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M&A wrap: Riverside, Watermill, Battery Ventures, Brentwood, Sun Capital, Center Rock, IOP, Manufacturing M&A


Manufacturing in the U.S. has contracted to its lowest level in more than a decade. The Institute for Supply Management said that its manufacturing index fell in December 2019 to 47.2. That’s its lowest level since June 2009, when it hit 46.3. This, in addition to a tight labor market, China’s retaliatory tariffs and the upcoming presidential election, has made manufacturing a tricky sector to do business in these days. Still, despite some of the headwinds facing the manufacturing industry, the M&A deal market remains active. Interest rates are low, and companies as well as investors have cash to invest. Additional factors come into play, including the need for consolidation and globalization in the manufacturing industry. Robots are playing a role as well, and manufacturing automation has become appealing. A tight labor market hampers manufacturing companies, but it also leads to dealmaking, especially in robotics. Historic unemployment numbers have led to an extremely tight labor market. Manufacturers have turned to robots for help to meet demand. At the beginning of 2020, filings for U.S. unemployment benefits fell to a four-week low—just one of the latest signs that the labor market remains robust. In fact, in 2017 and 2018 the U.S. consistently added more than 200,000 jobs each month. Private equity firms see the labor shortage as an opportunity to purchase companies that can help with production and push portfolio companies to become more productive and efficient. “The tight labor market and increasing wages have led us to pursue a number of different initiatives at our companies to counteract the resulting pressures created,” says Brad Roberts, a Riverside partner. “Automation is an option. We have also worked closely with our portfolio companies to optimize the productivity and efficiency of our existing workforce and have established new incentives where necessary to increase throughput.” Read our full coverage: 5 trends driving manufacturing M&A.

DEAL NEWS
Battery Ventures has raised two new funds totaling $2 billion, almost double its last total and highlighting investors’ growing interest in companies that cater to other businesses, rather than consumers. The new funds, a $1.2 billion Battery Ventures XIII, along with an $800 million side fund to help back extra-large bets, will keep investing in sectors like business-to-business software, information infrastructure and cybersecurity. Battery’s successes include tax-compliance software maker Avalara Inc., which first received an investment in 2012. Several of Battery’s portfolio companies were also acquired by bigger companies or private equity firms, including WebPT, ClearCare and Glassdoor. Read the full story by Bloomberg News: Battery Ventures raises $2 billion to go after enterprise companies.

Brentwood Associates has acquired Parchment. The target is a credential service that allows academic institutions and employers to request, verify and share credentials in simple and secure ways. Parchment will merge with Credentials Solutions, an education transcript services provider that was purchased by Brentwood in 2018. Goldman Sachs (NYSE: GS) and Quarles & Brady LLP advised Parchment. Shearman & Sterling represented Brentwood.

Sun Capital Partners has bought West Dermartogolgy from Enhanced Healthcare Partners. West operates 55 dermatology clinics throughout Arizona, California and Nevada. “Dermatology is a recession-resistant and growing industry within the broader retail health landscape,” says Sun co-CEO Marc Leder. Jefferies advised West.

Entrepreneurial Equity Partners has acquired Kronos Foods Corp. Kronos makes ready-to-eat Mediterranean foods and is known for its Greek gyros meat. Harris Williams advised Kronos. White & Case advised the buyer.

Center Rock Capital Partners-backed Linc Systems has bought Blackhawk Industrial Distribution’s dealer services business. The latter is a distributor of fasteners and packing supplies to lumberyards and construction materials dealers.

Industrial Opportunity Partners-backed Royston Group has bought Hamilton Laboratory Solutions, a manufacturer of labortory equipment.

Align Capital Partners-backed E Source has acquired predictive analytics company Trove Predictive Data Science.

ADI Global Distribution, a subsidairy of Resideo Technologies Inc. (NYSE: REZI), has acquired Herman ProAv. Herman supplies original replacement parts to the consumer electronics repair industry. The Dak Group advised Herman.

DEAL TRENDS
Broadly Syndicated Loan volume in the middle market declined throughout 2019, as a result of a rise in direct lending, a quiet leveraged buyout market, and a conservative approach from lenders. Interest rate spreads for institutional mid-market loans increased 30 basis points in Q4 2019 compared to Q3 2019 and have increased more than 50 basis points throughout the year, according to Capstone Headwaters, while leverage multiples declined during 2019 by 0.25x to 0.5x depending on the sector.

