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M&A wrap: Clearlake, JPMorgan, Goldman Sachs, Coronavirus, W20, Autodesk, M&A Mid-Awards

Clearlake Capital has raised its sixth private equity fund at $7 billion, raising the firm’s total assets under management to about $18 billion. Clearlake focuses on the consumer, industrials and technology sectors. “The Clearlake strategy has positioned our firm to take advantage of defensive growth as well as turnaround opportunities in this market,” says Clearlake co-founder Behdad Eghbali. “These are extraordinary times, and we believe our team is well-prepared to support existing portfolio companies as well as source new platforms as we invest this new fund.” In 2019, Clearlake raised its second non-control middle-market fund at $1.4 billion. “In this dynamic market, we believe our experience, focus, and flexibility will allow us to partner with more exceptional management teams as we build lasting value for our platforms and limited partners,” adds Clearlake co-founder José E. Feliciano. Credit Suisse Securities (USA) LLC served as Clearlake’s placement agent on the latest fundraise and Kirkland & Ellis LLP provided legal advice.

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.

W20 has acquired Symplur, a social media analytics firm for the healthcare sector. “Partic ularly in these challenging, uncertain times reverberating across global communities and economies, healthcare companies are looking to track essential information in an urgent and immediate manner utilizing data and analytics to discern insights for decision-making,” says W2O CEO Jim Weiss.

Autodesk Inc. (Nasdaq: ADSK) has acquired a minority stake in construction software company Aurigo Software. “Difficult economic environments and labor shortages consistently prove the need to optimize the building process for the future,” says Jim Lynch, vice president and general manager for Autodesk Construction Solutions.

JPMorgan Chase & Co. said first-quarter profit tumbled 69 percent to the lowest in more than six years as credit costs surged, giving investors a first glimpse at the extent of the damage Covid-19 is wreaking on bank results. Read the full story by Bloomberg News: JPMorgan profit sinks to lowest since 2013 on virus fallout.

Advanced economies will shrink about 35 percent this quarter from the prior three months, four times as much as the previous record set in 2008 during the financial crisis, according to annualized figures from Goldman Sachs Group Inc. Read the full story by Bloomberg: Goldman sees advanced economies shrinking 35 percent amid pandemic.

The global impact is one that no business can ignore. The outbreak is an international issue that touches all aspects of business, including M&A. Before the outbreak, middle market M&A transactions were on the rise and were predicted to steadily increase over the upcoming years. However, against this new backdrop, the outlook for M&A activity is—understandably—highly uncertain. Read full coverage: How to manage post-closing disputes in M&A as a result of the coronavirus.

The coronavirus continues to impact the global economy. In the middle market, companies are proactively drawing down on revolving lines of credit and other sources of financing to put cash on the balance sheet to weather the storm. 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

There is no question the global pandemic is disrupting the M&A landscape, injecting significant uncertainty into the deal-making market. In addition to delaying or derailing potential transactions, 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 full story: How the coronavirus forces dealmakers to assess effectiveness of RWI policies.

Genuine economic deterioration is a primary risk to private capital markets – PE tends to behave as a GDP-linked business. As consumer spending and business investment is set to decline, we expect to see a slowdown in PE transaction volume that follows the expected economic contraction. Read the full story: Private equity deals will slow down, as global economy stalls amid coronavirus pandemic.

While the long-term economic impact on American companies remains uncertain, there are important lessons to learn on how to manage future pandemic risks. Read the full story: Coronavirus contingency planning checklist for the middle market.

The coronavirus threat is the type of risk that material adverse change, or MAC, clauses are designed to address in M&A. Why the coronavirus makes material adverse change (MAC) clauses more important than ever.

