M&A wrap: Dell, Ally Financial, LendingClub, Align Capital, Blue Apron, VSS, Manufacturing M&A

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Lower middle-market private equity firm Align Capital Partners has raised its second fund at $450 million. With the closing of the new fund, the firm has raised over $775 million since it was founded in 2016. Since then, Align has acquired eight platforms and closed 16 add-on investments. Align invests in businesses that have up to $150 million in enterprise value. Recently, Align-backed E Source acquired predictive analytics company Trove Predictive Data Science. “ACP has built our brand around being disciplined growth investors in the true lower middle market, and we continue to believe in the potential it offers,” says Align co-founder Rob Langley. Before Align, Langley, along with co-founders Steve Dyke and Chris Jones were with the Riverside Co. About three-quarters of PE managers raising fund in 2020 expect it to be larger than the prior money pool, according to an EY survey. In 2019, the average fund size increased by 32 percent to $846 million, according to EY's PE Pulse report. Other recent fundraises include: GoldPoint Parners, the private equity affiliate of New York Life Investment Management LLC, closing its fourth fund-of-funds at $678 million; Incline Equity Partners raising its fifth fund at $1.165 billion; Odyssey Investment Partners closing its sixth fund at $3.25 billion; and Pamlico Capital raising its fifth fund at $1.4 billion. Captsone Partners served as Align's placement agenet and Kirkland & Ellis provided legal advice.

Manufacturing in the U.S. has contracted to its lowest level in more than a decade. The Institute for Supply Management said that its manufacturing index fell in December 2019 to 47.2. That’s its lowest level since June 2009, when it hit 46.3. This, in addition to a tight labor market, China’s retaliatory tariffs and the upcoming presidential election, has made manufacturing a tricky sector to do business in these days. Still, despite some of the headwinds facing the manufacturing industry, the M&A deal market remains active. Interest rates are low, and companies as well as investors have cash to invest. Additional factors come into play, including the need for consolidation and globalization in the manufacturing industry. Robots are playing a role as well, and manufacturing automation has become appealing. “The tight labor market and increasing wages have led us to pursue a number of different initiatives at our companies to counteract the resulting pressures created,” says Brad Roberts, a partner with the Riverside Co. “Where economical, we are investing in increased automation to enable us to meet growing sales volume amidst this difficult hiring environment.” Read our full coverage: 5 trends driving manufacturing M&A.

DEAL NEWS
LendingClub Corp. (NYSE: LC) is buying online bank Radius Bancorp. for $185 million. "This is a transformational transaction that allows us to reimagine banking in a way that is free from legacy practices and systems and where the success of LendingClub is aligned with the success of our customers," says LendingClub CEO Scott Sanburn. J.P. Morgan Securities (NYSE: JPM) and Sullivan and Cromwell LLP are advising LendingClub. Broadhaven Capital Partners, Piper Sandler (NYSE: PIPR) and Hogan Lovells are advising Radius.

Dell Technologies Inc. (NYSE: DELL) has sold one of its cybersecurity units, RSA, to a consortium led by Symphony Technology Group, Ontario Teachers’ Pension Plan Board and AlpInvest Partners, part of the computer maker’s efforts to streamline its business. The tech giant has sought to simplify its sprawling empire of hardware, software and security businesses that operate under the Dell Technologies banner, seeking to keep up with changing industry trends and to pay down debt. Read the full story by Bloomberg News: Dell offloads cyber unit, as it continues to streamline businesses.

Ally Financial has agreed to buy non-prime credit card and consumer finance lender CardWorks. Ally is paying $2.65 billion in cash and stock for the $4.6 billion-asset parent of Merrick Bank. CardWorks, founded in 1987, specializes in unsecured servicing and merchant services, though it also offers recreational and marine consumer finance loans. It has $2.9 billion in deposits and offices in Florida, Utah and Pennsylvania. Read the full story from American Banker: Ally to pay $2.6B for unsecured lender CardWorks.

Meal-kit delivery company Blue Apron Holdings Inc. (NYSE: APRN) announced plans to explore strategic alternatives, including a sale of the company. “Our strategic alternatives process, together with our cost optimization initiatives, is intended to best position the company for the future," says Blue Apron CEO Linda Findley Kozlowski.

