial-stage biopharmaceutical company focused on the development and commercialization of cancer treatments. Stemline’s Elzonris treatment was approved by the U.S. Food and Drug Administration in 2018, and Menarini will help bring the treatment to Europe and emerging markets as it is approved outside the U.S. “Stemline is an excellent fit for Menarini, enabling us to expand our presence in the U.S. with an established biopharmaceutical company focused on developing oncology therapeutics” says Elcin Barker Ergun, CEO of Menarini. “Through this acquisition, we will continue to strengthen our portfolio and pipeline of oncology assets and deliver novel therapies around the world.” Advisors on the deal included Goldman Sachs International; Fried, Frank, Harris, Shriver & Jacobson LLP; PJT Partners; BofA Securities; Skadden, Arps, Slate, Meagher & Flom LLP; and Alston & Bird LLP.

Los Angeles-based middle-market PE firm Levine Leichtman Capital Partners Europe has acquired e-learning company SiPM, in partnership with SiPM’s management and founding partners. Terms of the deal were not disclosed. Clients of Belgium-based SiPM have included more than 200 blue-chip corporations in more than 100 countries. SiPM, co-founded by Raf Verheyden and Peter Leyten in 2011, offers training for procurement, supply chain and sales employees. Advisors on the deal included KPMG, NautaDutilh, Deloitte, Lincoln International, Stibbe and PwC.

Insight Partners-backed software company ComplianceQuest has acquired LifeGuard Solutions, developer of workplace safety software. ComplianceQuest offers quality management software, and both ComplianceQuest and LifeGuard software is built on the Salesforce platform. ComplianceQuest expects the deal will open up agriculture, farms, energy, utilities, retail, chemicals and construction target markets to the company. New York-based Insight, a venture capital and private equity firm with more than $20 billion under management, was named to Mergers & Acquisitions’ top private equity firms in the U.S. for 2019.

Namogoo, provider of ad-blocking software to e-commerce clients, has made its first strategic acquisition, acquiring Personali, a startup that builds behavioral analytics tools for personalizing in-site incentives and increasing sales. Israel-based Namogoo uses machine learning to prevent unauthorized ads from redirecting customers to other websites. It has 150 clients, including Dollar Shave Club, Samsonite and Glasses USA.

Morgan Hill, California-based RNP Advisory Services Inc., an investment advisor to high-net worth individuals and others, is merging with St. Louis-based Buckingham Strategic Wealth, one of the 10 largest registered investment advisors in the U.S. RNP founder Carl Reinhardt will retire when the deal closes, which is expected by June 30th. RNP’s advisors will become part of Buckingham but continue to work from four California offices.

Ardian, an employee-owned private investment firm, has acquired a minority stake in Argon & Co., a global operations management advisor with more than 270 consultants, to help the firm develop and grow. “Operations management has never been so critical for our clients who are facing very short-term business recovery issues, and also issues of competitiveness and resilience of their operations, all in a context of environmental sustainability,” says Yvan Salamon, Argon CEO. Advisors on the deal included McDermott Will & Emery, KPMG, Rothschild & Co., Paul Hasting, Jeausserand Audouard, Oderis, LCL and Hogan Lovells.

Summit Midstream Partners, a privately held developer of shale and other midstream energy assets in the U.S., is buying out an investor, Energy Capital Partners II LLC, for $35 million, and Energy Capital has agreed to loan the $35 million back to Summit. The deal is expected to close by June 30th. Baker Botts LLP represented Summit in the transaction.

PEOPLE MOVES
Sophie Allen has joined law firm Morrison & Foerster in its London office as a partner to provide tax advice on cross-border investments and divestments.

CORONAVIRUS NEWS
San Diego-based Arcturus Therapeutics Holdings Inc. (Nasdaq: ARCT) is partnering with Somerset, New Jersey-based Catalent Inc. (NYSE: CTLT) to make Arcturus’s coronavirus vaccine candidate. Arcturus aims to apply its technologies to make a low-dose, single-shot vaccine against Covid-19 called LUNAR-COV19. Catalent’s drug substance biomanufacturing facility in Madison, Wisconsin, will make millions of doses in 2020 to support human clinical studies and potentially hundreds of millions of doses annually if the vaccine is commercialized. The first batches are expected by June.

