M&A wrap: Audax, HarbourVest, Genstar, KKR, Cornerstone, Searchlight, Forgelight, Univision, Intuit, Mondelēz, Coronavirus

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Audax, HarbourVest and Genstar ranked as the top three most active private equity firms in 2019, based on the volume of completed deals in the U.S., according to PitchBook. Three companies tied for fourth place: Abry, Carlyle and Shore Capital. Where were these PE firms looking for deals? Eight of the firms on our list name the software and technology sector among their top investment targets, and seven put healthcare companies on their priority list. Financial services and consumer services are each named by five of the firms as industries they focus on, with four naming business services companies. Fundraising from investors in 2019 led to two notable fund launches earlier in 2020: KKR’s Global Impact Fund and HarbourVest’s $2.6 billion HarbourVest Fund XI. See our full coverage: Top private equity firms in U.S. deals in 2019: Audax Private Equity ranked No. 1.

All eyes are on the the Dow Jones Industrial Average after it plunged more than 1,000 points on Monday, making it clear that COVID-19, also known as the coronavirus, will have a significant impact on the world’s economy. How it will play out in M&A and private equity is difficult to discern this early in the spread of the virus. To get a sense of the ramifications for the middle market, Mergers & Acquisitions examines several factors, including the current impact on China’s economic growth; how the virus was discussed in the earnings calls of U.S. public companies in January and February; and the views of two prominent dealmakers who are based in Hong Kong. As this is an ongoing story, we’ll continue evaluating the economic and business effects. Analysts are already forecasting slowed growth for China, due to COVID-19. While the country’s economic growth was 6.0 percent in the fourth quarter of 2019, it may fall to as low as 3.5 percent in the first quarter of 2020, if the spread of the virus is not contained fast enough for manufacturing production to resume to normal levels, Morgan Stanley analysts wrote in a Feb. 19 report. While factories had started to come online, analysts found that production had only reached 30 to 50 percent of normal levels. We asked executives from the Riverside Co. and Paul Hastings about the impact of the coronavirus on middle-market dealmaking. Read our full coverage: Viral impact: How COVID-19 is affecting M&A and private equity

DEAL NEWS
Cornerstone OnDemand Inc. (Nasdaq: CSOD) is buying Saba from Vector Capital for $1.395 billion. Saba uses artificial intelligence and machine learning to help businesses develop and recruit talent. "With the combination, our product development team is expected to significantly expand, giving us the ability to develop faster, further increase competitive differentiation, and help millions of people around the world to overcome the skills divide," says Cornerstone CEO Adam Miller. Centerview Partners, Morgan Stanley and Cooley are advising Cornerstone. William Blair and Paul Hastings are advising Saba. Morgan Stanley Senior Funding, Bank of America, Credit Suisse, Deutsche Bank and Jefferies Finance are providing financing.

Searchlight Capital Partners and Forgelight are buying a majority stake in Univision from Madison Dearborn Partners, Providence Equity Partners, TPG, Thomas H. Lee Partners and Saban Capital Group. Grupo Televisa is keeping its 36 percent stake. Morgan Stanley & Co., LionTree Advisors LLC, Moelis & Co., Cravath, Swaine & Moore LLP, Covington & Burling LLP and Sidley Austin LLP are advising Univision. BoFa Securities and Paul Weiss Rifkin Wharton & Garrison LLP are advising Searchlight. Guggenheim Securities LLC, Willkie Farr & Gallagher LLP and Proskauer Rose LLP are advising Forgelight. Goldman Sachs is advising Searchlight and ForgeLight as a group. Allen & Co., Wachtell, Lipton, Rosen & Katz and Pillsbury Winthrop Shaw Pittman LLP are advising Televisa.

Intuit Inc. (Nasdaq: INTY), the software giant behind TurboTax, is buying personal finance website Credit Karma Inc. for about $7.1 billion in cash and stock. Fintech companies are at a crossroads where a number of them are established enough to go public, but a spate of poor-performing IPOs are making acquisitions more attractive. Read the full story from Bloomberg News: Intuit buys Credit Karma for $7.1 billion.

Industrial Opportunity Partners has acquired PolyVision Corp., a manufacturer of ceramicsteel that are used to make writing surfaces. Cowen & Co. and Winston & Strawn advised IOP.

Mondelēz International Inc. (Nasdaq: MDLZ) is buying a majority stake in snacks producer Give & Co. from Thomas H. Lee Partners. The target is known for making brownies, cupcakes, pastries and muffins under the Two-Bite and Create-A-Treat brands. Houlihan Lokey (NYSE: HLI) advised Give & Go. Wachtell, Lipton, Rosen & Katz is advising Mondelēz.

FXI, a comfort technology supplier to North American home furnishings providers, backed by One Rock Capital Partners, has completed its merger with Innocor, backed by Bain Capital Private Equity. One Rock Capital Partners will be the majority shareholder of the combined company with Bain Capital Private Equity, continuing to own a stake.

Five Point Energy-backed WaterBridge Holdings is buying the Southern Delaware produced water infrastructure assets of Centennial Resource Development Inc. (Nasdaq: CDEV) for $225 million. Winston & Strawn is advising WaterBridge.

DEAL TRENDS
The number of AI-related healthtech deals has doubled every six months since the second half of 2017, reaching 10 percent of all transactions by the end of 2019, according to Hampleton Partners. The majority of recently disclosed healthtech deals are aimed at process efficiency, tackling mounting cost pressures and inefficiencies across the healthcare sector.

FEATURED CONTENT
M&A in the manufacturing industry is flourishing, despite many challenges in the sector - or rather, because of those challenges. 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. But M&A 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.

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.

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.

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.

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.

The 4th annual Emerging Manager Connect conference is taking place at the Harvard Club in New York on July 22nd.

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