M&A daily wrap: Francisco Partners, Grant Thornton, Spirit AeroSystems
Francisco Partners is acquiring learning analytics provider Renaissance Learning Inc. from Hellman & Friedman and others. The acquisition follows FP's sale of MyOn, which provides software aimed at honing reading and writing skills, to Renaissance. Chris Bauleke, former CEO of MyOn, is taking on the role of chief executive of Renaissance, while former Renaissance CEO Daniel Hamburger remains as an advisor. “Francisco Partners is the ideal partner for Renaissance through the next stage of the company’s growth,” says Hamburger. “Their deep commitment to education and technology will help the organization deliver on our purpose of accelerating learning for all.” Renaissance recently formed a strategic partnership with Houghton Mifflin Harcourt. Renaissance products are used in 70-plus pre-K through 12th grade schools worldwide. Macquarie Capital is the financial advisor to Renaissance, with Simpson Thacher & Bartlett serving as legal advisor. Barclays and Jefferies are FP's financial advisors and providers of debt financing for the acquisition; Kirkland & Ellis is the legal advisor. Francisco Partners is currently leading a group of investors in a take-private deal of Verifone Systems Inc. (NYSE: PAY), which provides payment and commerce products; and buying Bomgar, a cybersecurity developer, from Thoma Bravo.
“With valuations near all-time highs and a high degree of competition for deals, it’s more important than ever to take a holistic approach to diligence—including financial, operational and cultural diligence, to identify additional synergies and realize those synergies to drive transaction value," says Jim Peko, national managing principal, Grant Thornton LLP. The audit, tax and advisory firm has published the findings of a survey of 400-plus CEOs, managing directors, chief financial officers and other executives. The report, called the 2018 Deal Value Curve Study, says that M&A professionals are underwhelmed by the income and the rate of return generated by M&A deals. Only 14 percent of respondents said that deals exceed their initial expectations for income or rate of return. Only 37 percent agree strongly that efficient M&A is a well-understood core competency of their company. “We’ve found that if you are proactive in your M&A approach, you can achieve higher conversion rates, and deals turn out better across the board,” says partner Ed Kleinguetl. “But being proactive starts with being clear—that means translating your larger corporate strategy into a defined M&A strategy.”
Spirit AeroSystems Holdings Inc. (NYSE: SPR) is buying the parent company of ASCO Industries, supplier to the commercial aerospace industry and the military. Wichita, Kansas-based Spirit is paying $650 million in cash for the company, formally called SRIF, and plans to finance the acquisition through new debt. CEO Christian Boas will remain at the acquired company after the deal closes. Asco supplies fuselages, pylons, nacelles and wing components to aerospace suppliers. "ASCO is a compelling fit for Spirit that aligns extremely well with the strategic priorities we have been communicating,” says Spirit CEO Tom Gentile. “Specifically, it expands our Airbus content on A320 and A350 wings, adds new defense content on the F-35 and broadens our commercial capabilities to help grow our fabrication business." Spirit’s financial advisors are Methuselah Advisors and Goldman Sachs & Co., with Sullivan & Cromwell and Stibbe serving as legal advisors. Skadden, Arps, Slate, Meagher & Flom is advising Goldman Sachs. Lazard is financial advisor to the seller, and Eubelius and Gibson Dunn & Crutcher are legal advisors to the seller.
Boston-based tax software provider Sovos is acquiring Stockholm-based TrustWeaver, a provider of cloud software for archiving documents for value-added-tax audits. The deal coincides with Italy's becoming the first country in the European Union to require electronic invoicing, which is paving the way for an expansion of real-time, transaction-level reporting in Europe, explains Sovos. With the acquisition, Sovos extends its e-invoicing coverage to 60 countries in Europe, the Middle East, Africa and the Asia-Pacific region, adding to its customer base in Latin America, where e-invoicing has been used in recent years to close VAT collection gaps. In recent years, governments on six continents have mandated electronic signature rules, including proof of authenticity and proof of origin, and required invoice archiving for audit purposes, where specific invoice details must be searchable for as many as 10 years. TrustWeaver’s software automates compliance with those rules.