Family office Watermill has launched WMX, an initiative that brings private equity access and resources to women-led teams. About 28 percent of Watermill’s recent acquisitions have been women owned or led. Investors, advisors, and partners are collectively committed to growing this percentage and providing female leaders with the capital and resources needed to take their businesses to the next level. “We’re widening the path to private equity by making late stage investments in great teams led by women with a vision to build enduring businesses,” says Watermill president and COO Julia Karol. “As a women-led firm, we are committed to using our seat at the table to make more space for more companies with high growth potential. WMX is a mechanism to increase access to key financial, strategic and corporate resources that smart leaders need to thrive.”

Merchant bank the Raine Group has formed a strategic partnership with Brazilian investment bank G5 Partners that will focus on M&A and investment opportunities in the digital media and technology sectors in Brazil. “The TMT sector in Brazil is poised for significant growth,” say Raine co-founders Joe Ravitch and Jeff Sine.

PEOPLE MOVES
Derick Prelle has joined private equity firm Butterfly as a partner and head of portfolio operations. Prelle was previously with KKR.

Malcolm Tuesley has been named head of national security regulatory practice at Simpson Thacher & Bartlett. He joined the law firm in 2018, and advises clients national security reviews before the Committee on Foreign Investment in the United States (CFIUS).

FEATURED CONTENT
Artificial intelligence in healthcare saw about $4 billion in funding across 367 deals in 2019, according to data and research firm CB Insights. Amazon.com 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. Read our full coverage: How Amazon is using M&A to revolutionize healthcare.

Pushed by a groundbreaking California law mandating it, more companies are putting women on their public corporate boards. The law faces pressure in court and may not stand, but its rippling effect has already started to increase the visibility and awareness of the important benefits of board diversity. Investors are taking notice and trying to get ahead of the curve. According to a study published by MSCI in March 2018, having three or more women on a company’s board of directors translates to a 1.2 percent median productivity above competitors. Read the full guest article by Venable’s Belinda Martinez Vega: Why businesses are adding women to their boards.

If there’s anything M&A professionals dislike, it’s uncertainty. And heading into 2020, there’s more than enough uncertainty to go around, including questions about the economy, international trade, impeachment, domestic politics and more. The funny thing is, the lack of clarity may actually make the first half of the year a great time for M&A, as dealmakers push to close transactions before the looming uncertainty of Election Day and its outcome. We conducted interviews with 8 investment bankers and other M&A advisors. Some said the first half of the year will be robust, while others said the uncertainty may have a negative impact throughout 2020. Read the full story, What’s ahead for M&A in 2020? We ask 8 advisors.

Mergers & Acquisitions examines the impact of 7 technologies on M&A in the retail sector. Read the whole series:

Overview: Retail Tech M&A: 7 Technologies Driving Change
Retail Tech M&A #1: Nike, McDonald’s, PayPal, add customization, IoT
Retail Tech M&A #2: Why Walmart and other retailers are buying artificial intelligence startups
Retail Tech M&A #3: Amazon leads race to build fulfillment centers
Retail Tech M&A #4: Do robots fill orders faster?
Retail Tech M&A #5: Voice recognition gives retailers more ways to communicate
Retail Tech M&A #6: Data improves customer service
Retail Tech M&A #7: Demand for convenience drives growth in mobile ordering

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.

EVENTS
ACG New York is hosting the 12th annual healthcare conference and bourbon tasting at the Metropolitan Club in New York on Feb. 27.

ACG Raleigh Durham’s 18th annual capital conference is being from March 31-April 1 at the Raleigh Marriott Crabtree Hotel in Raleigh, North Carolina.

InterGrowth 2020 is taking place at the Aria Resort & Casino in Las Vegas from April 20-22.

Source: The Latest

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M&A wrap: M&A Mid-Market Award Nominations, Nike, Carlyle, Ecosystem, Bain, Freeman Spogli, IOP


The deadline for Mergers & Acquisitions 13th Annual M&A Mid-Market Awards nominations is fast approaching. The awards honor leading dealmakers and deals that set the standard for transactions in the middle market in 2019. Last year’s winners included TA Associates, Nike, Fortive and Hollie Haynes, who took home Dealmaker of the Year for raising a second fund for Luminate Capital Partners. Nominations are accepted only through our electronic forms. The deadline is Friday, Feb. 7, 2020. There is no fee. For more information on the nomination process and what we seek in winning candidates, see Call for nominations: Submissions for the M&A Mid-Market Awards due Feb. 7.

