M&A wrap: TA, Vista, Aptean, HSG, Carillon, ClariVest, Windjammer, ABE, Ascendant

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TA Associates and Vista Equity Partners are investing in Aptean, an enterprise software developer focused on manufacturing customers and headquartered in Alpharetta, Georgia. TA and Vista, along with members of Aptean’s executive management team who are investing in the company, hope to accelerate Aptean’s growth, as the company aims to continue providing best-in-class manufacturing ERP, supply chain and compliance software to its customers around the world. TA and Vista are equal partners in the deal, each investing new equity to acquire Aptean from the separate Vista fund that initially invested in the company in 2012. The deal is designed to leverage TA’s global add-on acquisition origination and integration capabilities and Vista’s operational expertise, with the aim of positioning Aptean for substantial organic and inorganic growth. Leading up to this investment, Vista and Aptean’s leadership team executed on a plan to focus the company’s product lines exclusively on Aptean’s industry-specific ERP, supply chain and compliance offerings. In July, Aptean announced the divestiture of its public sector and healthcare assets, and in October, the company sold its vertical business applications assets. As a result, Aptean is now positioned to invest in its core, vertical offerings and continue the development of next-generation Software-as-a-Service tools. “We are very pleased to be investing in Aptean, one of the leading manufacturing ERP, supply chain and compliance software providers globally,” says Hythem El-Nazer, a managing director at TA Associates, in a statement. “With its global and loyal customer base, talented management team and accelerating focus towards delivering cloud products, we believe Aptean is well positioned to take advantage of organic and inorganic strategic initiatives." TA has raised $24 billion in capital since its founding in 1968 and is committing to new investments at the pace of $2 billion per year. The firm’s more than 85 investment professionals are based in Boston, Menlo Park, London, Mumbai and Hong Kong. With offices in Austin, Chicago, New York, Oakland, and San Francisco, Vista has more than $46 billion in cumulative capital commitments and invests exclusively in software, data, and technology-enabled organizations led by management teams it considers world-class. DLA Piper is serving as the legal advisor to TA Associates. Advising Vista is Atlas Technology Group as financial advisor and Kirkland & Ellis and Ropes & Gray as legal advisors.

Technology M&A is thriving, and private equity firms are hot on the trail of innovations that will drive sustainable value to customers and make companies more efficient, more effective and less expensive to run. Among the developments appealing to PE investors are: artificial intelligence, data management, data virtualization, digital marketing, healthcare IT, industrial automation, the Internet of Things, machine-to-machine learning, payment processing and Software-as-a-Service. To gain more insights into what kinds of tech deals will dominate the field in 2019, Mergers & Acquisitions reached out to 10 private equity firms that are active investors in technology: Francisco Partners, Genstar, Great Hill, HGGC, Insight, LLR, Riverside, Silver Lake, TA and Vista.

Related: 10 private equity firms share strategies for tech M&A.

Deal news
Carillon Tower Advisers, a global multi-boutique asset-management firm with $64.6 billion in assets under management and advisement, is increasing its ownership stake in ClariVest Asset Management LLC. ClariVest has $7.3 billion in AUM and provides investment services to clients, including mutual funds and other pooled vehicles, corporate and public pensions, foundations, and multiemployer defined benefit plans, and invests across a range of equities strategies, including U.S. large and small cap, international and emerging markets equities. Effective in April, ClariVest will become a wholly owned subsidiary of Carillon Tower’s affiliate, Eagle Asset Management. The move follows Eagle’s purchase of an initial 45 percent stake in ClariVest in 2012. The transaction coincides with a long-planned management succession at ClariVest. Tiffany Ayres, who joined ClariVest in 2006 and serves as executive vice president, general counsel and chief compliance officer, will assume the role of president.

Windjammer Capital Investors has acquired Hermetic Solutions Group LLC, in partnership with management, for undisclosed terms, marking the first investment out of the private equity firm's $870 million Windjammer Senior Equity Fund V LP, which closed in December. HSG provides hermetic packaging and components designed to ensure critical electronic systems function reliably in demanding environments. The company's brands include: PA&E, Hi-Rel Group, Sinclair and Litron. “The breadth of HSG’s offering, its application engineering and materials science know-how, combined with its specialized manufacturing and process technologies, represent a truly differentiated value proposition, which is reflected in its long-tenured customer relationships,” says Craig Majernik, managing director at Windjammer. “We saw in HSG the opportunity to back a strong management team, support their ongoing initiatives to drive operational excellence and capacity expansion, and underwrite an acquisition strategy to further build out HSG’s platform of leading brands and product lines.” Based in Newport Beach, California, and Waltham, Massachusetts, Windjammer invests control equity in middle-market businesses and in partnership with management.

