M&A wrap: Amazon, Nike, Target, PillPack, Shipt, Palo Alto, Riverside, Allstate

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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.

Meanwhile, in private equity dealmaking, a new study reveals that about 78 percent of private equity firms are prepared to exit portfolio businesses quickly in the event of a market correction over the next 12 months. About 74 percent of PE firms say unsolicited bids will drive exit plans over the next 12 months, finds EY's 2019 Private Equity Global Divestment Study. Only 27 percent expect their exits to consist of initial public offerings in the next 18 to 24 months. The study was conducted from September to November 2018 and is based on interviews with 100 private equity executives from firms that have between $10 billion and $50 billion in assets under management.

Deal news
Palo Alto Networks (NYSE: PANW) is buying cybersecurity provider Demisto for $560 million. The addition of Demisto will accelerate Palo Alto's strategy to deliver immediate threat prevention and response for security teams, the buyer said.

The Riverside Co. has invested in rum maker E&A Scheer. Advisors to Riverside include: Bain & Co., Deloitte, PwC, Allen & Overy and Advocatenkantoor Parmentier. Advisors to the sellers include Rabobank Coporate Finance.

Allstate Corp. (NYSE: ALL) has acquired iCracked, a provider of on-site, on-demand repair services for smartphones and tablets. Alantra advised iCracked.

Ferguson Enterprises Inc. has purchased Kitchen Art of South Florida from Aeterna Capital Partners and Ridge Road Partners. The target designs, distributes, and installs custom cabinets for kitchens and bathrooms. Slate Partners advised Kitchen Art.

Genstar Capital-backed Mercer Advisors bought wealth management firm Arbor Asset Management.

Family-owned investment fund Baltisse has acquired glass manufacturer Polflam from the target's founders and Syntaxis Capital.

Independent Pet Partners has bought pet food and supplies retailer Chuck & Don's. The target operates 45 stores, with 30 of them in Minnesota.

Falfurrias Capital Partners has raised its fourth middle-market private equity fund at $500 million. The PE firm was founded in 2006 by former Bank of America CEO Hugh McColl Jr. and former Bank of America CFO Marc Oken.

For ongoing news about private equity firms raising funds, see our weekly column, PE fundraising scorecard: Ardian, Delphi, Falfurrias.

For more deal announcements, see The weekly wrap: Ingersoll-Rand, Staples, Thoma Bravo, Ellie Mae.

People moves
Megan Austin Karlen and Neil Tolaney were promoted to partner at Francisco Partners. Karlen leads capital markets from the firm, while Tolaney focuses on investments in the consumer Internet sector. They both joined the PE firm in 2016.

Christopher Kandel has joined Morrison & Foerster as a finance partner. He focuses on senior, second lien and mezzanine financings, high yield securities, structured loans, capital markets and restructurings. He was most recently with Latham & Watkins.

Jarrod Murphy was hired by Pillsbury as a partner, and Ted Powers joins the law firm as special counsel. Murphy was previously with Gibson Dunn & Crutcher, and Powers was with Willkie Farr & Gallagher LLP. They both focus on private equity and M&A.

Ivana Rouse has joined Latham & Watkins as a partner. She is advising private funds on investment, fundraising, and operational matters. She was most recently with Akin Gump Strauss Hauer & Feld LLP.

Margaret Seurynck has joined McGuireWoods as a senior counsel. Previously with Jones Day, Seurynck represents lenders and borrowers in transactions such as secured and unsecured loans, asset-based and cash flow loans.

Rupert Gerard and Ben Stanton have been promoted to senior vice president at middle-market investment GulfStar Group. They are responsible for overseeing the deal process and serving as integral parts of the firm's business development efforts.

Featured content
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: For a look at the three special reports, including timelines and criteria for nominations, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

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.

Mergers & Acquisitions asked leading dealmakers about their outlook for the middle market in 2019. Watch the video conversations, shot at ACG Philadelphia's M&A East: It is a seller's market, and deal activity is expected to remain steady, says Ramsey Goodrich of Carter Morse & Goodrich: Outlook 2019: Great time to sell. Private equity firms and strategic buyers will use their excess cash and capital to look for deals, says Bharat Ramprasad of Stifel Nicolaus: Outlook 2019: Excess capital to fuel M&A. Rising interest rates and regulatory changes may increase volatility, cautions Mark Emrich of Murray Devine: Outlook 2019: Keep an eye on rising interest rates.

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.

Events
The SBIA and the AM&AA are hosting a Deal Summit at The Doral in Miami from Feb. 20-22. The gathering offers networking opportunities with senior-level M&A advisors and lower middle-market private equity investors.

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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