M&A wrap: Adams Street Partners, Balance Point Capital, Carlyle, VSS, Vista, Clearlake

jeffreystevenson

The private equity model has held up very well over the decades, continuing to outperform the public markets, even as economic cycles come and go. But the rate of growth has slowed, leading PE firms to seek adjacent areas of business to expand. As PE firms face increased pressure to produce higher returns on their investments, many of them are turning to a familiar area of business: lending. Middle-market loans offer a potential growth path for PE firms, many of whom view credit as a natural extension of their bread-and-butter operations. Originally a private equity firm, VSS today offers mezzanine, subordinated debt, preferred equity and common equity, and has become more of a credit provider than an equity provider. VSS focuses on investing in information services, businesses services, healthcare and education. Founded in 1987, the firm decided to delve into credit in the mid-2000s and launched its first structured capital fund, called VSS SCI. Today, the firm is investing out of its fourth private equity fund and its third structured capital fund. Managing partner Jeffrey Stevenson (pictured) says the firm’s approach is a flexible capital strategy that includes both equity and debt and that typically provides more equity than a private debt fund. “We typically put in 25 percent equity,” says Stevenson. “Being able to be a single source of capital to the lower middle market is important. It’s not efficient in that market to separate the providers of debt and equity, and it allows us to be more of a partner to our portfolio companies. We participate on their boards and help our companies with strategy and growth.” Read our full coverage: Private equity firms are becoming lenders. Here’s why.

At Mergers & Acquisitions, we've begun work on one of our most popular projects of the year: the Most Influential Women in Mid-Market M&A. The deadline for nominations is Oct. 14. Last year, we honored 36 women, including Marilyn Adler (Medley Capital), Jennifer Cotton (Madison Capital Funding), Nishita Cummings (Kayne Anderson), Venita Fields (Pelham S2K), Jeri Harman (Avante Mezzanine Partners), Pam Hendrickson (the Riverside Co.), Gretchen Perkins (Huron Capital) and Trisha Renner (Baird). Who will make it on this year's list? To be considered, candidates must be women who are outstanding dealmakers both inside and outside of their firms. Evidence of influence in the broader M&A industry is essential. When nominating a candidate, please explain how she outperforms her colleagues at her firm and in the industry. Please provide examples of deals she has led, initiatives she has launched and other instances that show evidence of her influence in the middle market. An important guide to what we're looking for can be found in the dealmakers we've honored in previous years. See profiles of, and Q&As with, past honorees here.

TO NOMINATE A CANDIDATE, CLICK HERE.

DEAL NEWS
Enhanced Healthcare Partners has raised a new fund at $300 million. The fund will invest in lower middle-market healthcare businesses across the physician services, pharma services, payor services and healthcare technology sectors that are valued between $50 and $250 million. Kirkland & Ellis advised Enhanced.

Vista Equity Partners has acquired AltaReturn, a cloud-based technology provider for private capital and family offices. AltaReturn will be combined with current Vista portfolio company Black Mountain Systems. Advisors to AltaReturn include: Deutsche Bank and K&L Gates. Advisors to Vista are: Jefferies and Kirkland & Ellis.

CI Capital-backed Maroon Group has bought chemicals distributor Cambrian Solutions. CI formed Maroon Group in 2014.

Clearlake Capital-backed Unifrax is acquiring Shenyang JiuQing Dongxiang Glass Product Co. The target offers high-performance fibers in China.

Golden Gate Capital-backed Vantage Elevator Solutions is buying Thames Valley Controls, a supplier of elevator control and monitoring systems.

PEOPLE MOVES
Sean Fitzgerald has joined investment Houlihan Lokey (NYSE: HLI) as a managing director. Previously with Macquarie Capital, Fitzgerald focuses on providing equity capital to corporate and sponsor-backed company towards M&A.

Patrick Cox has joined law firm Nixon Peabody as a partner where he is concentrating on tax matters related to M&A. Cox was most recently with Baker McKenzie.

Adam Reinmann has been named CEO at private investment firm Wendel North America. Reinmann is a founding member of Wendel's New York office.