Hidden Harbor Capital Partners, an operationally focused private equity firm specializing in control investments in lower middle-market companies, has acquired the aftermarket division of Cloyes Gear & Products Inc., a subsidiary of American Axle & Manufacturing Inc. NYSE: AXL) Based in Fort Smith, Arkansas, and founded in 1921, Cloyes makes timing drive systems and components for replacement applications in the automotive aftermarket and high-performance racing segment.
As the auto industry readies for autonomous driving, there's a big wave of consolidation going on among makers of traditional car parts. Buyers include CenterOakPartners, Clearlake Capital Group and Wabash National. Meanwhile, Carl Icahn is among the sellers. Deals in the nascent self-driving sector are also thriving. Intel bought Israel's Mobileye for about $15 billion. Meanwhile, in a much smaller deal, Delphi bought NuTonomy. Check out our slideshow on the rush of auto deal activity.
CFGI, a national provider of high-end technical accounting and finance advisory services to the office of the CFO, has established an office in Washington, DC and named industry veteran Sean Turner as a partner and head of the new office. Turner brings 24 years of experience in professional services with a focus on building high performing, collaborative teams that provide hands-on accounting, financial reporting and advisory services. He specializes in advising clients in the areas of SEC reporting, initial public offerings, technical accounting, mergers and acquisitions and enterprise risk management. The Carlyle Group LP (NASDAQ: CG) invested in CFGI in March.
Alexander Horn has joined the private equity industry team of McGuireWoods as a partner in Raleigh, as the firm’s corporate practice continues growing in North Carolina’s Research Triangle region. Horn advises publicly traded business development companies (BDCs), small business investment companies (SBICs) and other private debt funds in a range of transactions. McGuire Woods won Mergers & Acquisitions’ M&A Mid-Market Award for 2017 Law Firm of the Year.
Kahlil Yearwood has joined Gibson, Dunn & Crutcher LLP as a partner in the firm’s San Francisco office. Yearwood, formerly with Dechert LLP, continues his real estate finance practice at Gibson Dunn.
Juniper Capital Management, a Dallas-based private equity firm, has added Ben Phillips as an associate, business development. Before joining Juniper, Phillips served as a senior associate in Transwestern’s industrial services group.
Watch our video interview with LLR Partners managing director Michael Sala, in which he outlines what the Philadelphia firm looks for in portfolio companies and how LLR helps them grow. LLR won Mergers & Acquisitions’ M&A Mid-Market Award for 2017 Private Equity Firm of the Year.
Huron Capital, Michigan's most active private equity firm and winner of Mergers & Acquisitions’ M&A Mid-Market Award for 2017 Seller of the Year, recently raised the $141 million Huron Flex Equity Fund for making non-control investments. We asked Huron managing partner Brian Demkowicz about the new fund and the thinking behind it. Read our Q&A here.
Read our Q&A with GTCR managing director Aaron Cohen about The Leaders Strategy and the Chicago firm's sale of Callcredit, a U.K. provider of real-time credit reports, to TransUnion (NYSE:TRU) for about $1.4 billion.
Check out our Q&A with ParkerGale partner Devin Mathews about the firm's recent investment in CultureIQ/Corporate Executive Board, overall market trends and the firm’s podcast. Read the full Q&A here.
KKR, LLR Partners, the Riverside Co., Shore Capital Partners, TA Associates and other private equity firms and strategic buyers, including Cognizant (Nasdaq: CTSH), are investing in eye doctors, dentists and veterinarians, plus revenue cycle management providers and other areas of healthcare that are ripe for consolidation, as Mergers & Acquisitions explores in our in-depth feature,Why private equity firms like veterinarians, opthamologists and dentists,and slideshow, 6 healthcare specialties driving M&A deals.
Read full coverage of Mergers & Acquisitions' 11th annual M&A Mid-Market Award winners: Campbell Soup, Huron Capital, Idera CEO Randy Jacops, LLR Partners, McGuireWoods, Stryker, Twin Brook and William Blair.