M&A wrap: Apollo, Leon Black, Blackstone, KKR, RealPage, Madison Dearborn
U.S. private equity firms have raised more capital in 2019 than any other year before. Brookfield recently closed its fifth PE fund at $9 billion, pushing fundraising totals into all-time territory. U.S, buyout funds have raised more than $246 billion to date in 2019, according to PitchBook data. 2017 held the previous record bringing in approximately $238 billion. "I think PE firms are trying to amass capital because they can, not necessarily because they predict some sort of huge crash in prices like we saw during the global financial crisis," says PitchBook analyst Wylie Fernyhough in the report. PE funds of at least $5 billion have accounted for over half of all fundraising through the third quarter. In September, Blackstone raised $26 billion for its eighth fund, the largest PE fund to date. And in June, Advent International closed the second-largest fund of the year with $17.5 billon.
Leon Black, co-founder of Apollo Global Management Inc. (NYSE: APO), said the firm is on course to almost double its assets under management to $600 billion in five years. The target “does not represent the end game for Apollo,” Black said at the firm’s 2019 Investor Day, rather “a step along the way.” It would be achieved through strategic and organic growth, he said. A near doubling from the current $323 billion in total assets would be a similar pace to the past five years for the firm. Apollo managed about $164 billion in 2014. The alternative asset management industry has been growing at a robust clip in recent years. Apollo and its rivals, including Blackstone Group Inc. (NYSE; BX) and KKR & Co. (NYSE: KKR) are collecting record amounts of cash from investors. Read the full story by Bloomberg News: Leon Black sees Apollo doubling assets in five years.
Real estate technology firm RealPage Inc. (Nasdaq: RP) is buying Buildium from Sumeru Equity Partners for $580 million. Buildium is a Software-as-a-Service real estate management provider. RealPage says the acquisition will help the company target smaller multifamily, single-family, condos and commercial properties, otherwise known as the SMB market. “The SMB market segment represents a tremendous growth opportunity for RealPage," says RealPage CEO Steve Winn. "This is an area where technology is underutilized, and currently served by myriad point products."
Madison Dearborn Partners-backed moving services company Sirva Worldwide Inc. is acquiring Realogy Holdings Corp.'s (NYSE: RLGY) global Cartus relocation business for $400 million. The target helps businesses and employees move. The deal does not include Cartus's Affinity or broker services businesses. Barclays and Skadden, Arps, Slate, Meagher & Flom LLP are advising Realology. Kirkland & Ellis is advising Sirva.
Olympus Partners is buying Adecco Group's U.S. healthcare staffing business, Soliant Health, for $612 million. Soliant primarily provides therapists, including speech pathologists, psychologists, occupational therapists and nurses, to K-12 schools. "Soliant plays an important role in helping school districts find the skilled resources that they need to meet the growing special education requirements of their students," says Olympus partner Jason Miller. Smith, Gambrell & Russell is representing Adecco. Kirkland & Ellis is representing Olympyus.
Arlington Capital Partners-backed Cadence Aerospace has acquired B&E Group's OEM manufacturing divison, which supplies machine engine parts to the aerospace and defense sector.
The Sterling Group-backed Time Manufacturing Co. has purchased BrandFx, a manufacturer of vehicle-mounted aerial lifts for the agriculture, infrastructure and telecom sectors.
Investcorp, China Resources and Fund Strategic Holdings Ltd. are jointly raising the first private equity fund that is dedicated to investing in food brands in China and Singapore. The food sector in China is fragmented and represents growth opportunities with 120 million households set to become middle class consumers over the next decade, according to the firms. The fund is looking to raise $500 million. Investcorp has committed $300 million.
John Doehr has joined investment bank Cascade Partners as a managing director. He was previously with Walnut Lake Advisors.
Esteemed M&A attorney Martin (“Marty”) Lipton was honored at a black-tie event hosted by the Institute of International Education at The Pierre in New York on Oct. 30. Called the “the king of M&A,” the co-founder of New York law firm Wachtell, Lipton, Rosen & Katz, is well known to dealmakers as the architect of the anti-takeover defense strategy known as the “poison pill.” Lipton was awarded the IIE Stephen P. Duggan Award for Mutual Understanding “in recognition of his lifetime of extraordinary achievement and his lasting contribution to international higher education. Read the full story: Martin Lipton, inventor of the “poison pill” anti-takeover defense honored by IIE.
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. Adams Street Partners, Balance Point Capital, Carlyle and VSS are all actively engaged in lending. Read the full story: Private equity firms are becoming lenders. Here’s why.
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.” For analysis of the deal, see Counting on bank M&A: Why Piper Jaffray bought Sandler O'Neill.
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.
ACG Charlotte brings M&A pros together for Deal Crawl at the Mint Museum in Charlotte, North Carolina, Nov. 6-7.
The 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. The 17th Annual Private Equity Wine Tasting Gala takes place on Nov. 13 at Gotham Hall.
Exponent Women is hosting a Family Office Event with Owens Group at LX Gallery in New York on Nov. 21. Mergers & Acquisitions editor-in-chief Mary Kathleen Flynn is moderating a panel.