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: Inc. (Nasdaq: AMZN), Google (Nasdaq: GOOG), Intel (Nasdaq: INTC), Microsoft Corp. (Nasdaq: MSFT) and 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 forces triage on private equity-backed healthcare deals

The impact of the Covid-19 pandemic on the healthcare sector is immense and varied, with nuances by subsector and geographic region. A significant aspect of the emergency and acute care delivery system has mobilized to address the virus while healthcare services focused on non-essential and elective care have been delayed. …

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Tyto Care raises $50 million as it looks to buy and build new services during COVID-19 demand surge

Tyto Care, the provider of a home health diagnostic device and telemedicine consultation app, said it has raised $50 million in a new round of funding.
The round was led by Insight Partners, Olive Tree Ventures, and Qualcomm Ventures, according to a statement, and brings the startup’s total capital raised to more than $105 million.
The funding comes just as Tyto has seen a dramatic surge in demand brought on by the global response to the COVID-19 pandemic. Tyto Care’s toolkit is being used as a telehealth diagnostic solution that was already seeing three times sales growth in 2019 alone.
Last …

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Deerfield raises $840 Million in new healthcare venture fund

Healthcare investment firm Deerfield Management Co. has raised $840 million for a new venture capital fund dedicated to early drug innovation, digital health and medical technology.New York-based Deerfield said half of the funds will be used to back companies and academic institutions developing new drugs. The rest will be put …

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M&A wrap: Coronavirus, BorgWarner, Delphi, BabyQuip, 5Capital, Hampleton Partners, Alvarez & Marsal, Riverside, M33 Growth, Paul Hastings

BorgWarner Inc. (NYSE: BWA) may back away from its $1.5 billion deal for Delphi Technologies Plc after the latter auto parts supplier tapped out its credit line without receiving permission from its acquirer. Delphi drew down its full $500 million revolving credit facility to position for the downturn related to the coronavirus …

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M&A wrap: Coronavirus, Blackstone, HealthEdge, JLL, Warburg Pincus, Conanicut Capital, Riverside, Paul Hastings

The Dow Jones Industrial Average opened more than 700 points higher on Tuesday after the federal government said stimulus measures could be on the way. The news comes one day after the stock market posted its worst day since 2008, as oil prices plunged and investors continue to assess the impact of …

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Innovaccer wants to be the service that unifies all healthcare data

The holy grail for technology companies working in the healthcare industry is becoming the gateway for all healthcare data.

Big legacy providers like Epic and Cerner are trying to reach out to hospital networks to hoover up all of their data. Google is interested in it. Salesforce is interested in it. Everyone wants to be the resource that organizes and manages healthcare data for physicians and hospital providers — everyone including the San Francisco-based startup Innovaccer, which has raised $70 million in new financing to finance its mission.

The new investment from firms including Steadview Capital, Tiger Global, Dragoneer, Westbridge Capital, the Abu Dhabi investment firm Mubadala Capital, and Microsoft’s corporate investment arm, M12.

These are deep-pocketed investors for whom money is no object, but Innovaccer has shown a fair bit of traction among hospitals and health systems with its data analysis and management platform.

The company’s software pulls from datasets including those generated by Cerner and Epic’s healthcare records, as well as insurance companies and pharmacies to create a more holistic view of a patient, the company says.

Since its launch in 2014, Innovaccer has provided a single source or healthcare information for 3.8 million patients and saved healthcare systems more than $400 million, the company said.

“Healthcare still needs a lot of work to become patient-centered and connected by organizing information and making it more accessible. It is really important to make patient data seamlessly available to all providers along the patient’s care journey,” said Abhinav Shashank, the co-founder and chief executive at Innovaccer, in a statement. “We have been fortunate to work with transformational healthcare initiatives that our amazing customers are engaged in. The vision of helping healthcare work as one needs a connected and open technology framework. We are excited to be at the forefront of providing the tech platform for our customers to drive that change.”

Its technology relies on over 200 APIs to take data from health plans, primary care providers, pharmacies, labs and hospitals and serves that data to 25,000 care providers. The company hopes to take that number ot over 100 million healthcare records and 500,000 caregivers over the next several years.