DEAL NEWS
Ecosystem Investment Partners has raised its fourth fund at $455 million. The PE firm focuses on investing in ecological and conservation projects. “These projects meet a large and growing demand for environmental offsets that mitigate unavoidable impacts to wetlands, streams, water quality and other important natural resources stemming from infrastructure, commercial, industrial and residential development,” the firm says in a release. Monument Group and Choate Hall & Stewart advised Ecosystem.

A group led by Bain Capital Private Equity is buying Apax Partners’ and NB Renaissance Partners’ stake in Engineering Group. The target is a IT services provider that focuses on digital transformation. Rothschild, Simpson Thacher & Bartlett, BonelliErede and PwC are advising the sellers.

Freeman Spogli has bought Galco Industrial Electronics Inc. The latter sells electronic industrial control and automation parts. Ropes & Gray advised Freeman Spogli. BB&T Capital Markets and Fried, Frank, Harris, Shriver & Jacobson LLP advised Galco. Madison Capital and BMO Harris provided financing.

Industrial Opportunity Partners has acquired Competition Cams, a manufacturer of aftermarket automotive parts. Winston & Strawn and McDermott Will & Emery advised IOP. Financing was provided by PNC Bank, Freeport Financial Partners and Norwest Mezzanine Partners.

Center Rock Capital Partners-backed Linc Systems has purchased R.V. Evans Co., a distributor of fastening and packaging products.

Warburg Pincus, is considering a sale of Service Logic, a commercial heating, ventilation, and air-conditioning company that could fetch more than $1.5 billion, according to Bloomberg News. Service Logic is one of a number of HVAC assets likely to come to market in 2020. Read the full story by Bloomberg: Warburg Pincus considers Service Logic sale.

Design House has acquired furniture wholesaler Leick Furniture. Livingstone advised the buyer.

Waud Capital Partners has formed a new investment platform to seek deals in the healthcare information technology sector. The PE firm has partnered with former MatrixCare CEO John Damgaard on the platform.

DEAL TRENDS
The Carlyle Group (Nasdaq: CG) reported a fourth quarter loss of $8.3 million, beating analysts expecations. These are the first earnings Carlyle reported since it converted to a corportation. “Carlyle had a great 2019, delivering strong results and reaching key milestones around our most important priorities. With our best in class corporate conversion complete, we are more shareholder friendly and excited to keep our operating momentum going,” say Carlyle co-CEOs Kewsong Lee and Glenn Youngkin.

There were 37 deals in the accounts receivable management sector totaling to $1.7 billion in deal value in 2019, according to Corporate Advisory Solutions. In addition, there were 73 revenue cycle management deals with over $9.6 billion in deal value, and 42 customer relationship management transactions over $5.9 billion in value.

PEOPLE MOVES
Tracy Pizzi has been promoted to partner at consumer-focused private equity firm Yellow Wood Partners. Pizzi joined the firm in 2016 as chief financial officer.

Jim Lott has joined PE firm Peak Rock Capital as a managing director. Most recently with GTCR, Lott is focusing on improving tech-related services within Peak Rock’s portfolio.

Rohan Narayan has joined PE firm One Rock Capital Partners as a partner. He was most recently with Lindsay Goldberg.

Christopher Parisi was hired by investment bank Carl Marks Advisors as a managing director and Michael Gordon has joined as vice president. Parisi was most recently with FPG Advisory, while Gordon comes from KPMG.

Alex Conti has been promoted to managing director at accounting firm UHY Advisors. He focuses on due diligence, restructuring and capital sourcing.

Gregory Klein and Michael Kaplan have koined law firm Simpson Thacher & Bartlett. They were both previously with Irell & Manella and focus on M&A.

Philip Dunlap and David Bowsher were hired by law firm Balch & Bingham as partners. They focus on M&A in the energy sector.

FEATURED CONTENT
Artificial intelligence in healthcare saw about $4 billion in funding across 367 deals in 2019, according to data and research firm CB Insights. Amazon.com 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. Read our full coverage: How Amazon is using M&A to revolutionize healthcare.