Advanced BioEnergy LLC, a low-cost producer of ethanol and coproducts with two production facilities located in eastern South Dakota, is exploring strategic alternatives for its business operations, including the possibility of a sale of one or both of it ethanol plants, and has retained Ascendant Partners Inc. to advise it in the process. Since 2011, ABE has made capital investments of $33.8 million, or $0.40 per gallon, in its South Dakota plants to lower costs, improve operations, and expand production capacity. As the ethanol industry continues to consolidate and transitions to the next generation of technology improvements, the ABE board of directors believes the time is right to formally evaluate strategic alternatives and to position the ABE plants to provide continued value to their local communities.

Cogeco Peer 1, a provider of colocation, network connectivity and managed services, has announced plans to become a standalone business following its sale to Digital Colony, a global investment firm dedicated to strategic opportunities in digital infrastructure. Digital Colony has reached a definitive agreement with Cogeco Communications Inc. (TSX:CCA) to acquire Cogeco Peer 1, which will remain headquartered in Toronto and adopt a new brand.

Deal trends
M&A activity among some of the larger U.S. banks could remain strong over the next 12-24 months, according to a new report from Fitch Ratings. The announced merger of equals involving BB&T Corp. and SunTrust Banks Inc. could serve as a template for further consolidation among regional banks looking to compete directly with the largest national banks. "The financial and strategic benefits of the BB&T and SunTrust deal are compelling, and other regional banks may look to replicate the model in order to increase spending power and scale to drive innovation," says Michael Shepherd, associate director, Fitch Ratings. "While the merits of the BB&T and SunTrust deal may be difficult to replicate, many regional banks would welcome the opportunity to grow market share and improve technological efficiency."

Related: BB&T, SunTrust to combine in $28B merger.

Featured content
In Mergers & Acquisitions' annual look at strategic buyers, we see significant deals aimed at enhancing the customer relationship, including Amazon.com Inc.'s (AMZN) purchase of PillPack, Nike Inc.'s (NYSE: NKE) acquisitions of Invertex Ltd. and Zodiac Inc. and Target Corp.s' (NYSE: TGT) acquisition of Shipt. Technology plays a key role in many transactions. But while technology is enabling developments, it’s not an end unto itself for many corporations. Instead, strategic buyers are using innovations as a means to achieve goals. Based on analyzing hundreds of recent deals, Mergers & Acquisitions has identified seven goals corporate dealmakers hope to accomplish through M&A transactions today: Integrate data with software; improve the customer experience and relationship; expand and improve distribution; process payments more efficiently; leverage tech trends, like autonomous vehicles; make manufacturing processes more efficient; and achieve better outcomes and efficiencies in healthcare. “Strategics have been really active,” says John Neuner, managing director, Harris Williams. “They are aggressive in pursuing the assets they want, as long as it fits within their strategy. Scale is critical to them, and they have to meet consumer demands by adding new capabilities.”

Related: 7 reasons why smart companies Amazon, Nike, Target are doing M&A.

"There's a lot of capital chasing deals, both from the private equity community and strategic buyers across sectors," says Delance Street Partners' David Allebach, in this video shot at ACG Philadelphia's M&A East conference. Watch the video: Why buyers have to pay more for quality targets.

"Companies that are inclusive and also diverse tend to outperform companies that aren't,"says investor Lorine Pendleton of Pipeline Angels and Portfolia in a video interview shot at Exponent Exchange, a gathering of 200 female dealmakers hosted by Exponent Women. Pendleton looks to invest in companies led by diverse entrepreneurs, which she defines as entrepreneurs of color, LGBT entrepreneurs, women, veterans, and disabled entrepreneurs. She also backs companies that have products and services that cater to those markets. "People think that they are niche markets, but they're actually growing in terms of spending dollars and market size."

Related: M&A Insights: Inclusion investing, a video interview with Lorine Pendleton.

Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital's Sarah Bradley, Kayne Anderson Capital Advisors' Nishita Cummings and Pelham S2K Managers' Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women.

Related: Meet the 2019 Most Influential Women in Mid-Market M&A.

Mergers & Acquisitions has closed the nomination process for the 2018 M&A Mid-Market Awards. We look forward to announcing the winners in March. The Awards are one of three special reports we produce each year to celebrate deals, dealmakers and dealmaking firms. The other two are The Rising Stars of Private Equity and The Most Influential Women in Mid-Market M&A.

Related: Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

Events
ACG New York hosts the 11th Annual Healthcare Conference at the Metropolitan Club in Manhattan on Feb. 28. Dealmakers network with healthcare-focused private equity investors and other industry professionals.

ACG Minnesota and Corvus North are hosting AIM: A Women's Leadership Conference at the Minneapolis Hyatt on March 7. The conference is designed to support and encourage female leaders to grow and achieve success throughout their career journeys.

ACG Philadelphia is hosting its 2nd annual Industry Tour focused on SaaS & Tech-Enabled Services on March 12 at the Union League of Philadelphia. Last year's event brought together 200 PE investors, investment bankers, operating companies and industry advisors from around the country.

ACG New York's Women of Leadership is hosting a golf event and reception on March 21 at Konnect Golf in Manhattan. The event brings together female dealmakers from private equity firms, investment banks and lenders.

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