CORONAVIRUS IMPACT ON THE MIDDLE MARKET
The coronavirus pandemic will change the world and how we live in it profoundly, with dramatic shifts in how we gather and meet, work and learn, make products and distribute them. But exactly how the transformations will play out in the middle market is difficult to discern. Several recent reports and surveys aim to provide a sense of direction. Read the full story: Coronavirus crisis is changing everything, including private equity and M&A.

To explore how the coronavirus is affecting the middle market, Mergers & Acquisitions interviews dealmakers from Alvarez & Marsal, Merrill Corp., M33 Growth, M-III Partners, Paul Hastings and the Riverside Co. Read our full coverage: “Brace for impact,” say private equity firms to portfolio companies about the coronavirus.

The coronavirus pandemic has already quashed a number of previously announced deals, including Xerox’s hostile takeover bid for HP. More deals are expected to fail, as companies focus on preserving cash and ensuring debt access just to make it through the challenging economic cycle. The auto, retail, restaurant, travel and manufacturing sectors have been particularly hit hard, as they face declining sales and location closures. Automotive manufacturers are restructuring their businesses, and car dealerships are seeing fewer people walk in the door. For more, read our full coverage: 5 derailed deals: HP, TGI Fridays among those losing buyers during coronavirus crisis.

Deal structures are changing, especially in terms of what happens after a deal is completed. Read our story: How to manage post-closing disputes in M&A as a result of the coronavirus.

Covid-19 is forcing M&A practitioners to assess appropriate risk allocation mechanisms to address the impact of the virus on global business operations, including Representations and Warranties Insurance (RWI). Read the guest article: How the coronavirus forces dealmakers to assess effectiveness of RWI policies.

As consumer spending and business investment is declining, we expect a slowdown in private equity transaction volume. Read the story: Private equity deals will slow down, as global economy stalls amid coronavirus pandemic.

For more on how to cope with these challenging times, see: Coronavirus contingency planning checklist for the middle market.

FEATURED CONTENT
In the challenging times we face now, it’s more important than ever to come together as a community and recognize the people and companies that excel and lead. We invite you to join us in honoring the 2019 winners of Mergers & Acquisitions’ M&A Mid-Market Awards. In contrast with the volatile coronavirus-driven conditions unfolding in 2020, the dealmaking environment of 2019 was remarkably stable. Among the PE firms benefitting from the auspicious fundraising climate was Vista Private Equity, which raised a $16 billion fund – the largest technology-focused PE fund ever raised. Mergers & Acquisitions is honoring Vista founder and CEO Robert F. Smith with our 2019 Dealmaker of the Year award. In addition to leading his firm’s unprecedented fundraising, Smith excelled in philanthropy. When he spoke at the commencement of Morehouse College, he announced he would pay off all the student loans of the HBCU’s 2019 graduates, providing a helping hand in the student debt crisis facing many U.S. families. The financial services sector saw a lot of consolidation in 2019. Piper Jaffray wins our 2019 Deal of the Year for buying Sandler O’Neill to form Piper Sandler, which instantly became a leading investment bank in the financial services sector. And Stifel wins our 2019 Investment Bank of the Year for growing dramatically and making several acquisitions. Read our full awards coverage: Meet the winners of Mergers & Acquisitions’ M&A Mid-Market Awards.

Once venture capital-backed startups themselves, today’s tech giants know a thing or two about VC seed money. It’s fitting that many of them have created corporate venture capital groups of their own. These CVCs help their owners experiment and nurture new technologies and ideas in the early stages, without requiring the commitment of an acquisition. The CVC strategy often augments a company’s research and development efforts as well as complementing its M&A strategy. Middle-market dealmakers would be wise to track the VC investments of the five companies we highlight: Amazon.com Inc. (Nasdaq: AMZN), Google (Nasdaq: GOOG), Intel (Nasdaq: INTC), Microsoft Corp. (Nasdaq: MSFT) and Salesforce.com Inc. (NYSE: CRM. Read our full coverage: Venture forth: How five of the biggest tech companies explore new territory through early-stage investments.