Pushed by a groundbreaking California law mandating it, more companies are putting women on their public corporate boards. The law faces pressure in court and may not stand, but its rippling effect has already started to increase the visibility and awareness of the important benefits of board diversity. Investors are taking notice and trying to get ahead of the curve. According to a study published by MSCI in March 2018, having three or more women on a company’s board of directors translates to a 1.2 percent median productivity above competitors. Read the full guest article by Venable’s Belinda Martinez Vega: Why businesses are adding women to their boards.

If there’s anything M&A professionals dislike, it’s uncertainty. And heading into 2020, there’s more than enough uncertainty to go around, including questions about the economy, international trade, impeachment, domestic politics and more. The funny thing is, the lack of clarity may actually make the first half of the year a great time for M&A, as dealmakers push to close transactions before the looming uncertainty of Election Day and its outcome. We conducted interviews with 8 investment bankers and other M&A advisors. Some said the first half of the year will be robust, while others said the uncertainty may have a negative impact throughout 2020. Read the full story, What’s ahead for M&A in 2020? We ask 8 advisors.

Mergers & Acquisitions examines the impact of 7 technologies on M&A in the retail sector. Read the whole series:

Overview: Retail Tech M&A: 7 Technologies Driving Change
Retail Tech M&A #1: Nike, McDonald’s, PayPal, add customization, IoT
Retail Tech M&A #2: Why Walmart and other retailers are buying artificial intelligence startups
Retail Tech M&A #3: Amazon leads race to build fulfillment centers
Retail Tech M&A #4: Do robots fill orders faster?
Retail Tech M&A #5: Voice recognition gives retailers more ways to communicate
Retail Tech M&A #6: Data improves customer service
Retail Tech M&A #7: Demand for convenience drives growth in mobile ordering

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 s for each, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
ACG New York is hosting the 12th annual healthcare conference and bourbon tasting at the Metropolitan Club in New York on Feb. 27.

ACG Raleigh Durham’s 18th annual capital conference is being from March 31-April 1 at the Raleigh Marriott Crabtree Hotel in Raleigh, North Carolina.

InterGrowth 2020 is taking place at the Aria Resort & Casino in Las Vegas from April 20-22.

Source: The Latest

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M&A wrap: Aflac, Varagon, AIG, Apax, L Catterton, IOP, Rockwell, Most Influential Women, Call for Nominations


Aflac Global Investments, a subsidiary of insurer Aflac Inc. (NYSE: AFL) is forming a partnership with middle-market lender Varagon Capital Partners. Varagon is also extending its partnership with American International Group. Aflac is committing up to $3 billion for Varagon to invest in mid-market loans, and is also buying the minority stake in Varagon held by former and current Oak Hill Capital partners and affiliates. Aflac and AIG will own equal stakes in Varagon, and the deal does not reduce Varagon’s ownership. “Middle market credit is a strategically important asset class for Aflac and we are excited to partner with Varagon,” says Aflac global chief investment officer Eric Kirsch. Varagon made about $14.5 billion in financing commitments to around 180 companies, as of Dec. 31. “These long-term commitments from two world-class insurers provide access to substantial capital, enhance Varagon’s capabilities to serve investors and borrowers, and accelerate the execution of our strategic growth objectives,” says Varagon CEO Walter Owens. Wells Fargo Securities and Davis Polk & Wardwell LLP are advising Varagon. Rothschild and Debevoise & Plimpton are advising Aflac. Cadwalader, Wickersham & Taft LLP is representing AIG.

Mergers & Acquisitions has opened up the nomination process for the 13th Annual M&A Mid-Market Awards, which will honor leading dealmakers and deals that set the standard for transactions in the middle market in 2019. Nominations are accepted only through our electronic forms. The deadline is Friday, Feb. 7, 2020. There is no fee. For more information on the nomination process and what we seek in winning candidates, see Call for nominations: Submissions for the M&A Mid-Market Awards due Feb. 7.

CLICK HERE TO SUBMIT A NOMINATION.

DEAL NEWS
Apax Partners and L Catterton have invested $285 million in ClassPass, which gives people access to gyms and fitness studios and allows them to make reservations online. Apax and L Catterton join existing investor Temasek. Kirkland & Ellis represented L Catterton

Industrial Opportunity Partners has acquired acquired Midwest Recycled and Coated Containerboard Mill. The latter manufactures recycled containerboard, for packaging, recycled bag products and white paper for book publishing and printing materials. McDermott Will & Emery represented IOP. JP Morgan Chase Bank and Yukon Partners provided financing.

