Looking for a glimpse of what’s to come in the private equity industry? Meet the 10 dealmakers named by Mergers & Acquisitions as the 2019 Rising Stars of Private Equity:
Austin Collier, Branford Castle Partners
Kevin Cunningham, LNC Partners
Shawn Domanic, Sterling Partners
Stephen Jeschke, GTCR
Danielle Lalli, Huron Capital
Jason Mironov, TA Associates
James Oh, Transom Capital Group
Sophia Popova, Summit Partners
Pavan Tripathi, Bregal Sagemount
Christine Wang, Francisco Partners (pictured)
The Rising Stars share a common set of core values. They are passionate about building companies. They are naturally curious and interested in changing things for the better. They enjoy working with portfolio company managers, investment bankers and other deal team members. They appreciate the responsibility and autonomy their firms have given them. They are grateful for the leaders who have helped shape their careers, and they are generous with their own time when it comes to nurturing the next generation. As the PE industry goes through a generational shift and many firm founders retire, it's well worth getting to know these emerging leaders. They represent the future of private equity. 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
Apple Inc. (Nasdaq: AAPL) is reportedly negotiating to acquire the cellular modem chip business of Intel Corp. (Nasdaq: INTC) for about $1 billion, according to multiple media reports. If a deal is reached, possibly this week, Apple would have the engineering talent and patents to develop new mobile devices connected to the internet. Apple has been building its own cellular modems for the iPhone, iPad and Apple Watch to reduce its reliance on Qualcomm Inc. (Nasdaq: QCOM) for components. If a deal comes through with Intel, it could be similar to Apple’s $600 million deal to take over the power management business of Dialog Semiconductor Plc, which also provides key components for Apple devices.
Dish Network Corp. (Nasdaq: DISH) will acquire wireless assets from T-Mobile US Inc. (Nasdaq: TMUS) and Sprint Corp. (NYSE: S) to clear the way for the U.S. Department of Justice to approve a merger of the mobile-phone carriers, Bloomberg reports. Dish, the satellite TV company, will pay $1.5 billion for prepaid mobile businesses and $3.5 billion for spectrum, and the company has to maintain control of the assets for three years.
Sonic Financial Corp. is acquiring Speedway Motorsports Inc. (NYSE: TRK), a marketer and promoter of motorsports entertainment. Sonic, owned by Bruton Smith and his family, will pay a 42 percent premium above the stock price just before it made the merger proposal. Smith and his family also control 71 percent of Speedway’s voting power. Morgan Stanley & Co. (NYSE: MS), Simpson Thacher & Bartlett LLP, McGuireWoods LLP, BofA Merrill Lynch (NYSE: BAC), Kirkland & Ellis LLP and Parker Poe Adams & Bernstein LLP advised on the deal.
Aquiline Capital Partners, a financial services and technology -focused private equity firm, is acquiring CoAdvantage, provider of human resources solutions. Acquiline is buying the company from Morgan Stanley Capital Partners, a subsidiary of Morgan Stanley (NYSE: MS) that has owned it since 2015. Willkie Farr & Gallagher LLP advised Aquiline on the deal.
Maroon Group LLC, a specialty chemicals distributor, has acquired Amsyn LLC, which distributes chemicals for coatings, lubricants, nutraceutical, pharmaceutical and electronics businesses. Amsyn’s management team, led by Thomas Castrovinci, will continue to manage the business.
RF Investment Partners has invested in InterCoolUSA LLC to support InterCool’s acquisition of another industrial refrigeration business, Freije RSC. RF Investment provides capital to U.S.-based lower-middle market companies.
Middle-market private equity firm Equistone Partners Europe is buying Heras, an outdoor security solutions business, from CRH plc (NYSE: CRH) building materials group. Equistone also recently agreed to acquire Moody’s Analytics Knowledge Services from Moody’s Corp. (NYSE: MCO) and FirstPort, a residential property management company, from Knight Square.
A group led by the BC Partners investment firm is buying Garda World Security Corp., a security services company, from the Rhône Group private equity firm. The buyers’ group also includes Garda CEO Stephan Crétier and other company managers—they will own 49 percent of the company; BC will own 51 percent. Raymond Svider, BC Partners chairman, says the deal is the largest private buyout in Canadian history. Barclays (NYSE: BCS), TD Securities (NYSE: TD), Scotiabank (NYSE: BNS), Simpson Thacher & Bartlett LLP, Séguin, Racine LLC, Kirkland and Ellis LLP and Osler, Hoskin & Harcourt LLP advised on the deal. JPMorgan Chase Bank (NYSE: JPM), Bank of America (NYSE: BAC), Barclays and TD Securities provided financing.
Ligand Pharmaceuticals Inc. (Nasdaq: LGND) is acquiring Ab Initio Biotherapeutics, an antigen discovery company, for $12 million. Ligand focuses on developing or acquiring technologies that help pharmaceutical companies discover and develop medicines.