It’s a lofty goal, but one that appeals to the Ravi Mehta, the founder of the $2.5 billion hedge fund Steadview Capital.

“By using their connected care framework coupled with their leading-edge data aggregation and analytics platform, they are unifying patient records and enabling care teams to coordinate patient care at a new level,” said Mehta. “We believe this will achieve greater efficiencies, enable better care and reduce overall healthcare spend in the years to come.” 

Source: TechCrunch

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How Amazon is using M&A to revolutionize healthcare

Artificial intelligence in healthcare saw about $4 billion in funding across 367 deals in 2019, according to data and research firm CB Insights. Inc. (Nasdaq; AMZN) is no exception. The tech conglomerate is using its recent deals for Health Navigator and PillPack to launch new software services in healthcare. Health Navigator works with companies like Microsoft Corp. (Nasdaq: MSFT) in offering services such as remote diagnoses, and with triage to help patients figure out whether to stay at home, see a doctor or go straight to the emergency room. Health Navigator has joined Amazon Care, which is designed to serve as a medical benefit for employees and helps provide care virtually through a video visit, or home visits, if additional care is needed.

Shortly after Amazon announced its purchase of Health Navigator, the company launched Transcribe Medical, a medical transcription service that captures conversations between doctors and patients and turns them into digital formats for medical records.

PillPack is also growing within Amazon. The company, now called PillPack by Amazon Pharmacy, is working with Blue Cross Blue Shield of Massachusetts to launch a new pharmacy integration app that helps members manage prescriptions by using Amazon’s own Internet pharmacy. BCBSMA is the first health plan provider to offer this type of integration with PillPack.

In other related deals MTBC, a developer of cloud-based software for healthcare and revenue cycle management tools, closed a deal for CareCloud in January 2020. CareCloud, founded in 2009, provides medical software to manage practices, electronic health records and patient experience. The company serves more than 7,000 healthcare professionals.

“CareCloud’s cutting-edge cloud-based software, which, through its existing partnerships, leverages Amazon and Google cloud platforms, brings to MTBC exciting new technology integrations,” said A. Hadi Chaudhry, president of MTBC, in a statement.

In 2018, Amazon’s Alexa Fund and the Google Assistant Investment Program, announced that they invested in patient voice assistant Aiva, which specializes in hands-free communication between patients and caregivers. The Aiva system lets patients choose entertainment or educational information, or to set reminders.

The Alexa Fund invests up to $200 million in venture capital in voice technology companies. “We believe experiences designed around the human voice will fundamentally improve the way people use technology,” according to Amazon’s website. Google Assistant Investment Program also backs early-stage voice assistance programs.

Source: The Latest

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H1 Insights is giving the healthcare industry the ultimate professional database

I want to build a business which profiles every single researcher and healthcare professional in the world and I want to sell it to industry,” says Ariel Katz, the co-founder and chief executive of H1 Insights. 

With the healthcare industry on a mission to digitize and analyze every conceivable datapoint it can to wring more efficiencies out of its incredibly fragmented and broken system, for Katz, there’s no opportunity that seems more obvious than giving the industry data on its own professionals.

The idea may sound like nothing more than creating a LinkedIn for healthcare professionals, but building an accurate account of the professional ecosystem could be a huge help to businesses as diverse as pharmaceutical companies, hospitals, insurers, and, eventually, consumers.

For Katz, it’s the continuation of a longstanding mission to create transparency for datasets that were previously opaque. Katz sold his first company, Research Connection (which became LabSpot), three years ago. That company was designed to uncover the research underway at universities around the country so students could see where they should apply for undergraduate and graduate studies.

After the sale the young entrepreneur went on a vacation to India, and it was there that he met his co-founder Ian Sax. “He backpacked there to follow his wife who was volunteering with Mother Theresa [and] ended up starting a staffing company.”

The two men became friends and collaborated on projects — including a software that would help medical school students find jobs.