Duo Bank of Canada, a financial services provider that is supported by Stephen Smith, Centerbridge Partners and Ontario Teachers’ Pension Plan, is buying Fairstone Financial Holdings from J.C. Flowers and Värde Partners. Fairstone is a Canadian non-bank provider of lending services for near-prime borrowers. RBC Capital Markets, CIBC Capital Markets, Torys LLP and Freshfields Bruckhaus Deringer US LLP are advising Duo. Willkie Farr & Gallagher LLP is advising Centerbridge. Osler, Hoskin & Harcourt LLP is advising OTPP. Citi, National Bank Financial, Barclays and Stikeman Elliott are advising the sellers.

Veronis Suhler Stevenson has invested in Ascent Behavioral Health, a provider of behavioral health programs throughout Utah.

PEOPLE MOVES
Karin Kovacic has joined middle-market lender as a managing director. Nepfin where she is concentrating on East coast deal originiations. Kovacic was previously with Monroe Capital. Kovacic is one of Mergers & Acquisitions Most Influential Women in Mid-Market M&A.

Masha Trainor has joined law firm Blank Rome as a partner where she is focusing on M&A.

FEATURED CONTENT
Artificial intelligence in healthcare saw about $4 billion in funding across 367 deals in 2019, according to data and research firm CB Insights. Amazon.com Inc. (Nasdaq; AMZN) is no exception. The tech conglomerate is using its recent deals for Health Navigator and PillPack to launch new software services in healthcare. Health Navigator works with companies like Microsoft Corp. (Nasdaq: MSFT) in offering services such as remote diagnoses, and with triage to help patients figure out whether to stay at home, see a doctor or go straight to the emergency room. Read our full coverage: How Amazon is using M&A to revolutionize healthcare.

Pushed by a groundbreaking California law mandating it, more companies are putting women on their public corporate boards. The law faces pressure in court and may not stand, but its rippling effect has already started to increase the visibility and awareness of the important benefits of board diversity. Investors are taking notice and trying to get ahead of the curve. According to a study published by MSCI in March 2018, having three or more women on a company’s board of directors translates to a 1.2 percent median productivity above competitors. Read the full guest article by Venable's Belinda Martinez Vega: Why businesses are adding women to their boards.

If there’s anything M&A professionals dislike, it’s uncertainty. And heading into 2020, there’s more than enough uncertainty to go around, including questions about the economy, international trade, impeachment, domestic politics and more. The funny thing is, the lack of clarity may actually make the first half of the year a great time for M&A, as dealmakers push to close transactions before the looming uncertainty of Election Day and its outcome. We conducted interviews with 8 investment bankers and other M&A advisors. Some said the first half of the year will be robust, while others said the uncertainty may have a negative impact throughout 2020. Read the full story, What’s ahead for M&A in 2020? We ask 8 advisors.

Mergers & Acquisitions has named the 2020 Most Influential Women in Mid-Market M&A. This marks the fifth year we have produced the list, which recognizes female leaders with significant influence inside their companies and in the wider dealmaking world. It’s been gratifying to watch the project evolve over the years – and become more influential itself. This year, we received more nominations than ever before. As a result, we expanded the number honored to 42 in 2020, up from 36 in 2019. Many dealmakers are new to our list, including Rockwood Equity Partners' Kate Faust, William Blair's Shay Brokemond and Avante Capital Partners' Ivelisse Simon. Read our full coverage of all the champions of change on our list, including Q&As with each individual.

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 Influenital Women in Mid-Market M&A. For an overview of what we're looking for in each project, including timelines, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
ACG New York is hosting the 12th annual healthcare conference and bourbon tasting at the Metropolitan Club in New York on Feb. 27.

ACG Raleigh Durham's 18th annual capital conference is being from March 31-April 1 at the Raleigh Marriott Crabtree Hotel in Raleigh, North Carolina.

InterGrowth 2020 is taking place at the Aria Resort & Casino in Las Vegas from April 20-22.

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