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.
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.
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.
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.
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.