Kirkland & Ellis distinguished itself among many sterling law firms in the middle market in 2016, not only in the volume of deals it advised on, but through its work in technology M&A transactions and tech fund formation.
Technology is projected to be one of the hottest sectors for middle-market M&A, and Kirkland & Ellis foreshadowed that trend by advising on several significant middle-market tech M&A funds that closed to investors in 2016. Those funds included HGGC Fund III, which the Palo Alto, California-based HGGC raised in less than 100 days and closed at $1.84 billion. HGGC is investing in companies updating technology in businesses like grocery stores and insurance providers.
Kirkland also advised on Thoma Bravo Fund XII, which closed in September at $7.6 billion. The Thoma Bravo firm, based in Chicago and San Francisco, is pursuing software and technology opportunities with the new fund, as the software industry grows to serve all areas of the economy.
In the lower-middle market, Kirkland & Ellis advised Chicago-based ParkerGale Capital LP on its $240 million debut debt buyout fund, which makes majority investments in founder-owner tech companies with Ebitda of $2 million to $10 million.
With its fund formation business, Kirkland & Ellis made a push for new clients in 2016 that signed more than 100 PE sponsors as clients, including about 25 middle-market M&A firms, said John O’Neil, a corporate partner at the firm and head of its investment funds group.
Tech funds, along with the tech M&A deals driving the formation of those funds, were among strongest areas of growth for Kirkland & Ellis in 2016, O’Neil said. For limited partners, “a lot of times the technology is used across so many different industries that actually an investment into tech brings a level of diversification to the portfolio that you otherwise might not expect,” O’Neil said.
Kirkland & Ellis advised on 275 completed mid-market transactions worth $21.6 billion in 2016, according to data from Thomson Reuters on transactions worth $1 billion or less, including those with undisclosed terms.
Among the firm’s notable M&A practice hires in 2016 was Jonathan Davis, who joined as a partner from Cravath, Swaine & Moore in December. Kirkland has more than 700 attorneys globally in its corporate practice, which advises on middle-market M&A transactions as well as a wide range of types of corporate transactions.
Kirkland’s notable deals in 2016 included advising Accenture Plc (NYSE: CAN), the global professional services provider, on its agreement to purchase DayNine, a cloud-based human resources consulting and deployment services provider. The law firm also advised telecom network provider Inteliquent Inc. (Nasdaq: IQNT) on its sale to GTCR LLC for nearly $800 million.
For Kirkland & Ellis, the sizable volume of middle-market deals it advised on and the fund formation business growth are tied together, as more PE firms aim to consolidate their law services business with law firms, O’Neil said.