A portfolio company of private equity firm H.I.G. Capital, called AVI-SPL Inc., has acquired Digital Video Networks, which designs and services workplace collaboration technology. AVI-SPL’s Symphony software manages customer meeting environments and video networks.
Velodyne Lidar Inc. has acquired mapping and localization software, intellectual property assets and the leadership and engineering teams from Mapper.ai, developer of machine learning for self-driving cars. Nikhil Naikal, founder and CEO of Mapper, is also joining Velodyne. The Mapper technology will help Velodyne to develop its Vella software and Velarray lidar sensor for advanced driver assistance systems.
Medical Properties Trust Inc. (NYSE: MPW) is buying interests in eight private hospitals in England from Secure Income REIT for $434 million. Ramsay Health operates the hospitals; the deal is expected to close by Sept. 30. Medical Properties Trust also acquired BMI Harbour Hospital in England earlier this year.
Compass Datacenters LLC, builder and operator of data centers, has acquired Root Data Center, a wholesale data center provider in Montreal. The acquisition is the first in Compass’ plan to develop up to $3 billion in new data center campuses aided by investment from RedBird Capital Partners, Ontario Teachers’ Pension Plan and Azrieli Group Limited.
Presidio Investment Holdings LLC, a portfolio company of Morgan Stanley Energy Partners, has acquired all the oil and natural gas producing properties in the western Anadarko Basin of Texas, Oklahoma and Kansas from Apache Corp. (NYSE: APA). Morgan Stanley Energy Partners is a private equity business of Morgan Stanley Investment Management, a subsidiary of Morgan Stanley (NYSE: MS). This transaction is the first add-on acquisition for Presidio since Morgan Stanley’s initial investment in 2018.
Middle-market PE firm Aurora Capital Partners has acquired Cold Chain Technologies, provider of thermal packaging for life sciences companies. Cold Chain’s CEO, Larry Gordon, and president, Bob Bohne, will stay on with the business, along with its executive leaders and middle managers. The deal is the seventh investment from the $1.2 billion Aurora Equity Partners V fund. Harris Williams & Co., Goodwin Procter LLP, Robert W. Baird & Co. and Kirkland & Ellis LLP advised on the deal.
Porch, an online network that connects homeowners with contractors, has acquired HireAHelper.com, which connects people with movers. Porch also recently acquired Kandela, which connects people with TV, internet and home security installers.
Interstate Restoration, a disaster recovery and property restoration business, has acquired ASR Construction Inc., a fire and water damage property restoration company. Kirk Prouse, CEO of ASR Construction, will serve as a regional director for business. Generational Equity advised on the deal.
Marketing company Quad/Graphics Inc. (NYSE: QUAD) and LSC Communications Inc. (NYSE: LKSD), provider of print and digital media services and products, have terminated a planned deal where Quad was to acquire LSC. Shareholders of both companies had approved the deal in February, but in June the U.S. Department of Justice sued to block the deal. Quad will pay LSC a reverse termination fee of $45 million, as required by their merger agreement.
Food management company Continental, a portfolio company of middle-market PE firm New Heritage Capital, has acquired Northern Vending Co. and its entire staff. It is Continental’s sixth acquisition in two years.
Web.com is acquiring Dreamscape Networks Ltd, a company that helps businesses build their online presence through brands like Crazy Domains and Vodien. Web.com helps its customers build online presence through its Network Solutions and Register.com brands. The acquisition will help extend Web.com’s business across Australia, New Zealand and Southeast Asia, says Sharon Rowlands, Web.com’s CEO.
Mynd Property Management, which focuses on small residential properties, has acquired HomeUnion, developer of Investimate, an online tool that allows users to determine the investment potential of any home in the U.S. Mynd recently merged with the RentVest property management company.
Toast, a restaurant management software company, has acquired StratEx, provider of human resources and payroll software for restaurants. Toast is wrapping the StratEx product into its Toast Payroll & Team Management all-in-one restaurant HR software.
An investor group led by ClearSky has acquired Altamira Technologies Corp., provider of analytics and engineering solutions to the U.S. national security community. ClearSky is a venture capital and growth equity firm that invests in cybersecurity, industrial security and critical infrastructure security companies, as well power sector technology. Other investors in the buyer consortium include McNally Capital and Nio Advisors. KippsDeSanto & Co. and Cooley LLP advised on the deal.
Managed Care Advisors Inc., provider of healthcare products and services, has acquired WebOpus Federal, a cloud-based workers’ compensation case management, document storage and reporting system for federal agencies. Customers of Managed Care Advisors include federal, state and local government agencies; corporations; health plans; and ancillary providers.
Sodexo, a food services and facilities management company, plans to acquire a minority stake in Zeta, an Indian financial technology company. Sodexo’s benefits and rewards services unit in India has been partnering with Zeta since 2017. Sodexo expects Zeta’s payment solutions technology will benefit all of its customers, including those of subsidiaries in Asia and Latin America, says Aurelien Sonet, CEO of Sodexo Benefits & Rewards Services.