Conversations between the two soon hit upon the lack of transparency around what research was happening at what universities and which clinical trials were underway at which hospitals. A visible network of experts, the two men thought, would go a long way toward solving a number of the healthcare industry’s seemingly intractable problems.

“Pharma, biotech, and medical devices spend $30 billion per year partnering with researchers and hospitals,” says Katz. “If you could allow a user sitting on the pharmaceutical side to sort and search and rank and analyze researchers… it would help reduce the cost and solve the problem.”

While Katz says the transparency can help solve a number of healthcare’s drug development and discovery problems, he’s wary about creating others. H1 Insights has built certain rules on how its database should be used, which Katz hopes will limit abuse.

“We don’t sell to sales and marketing arms at pharmaceutical companies,” he says. The risk there is that these sales and marketing arms could put undue pressure on doctors to skew research.

The data that H1 collects is already public, so there’s no need for the company to use user generated data to build out its dataset. “It’s all public. The biggest problem is de-duping it,” says Katz.

The company already has 350,000 academic researchers and 4 million healthcare professionals in its database already.

That body of knowledge was enough to attract Y Combinator, which accepted H1 Insight into its latest cohort of companies.

With the accelerator’s help, H1 Insights wants to take its business global and develop applications for the pharmaceutical industry, care providers and ultimately consumers.

The initial application for all of that data is clinical trials.

“The number one reason why clinical trials fail is recruitment,” says Katz. “If you can find a principal investigator who has done a successful clinical trial in an adjacent space,” pharma companies can improve their chances for success, according to Katz. 

Source: TechCrunch

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Blackstone, KKR hidden hands in ad blitz unleashes Washington fury

Confronted with the rare prospect of defeat on Capitol Hill, private equity titans Blackstone Group Inc. and KKR & Co. unleashed a national advertising blitz last year against legislation that threatened their investments in health-care companies valued at $16 billion.

The $53.8 million campaign sought to derail a crackdown on surprise medical billing, in which patients are unexpectedly hit with exorbitant charges, often following visits to emergency rooms. Television ads depicted patients in trauma being denied care and urged viewers to contact lawmakers, dozens of whom were identified by name.

The onslaught ended up generating a bi-partisan backlash, and a rebuke from President Donald Trump’s White House, in large part because Blackstone and KKR didn’t reveal that medical-staffing companies they owned were bankrolling the effort.

“It was a dumb strategy,” said Representative Greg Walden, the top Republican on the House Energy and Commerce Committee, which is investigating Blackstone and KKR’s investments in medical-staffing companies. “All it’s done is driven a bunch of us to double down. They would have been much better served to just come in and talk to us about their concerns.”

The furor comes at a time when private equity firms need allies in Washington. The industry is under attack from progressive Democrats, who accuse it of looting companies, putting Americans out of work and profiting from investments in unethical businesses. Among the chief adversaries is presidential candidate Elizabeth Warren, who has proposed making private-equity executives pay much higher taxes and tying their earnings to the success of companies they control.

Those involved in the influence campaign say it was necessary — even if it did irk some lawmakers — because Blackstone and KKR have so much at stake.

The bill they are fighting would effectively cap how much medical-staffing firms, which outsource doctors to hospitals, can charge patients. Blackstone completed an acquisition of TeamHealth in 2017, valuing the company at $6.1 billion. KKR bought Envision Healthcare, valued at $9.9 billion, a year later. Health-care policy analysts predict revenues would fall significantly if Congress capped the companies’ fees.

TeamHealth and Envision support competing legislation that would resolve payment disputes between medical providers and health-insurance companies through arbitration. They argue the cap would be a boon for insurers that would hurt patients by triggering doctor shortages.

“A very broad coalition of doctors, patients, and bi-partisan members of Congress — not just TeamHealth — believes that arbitration is the right approach to end surprise medical bills,” Blackstone spokesman Matthew Anderson said in a statement. “By contrast, the insurance-industry-backed bill for government rate setting has generated widespread opposition from many quarters given concerns it would harm the availability of high-quality patient care, which is the real reason it has failed to gain support.”

