M&A daily wrap: BMO, A&M, InterGrowth, board diversity, innovation investing
Dealmaking is all about building relationships, and few events provide a better opportunity than the ACG InterGrowth 2018 conference to forge new connections and fortify old ones. The event, held May 2-4 at the Marriott Marquis San Diego Marina, draws some 2,000 M&A pros. Mergers & Acquisitions team members are there, conducting video interviews in the InterGrowth Lounge. Stop by and introduce yourself. Don't miss the keynote talk by Jeff Immelt, who served as CEO and chairman of General Electric Co. (NYSE: GE) from 2001 to 2017. While his legacy at GE is currently being reexamined by some observers, his bio argues he "transformed GE into a simpler, stronger and more focused digital industrial company." The divestiture of GE Capital assets under his watch launched a highly competitive process for prolific middle-market lender Antares Capital, bought by the Canada Pension Plan Investment Board for $12 billion. Leading the conversation with Immelt is Jay Jester, managing director, Audax Private Equity, who serves on the board of ACG Global. Other don't-miss sessions at InterGrowth include: Women's Networking Breakfast; The Importance of Gender-Diverse Boards and Management When Investing in Companies; Updates from the Capitol – The Latest on Tax Reform and M&A; Innovation Investing: How to Be on the Right Side of Disruption; and Filling the Workforce Gap: Talent Management Best Practices for Your Mid-Market Business.
BMO Financial Group (NYSE: BMO) is acquiring KGS-Alpha Capital Markets, a New York-based fixed income broker-dealer specializing in U.S. mortgage- and asset-backed securities in the institutional investor market. KGS has 135 employees, including 84 sales and trading professionals, mostly in New York with seven other offices across the U.S. According to BMO, the acquisition complements its existing mortgage-backed securities trading business and it makes BMO a top-tier dealer in securitized products, especially agency-backed residential and commercial mortgage-backed-securities products. "BMO has built a solid capital markets platform in the U.S.," says CEO Pat Cronin. "The acquisition of KGS is highly complementary to our strategy, leverages our existing capabilities and allows us to better serve our clients. The size and scope of the MBS bond market represents a tremendous opportunity to continue to diversify our platform, and grow revenues with key new initiatives." Upon closing, KGS-Alpha will take on the BMO Capital Markets name, with the KGS team joining the BMO Capital Markets trading products group. According to BMO, the mortgage-backed bond market is the second-largest U.S. fixed income securities market. BMO Capital Markets is the financial advisor to BMO on the deal, with Sullivan & Cromwell LLP and Osler, Hoskin & Harcourt LLP acting legal counsel. Credit Suisse Securities is financial advisor and Simpson Thacher & Bartlett LLP is legal counsel to KGS. Terms of the deal were not disclosed.
Alvarez & Marsal, a global professional services firm based in New York, is establishing the A&M Global Transaction Analytics service offering, which will be led globally by Steven Lee, a managing director with the global transaction advisory group. The new offering aims to help clients find business insights embedded in due diligence for buy-side and sell-side transactions and capital markets activity. “We will leverage A&M’s world-class operational and in-depth financial accounting due diligence expertise to best identify key investment performance metrics for our private equity and strategic clients,” says Lee. Data analytics is integral to the future of due diligence and the transaction advisory process, says Paul Aversano, global head of the firm's transaction advisory group.
Audax Private Equity-backed CoolSys, which owns refrigeration and HVAC companies, is acquiring Axiom Energy Solutions, a provider of energy-efficient equipment and technology. The deal combines companies serving energy optimization services across the U.S., particularly for retail grocery businesses. “Our acquisition of Axiom is just the beginning of the investments that we plan to make in bringing expanded capabilities to our CoolSys Energy Solutions customers,” says CEO Adam Coffey. Axiom engineers customized solutions to address the energy, sustainability and compliance needs for companies in the supermarket, non-food retail, convenience store, hospitality, healthcare and education sectors. CoolSys is headquartered in Southern California with more than 1,400 field-based service and installation employees and more than 3,500 customers across North America. Axiom has implemented more than $750 million in energy projects, installed and managed more than 20,000 facilities, designed more than 2,000 lighting systems and installed more than 1.7 million fixtures in facilities for its clients. Boston-based Audax targets lower middle-market companies with up to $35 million in Ebitda.
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 LLR helps them grow. LLR won Mergers & Acquisitions’ M&A Mid-Market Award for 2017 Private Equity Firm of the Year. It is one of the most active private equity firms in the middle market, having racked up 28 transactions in 2017, including four new platform investments, 18 add-on acquisitions and six exits.
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.
As Americans plan road trips and other summer vacations, car deals are thriving, especially in the nascent self-driving tech sector. Intel bought Israel's Mobileye for about $15 billion. Meanwhile, in a much smaller deal, Delphi bought NuTonomy. As the 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. Check out our slideshow on the rush of activity.
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.