FEATURED CONTENT
It’s a milestone year for the Blackstone Group Inc. (NYSE: BX), which transitioned from a publicly-traded partnership to a corporation on July 1. Most recently, the New York firm announced on Sept. 11 the final close of its latest global real estate fund. With $20.5 billion of total capital commitments, Blackstone Real Estate Partners IX is the largest real estate fund ever raised. Mergers & Acquisitions spoke with Stephen A. Schwarzman, the firm’s co-founder, chairman and CEO, on the occasion of his new book, What It Takes: Lessons in the Pursuit of Excellence, published by Avid Reader Press/Simon & Schuster, and released on Sept. 17. Schwarzman, who is speaking at the Economic Club of New York on Sept. 18, shared his perspective on the private equity model, its resilience during recessions and how the industry has evolved over three decades. Read the full story: "Complete control" is the beauty of private equity, says Blackstone's Stephen A. Schwarzman.

Bank M&A has been soaring, creating the perfect backdrop for Piper Jaffray’s announced acquisition of Sandler O’Neill & Partners LP. “There has been a lot of consolidation in the bank space,” Piper Jaffray CEO Chad Abraham told Mergers & Acquisitions. “But there are still 5,000 banks, and we expect the pace of consolidation to continue.” Piper Jaffray is determined to be the market leader in all the industries it does business in. The Minneapolis-based boutique investment bank currently dominates some of the sectors it serves, especially healthcare. With the acquisition of New York-based Sandler the renamed firm Piper Sandler will instantly become a leading investment bank in financial services, a sector Piper has sought to expand in for several years. For analysis of the deal, see Counting on bank M&A: Why Piper Jaffray bought Sandler O'Neill.

Activity and urgency characterize the current dealmaking environment, say investment bankers and other M&A advisors interviewed by Mergers & Acquisitions. After a record-breaking 2018, forecasts for 2019 remain bullish. Advisors point to a lot of cash that must be deployed by strategic buyers and private equity firms alike; a healthy U.S. economy; and low interest rates. Competition for high-quality targets has never been more intense, especially for technology providers, they report, which means sellers are commanding high prices. It all adds up to a sellers' market. Read the story: 8 M&A advisors urge closing deals now, while economy stays strong.

The New York Yankees are in first place in the American League East division and have one of the best overall records in Major League Baseball. Alex Rodriguez is best known as the former Yankees star who hit 696 home runs over the course of his 22-year baseball career, but today he’s making a name for himself as an investor as the founder and CEO of A-Rod Corp. One recent example: While serving as a guest judge on CNBC’s Shark Tank, Rodriguez backed Ice Shaker, an insulated bottle maker founded by former National Football Leaguefullback Chris Gronkowski. Rodriguez talked about his life off the field at EisnerAmper’s 4th annual Alternative Investment Summit. Among the topics discussed: Rodriguez’ childhood as the son of a single mom; his investment thesis, which shares much with other middle-market investors; how he’s helping singer/dancer/actress Jennifer Lopez (to whom he became engaged in March) transition her business initiatives from licensing her brands to owning them; and how one day he just might buy a baseball team. Read the full story: A-Rod talks Ice Shaker, NRG eSports, J. Lo & maybe buying a baseball team.

Looking for a glimpse of what’s to come in the private equity industry? Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity. As the PE industry undergoes a generational shift, and many firm founders retire, it’s well worth getting to know these emerging leaders, including Branford's Austin Collier, Sterling Partners' Shawn Domanic and Summit Partners' Sophia Popova. For profiles and video interviews, see Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity For Q&As, see 10 Rising Stars of Private Equity tell their tales.

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 Influential Women in Mid-Market M&A. For more on the timeline and nomination process for each, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
The Virginia Capital Conference is being held on Oct. 2 at the Jefferson Hotel in Richmond, Virginia.

Exponent Women is hosting a fall rooftop networking session at RSM in New York on Oct. 7.

M&A East is taking place at the Pennsylvania Convention Center in Philadelphia Oct. 22-23.

ACG Charlotte is hosting Deal Crawl at the Mint Museum in Charlotte, North Carolina Nov. 6-7.

Third Annual Women in Alternative Investments Career Forum is taking place at the New York Hilton on Nov. 8.

ACG New York is hosting Middle Market Week in New York from Nov. 11-15.

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