Human behavior and data analytics firm Escalent has purchased Javelin Strategy & Research from Greenwich Associates. The deal expands Escalent’s presence in retail and small business banking. Marlin & Associates advised Javelin.

Entrepreneurial Equity Partners-backed Daniele International has merged with Creminelli Fine Meats. The target is a producer of charcuterie and protein snacks. BofA Securities advised the Creminelli.

Rockwell Automation (NYSE: ROK) is buying cybsecurity company Avnet Data Security.

PEOPLE MOVES
Mark Satran has joined aerospace and defense-focused private equity firm AE Industrial Partners as a senior managing director. He was previously with Alterna Capital Partners.

Ian Read, a former Pfizer (NYSE: PFE) CEO, was hired by the Carlyle Group (Nasdaq: CG) as an operating executive in the firm’s healthcare group. Read will help Carlyle find healthcare investments. Separately, Carlyle partner Bryan Corbett was hired by the Managed Funds Association, the hedge fund’s industry main trade association, as its new president. The group lobbies on tax and financial regulation issues.

WIlliam Perlstein has joined FTI Consulting Inc. (NYSE: FCN) as a senior managing director and vice chair, client services. He was most recently with BNY Mellon.

Brian Brownschidle, Roger Gill and David Lloyd have been promoted to managing directors at financial services firm XMS Capital Partners.

FEATURED CONTENT
If there’s anything M&A professionals dislike, it’s uncertainty. And heading into 2020, there’s more than enough uncertainty to go around, including questions about the economy, international trade, impeachment, domestic politics and more. The funny thing is, the lack of clarity may actually make the first half of the year a great time for M&A, as dealmakers push to close transactions before the looming uncertainty of Election Day and its outcome. We conducted interviews with 8 investment bankers and other M&A advisors. Some said the first half of the year will be robust, while others said the uncertainty may have a negative impact throughout 2020. Read the full story, What’s ahead for M&A in 2020? We ask 8 advisors.

Mergers & Acquisitions has named the 2020 Most Influential Women in Mid-Market M&A. This marks the fifth year we have produced the list, which recognizes female leaders with significant influence inside their companies and in the wider dealmaking world. It’s been gratifying to watch the project evolve over the years – and become more influential itself. This year, we received more nominations than ever before. As a result, we expanded the number honored to 42 in 2020, up from 36 in 2019. Many dealmakers are new to our list, including Rockwood Equity Partners’ Kate Faust, William Blair’s Shay Brokemond and Avante Capital Partners’ Ivelisse Simon. Read our full coverage of all the champions of change on our list, including Q&As with each individual.

Mergers & Acquisitions examines the impact of 7 technologies on M&A in the retail sector. Read the whole series:

Overview: Retail Tech M&A: 7 Technologies Driving Change
Retail Tech M&A #1: Nike, McDonald’s, PayPal, add customization, IoT
Retail Tech M&A #2: Why Walmart and other retailers are buying artificial intelligence startups
Retail Tech M&A #3: Amazon leads race to build fulfillment centers
Retail Tech M&A #4: Do robots fill orders faster?
Retail Tech M&A #5: Voice recognition gives retailers more ways to communicate
Retail Tech M&A #6: Data improves customer service
Retail Tech M&A #7: Demand for convenience drives growth in mobile ordering

Albertsons, Kroger Co. (NYSE: KR), Stop & Shop and Walmart (NYSE: WMT) are building automated mini-warehouses and “dark stores” to make deliveries and prepare pickup orders. Mini-warehouses are usually attached to existing stores, and in most cases, “dark stores” are completely separate. Both formats are closed off to customers, and are mostly automated. They use the assistance of robots for speed, save on labor, and get orders out faster. Kroger bought a five percent stake in robotics firm Ocado. Read our full coverage: Smart supermarkets become popular, as Kroger, Walmart add them.

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 Influential Women in Mid-Market M&A. For more on the timeline and nomination process for each, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
The Annual AM&AA Winter Conference is taking place in Scottsdale, Arizona Jan. 8-10.

Deal Wave is being hosted by ACG Orange Country at the Ritz-Carlton-Laguna Niguel in Dana Point, California on Jan. 9.

ACG New York is hosting the 12th annual healthcare conference and bourbon tasting at the Metropolitan Club in New York on Feb. 27.

Source: The Latest