KKR’s Envision made similar points, saying in a statement that it “will continue advocating for an effective independent dispute resolution process that puts patients first.” KKR fully supports those efforts, Envision said.

TeamHealth and Envision funded the tsunami of ads. Opponents such as Walden, who backs the bill that TeamHealth and Envision are trying to kill, concede the campaign slowed momentum on Capitol Hill.

But the fight is far from over. In December, lawmakers tried to include a measure on surprise-medical billing in year-end legislation funding the federal government but couldn’t work out their differences. Key negotiators in the House and Senate have now set a deadline of May 2020 to strike a deal, at which point they intend to include a proposal in negotiations to extend funding for expiring health-care programs.

TeamHealth and Envision influenced the debate via a front group called Doctor Patient Unity. One ominous ad showed an ambulance arriving at a hospital with a dark and empty emergency room — all because of “government rate setting.”

“The ads are disgusting and are only meant to take advantage of vulnerable Americans,” White House domestic policy adviser Joe Grogan, a former pharmaceutical industry lobbyist, said in a statement. “The administration remains undeterred as we meet with members of both parties to find a bi-partisan solution to end crushing surprise medical bills.”

Calls from anxious voters flooded the offices of House and Senate members after the ads began to run. Once lawmakers started probing, they found out that Blackstone and KKR controlled the companies behind them. No advocacy group spent more than Doctor Patient Unity on a single issue in 2019, according to Advertising Analytics, which tracks political ads.

“They’ve made a lot of enemies,” Senator Jeanne Shaheen, a New Hampshire Democrat, said in an interview. “They deliberately misled the American public.”

Surprise medical billing has long been controversial. It happens when patients don’t realize that all the doctors who treat them during a hospital visit aren’t covered by their insurance.

One proposal that was gaining traction last year would restrict out-of-network medical providers from billing patients the full amount for services. Instead, medical bills would be based on the median rates paid to in-network providers, likely hurting TeamHealth and Envision’s profits.

With the debate heating up on Capitol Hill, Doctor Patient Unity started blanketing airwaves in July. Its biggest ad buys have been in states where lawmakers face tough re-elections this year, including North Carolina, Georgia, Colorado and Minnesota. Running the campaign is Narrative Strategies, a Washington-based communications and advocacy firm.

Greg Blair, a spokesman for Doctor Patient Unity at Narrative Strategies, said the group had to step up to counteract insurers, which have spent almost $50 million to lobby for legislation that would have “severely harmed patients.”

“As the insurance industry pressed lawmakers to rush their legislation through Congress, our coalition worked to educate voters about the harmful consequences of rate setting,” Greg Blair said in a statement.

At the Minnesota State Fair in August, Democratic Senator Tina Smith said voters flooded her booth to share how “completely confused” they were by Doctor Patient Unity’s campaign.

Smith added that the group’s ads sent mixed messages. She felt targeted by an early version even though she was co-sponsoring the bill that TeamHealth and Envision supported. Then, with no disclosure of who was funding the ads, Doctor Patient began airing new ones thanking Smith.

“You ought to at least have the guts to say who you are,” she said.

The fight is erupting as Trump seeks re-election. Private-equity executives say privately that they expect to be wearing a bullseye in 2020, with critics shining a spotlight on policy wins the industry secured during his first term.

House Financial Services Committee Chairwoman Maxine Waters has already said she plans to hold a hearing early this year featuring executives from top firms. Meanwhile, progressive groups such as Americans for Financial Reform and United for Respect are funding anti-private equity campaigns.

The scrutiny won’t be helpful should Congress turn its attention back to surprise-medical billing, something the firms’ opponents on the issue have pledged to do.

“I’m going to do everything I can to keep surprise medical billing on the front burner,” retiring Republican Senator Lamar Alexander of Tennessee said in an interview. “It’s a bill that almost everyone wants passed except a handful of people, including private equity firms that benefit from it.”

Source: The Latest