Dan Ireland and Paul Huettner have been hired as managing director and vice president, respectively, by Carl Marks Advisors to expand the investment bank’s healthcare, retail, higher education and family business practices.
Scott Ganeles, a partner at private investment platform WestCap, has joined the board of directors of SRS Acquiom, provider of M&A services. Ganeles was previously CEO of financial services firm Ipreo Holdings LLC and president of the Carson Group, a financial information services firm he co-founded.
DIVERSITY IN DEALMAKING
Women hold just 9.4 percent of senior positions at PE firms globally, according to a recent study by HEC Paris. The low representation underscores the importance of projects that feature successful female dealmakers, such as Mergers & Acquisitions' Most Influential Women in Mid-Market M&A. The special report profiles 36 women M&A pros and includes interviews with them.
“There is this idea in sociology: You've got to see it to be it,” said NBC News correspondent Stephanie Rhule about the importance of building communities of women in the financial services sector, where they are woefully underrepresented. Rhule spoke at the second annual Exponent Exchange, hosted by Exponent Women, a group devoted to nurturing the financial services careers of its female members. Read the full story: Exponent Exchange brings together 200 women dealmakers for second annual event.
Gender-diverse PE investment committees outperformed all-male investment committees substantially, finds a recent study by HEC Paris professor Oliver Gottschalg. The results are compelling: Gender-diverse PE investment committees outperformed all-male investment committees substantially, as measured by several metrics: 7 percent more alpha; .52x more total value to paid-in multiple; and 12 percent higher internal rate of return. Also impressive: the failure rate of gender-diverse investment committees was 8 percent lower. The findings provide concrete evidence showing the value of including women on deal teams and may help to convince skeptics. For more, read Why private equity firms should include more women on deal teams.
A new payment company is attacking the hurdles professional women face when returning to the workforce after time away, a distinct problem borne out of the broader gender gap in financial services. “This is an economic problem, where you have something like a parent who left the workforce and then could not get back in,” said Samantha Ettus, founder and CEO of Park Place Payments. Read the full story: Behind a payment startup's battle to bridge the gender gap.
Alex Rodriguez is best known as the New York 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 League fullback Chris Gronkowski. Rodriguez talked about his life off the field as a savvy investor since his 20’s as the keynote speaker at EisnerAmper’s 4th annual Alternative Investment Summit at the The Museum of Modern Art on June 19. Among the topics discussed in a conversation led by Charles Weinstein, CEO of EisnerAmper: 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.
"We don’t have a fixed timeframe for a sale," says the Stephens Group managing director Aaron Clark. "We just pursue a strategy that can add value and help businesses mature." Mergers & Acquisitions recently spoke with Clark and managing director Clay Hunter to explore the firm’s investment strategy. The Little Rock, Arkansas firm bought Sound Seal, a maker of noise control products, earlier in 2019. Read the full story: Investing for the long term: Q&A with the Stephens Group family office.
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 seller’s market. A mood of urgency prevails, as dealmakers seek to close deals quickly, while conditions remain favorable. The advisors interviewed for this story say they don’t see signs of a recession this year; however they are closely monitoring bellwethers, including corporate earnings, wage pressure, global supply chains and slowdowns abroad. They are recommending that clients be prepared for an economic slowdown in the next two years. Specialization is the name of the game, and investment bankers advise clients to seek targets with business-model stability, limited cyclical exposure and a recurring revenue business model. Technology, business services, healthcare, consumer and manufacturing are among the most promising sectors. Read the story: 8 M&A advisors urge closing deals now, while economy stays strong.
Organizations in industries, ranging from manufacturing to healthcare, are using M&A to add automated technology in their processing systems. Advances in robotic technology are making it possible to complete more complex tasks at higher speeds and with improved control and outcomes. Read the full story: Accelerating automation through M&A.
Excelled. Innovated. Inspired. That’s what the eight winners of Mergers & Acquisitions’ 12th Annual M&A Mid-Market Awards did in 2018. Our awards honor the leading dealmakers and deals that set the standard for transactions in the middle market. In addition to Nike, award winners include: Fortive, TA Associates, the Riverside Co., Harris Williams, Monroe Capital, Goodwin and Luminate Capital Partners' Hollie Haynes. Read our full coverage: Meet the winners of the M&A Mid-Market Awards: Nike, Fortive, TA, Harris Williams.
ACG Seattle hosts the Northwest Middle Market Growth Conference at the Fairmont Olympic Hotel in Seattle on July 25.
ACG New York's summer dealmaking conference takes place at Gurney's Star Island Resort & Marina in Montauk, NY, July 31-Aug.1.
The Great Lakes ACG Capital Connection is being held at the Westin Book Cadillac Detroit Hotel in Detroit from Sept. 4-6.