In a period of accelerating technology innovation and investment, it’s critical to stay aware of new technologies, offerings, data and analytics types and business models in your space, and adjacent spaces. Most companies are looking for ways to get better and earlier access to the startup space. While corporate venture capital (CVC) is only one method, it can be a fairly powerful one. Read full coverage: How corporations can benefit from VC investments in technology

Houlihan Lokey, Lincoln International, Jefferies Financial Group, William Blair and Piper Sandler Cos. rank as the top five most active M&A investment banks in 2019, based on the volume of completed private equity-backed deals in the U.S., according to PitchBook. Besides advising on M&A deals, the investment banks on the top 10 list also had a busy year with acquisitions of their own in 2019, including two acquisitions by Houlihan Lokey and three by Stifel Financial. Piper Sandler Cos., was created when Minneapolis-based Piper Jaffray Cos. acquired New York-based Sandler O’Neill & Partners in a deal representing more than half of Piper Jaffray’s $930 million market capitalization. The firm also had another acquisition in 2019 and sold a company to exit the traditional asset management business. See our full coverage: Top investment banks for PE-backed deals in 2019: Houlihan Lokey led the pack.

Audax, HarbourVest and Genstar ranked as the top three most active private equity firms in 2019, based on the volume of completed deals in the U.S., according to PitchBook. Three companies tied for fourth place: Abry, Carlyle and Shore Capital. Where were these PE firms looking for deals? Eight of the firms on our list name the software and technology sector among their top investment targets, and seven put healthcare companies on their priority list. Financial services and consumer services are each named by five of the firms as industries they focus on, with four naming business services companies. Fundraising from investors in 2019 led to two notable fund launches earlier in 2020: KKR’s Global Impact Fund and HarbourVest’s $2.6 billion HarbourVest Fund XI. See our full coverage: Top private equity firms in U.S. deals in 2019: Audax Private Equity ranked No. 1.

To celebrate deals, dealmakers and dealmaking firms, Mergers & Acquisitions produces three special reports every year: the M&A Mid-Market Awards; the Rising Stars of Private Equity; and the Most Influenital Women in Mid-Market M&A. For an overview of what we’re looking for in each project, including timelines, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

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Coronavirus crisis is changing everything, including private equity and M&A

The coronavirus pandemic will change the world and how we live in it profoundly, with dramatic shifts in how we gather and meet, work and learn, make products and distribute them. But exactly how the transformations will play out in the middle market is difficult to discern. Several recent reports and surveys aim to provide a sense of direction.

Preparing for a lengthy downturn, dealmakers expect their organizations to change their business strategy, including cost reductions in the near term and possible layoffs in the next 12 months, according to a poll of 100 global M&A professionals conducted by Datasite from March 26 to April 6. On average, dealmakers rated the intensity of the economic downturn as an eight on a scale from one to 10 with 10 being the worst. Fifty-nine percent said they expect the drop to last longer than seven months. Eighty percent said that the global economic decline is already causing, or likely to cause, significant adjustments to their company’s strategy in the near future, with more than 55 percent expecting to switch from a strategy of growth to a strategy of maintenance or restructuring.

In private equity, general partners are expected to issue smaller and fewer capital calls, finds a recent PitchBook report. “We believe this pandemic-related crisis will differ from past crises in the shorter term,” says the report. “GPs are already issuing capital calls to inject equity and rescue some portfolio companies. Furthermore, many GPs have been or will be issuing capital calls to repay their exiting capital call subscription loans.”

“Buyout fund valuations are expected to fall just as public equity indices have in recent weeks, though to a lesser extent,” says the PitchBook report. Limited partners “must be aware that they are likely to face the denominator effect in their portfolios, which may prevent them from upping their allocations. However, times of crisis tend to be the best times to invest in private (or public) equities and LPs should take advantage of this pricing environment if possible.”

Technology investors and executives also expect the Covid-19 crisis to have a lengthy impact on business operations, leading to a “U-shaped economic recession,” finds a survey of nearly 300 tech executives, entrepreneurs, and private equity and venture capital investors polled by Stifel Financial Corp. (NYSE: SF) April 6 – 12. Says the report: “While a natural slowdown in activity is expected during this period of virus mitigation, we believe that technology will be the key driver of a global economic recovery, and the sector will continue to grow strongly post-pandemic.”

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