M&A wrap: Audax, Vista, Robert F. Smith, Sumeru, Stifel, Piper Jaffray, SoFi, Clearlake, M&A Mid-Market Awards

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In the challenging times we face now, it’s more important than ever to come together as a community and recognize the people and companies that excel and lead. We invite you to join us in honoring the 2019 winners of Mergers & Acquisitions’ M&A Mid-Market Awards. In contrast with the volatile coronavirus-driven conditions unfolding in 2020, the dealmaking environment of 2019 was remarkably stable. Private equity enjoyed a record-breaking year, with firms raising more money than they had in any previous year. Among the PE firms benefitting from the auspicious fundraising climate was Vista Private Equity, which raised a $16 billion fund – the largest technology-focused PE fund ever raised. Mergers & Acquisitions is honoring Vista founder and CEO Robert F. Smith with our 2019 Dealmaker of the Year Award. In addition to leading his firm’s unprecedented fundraising, Smith excelled in philanthropy. When he spoke at the commencement of Morehouse College, he announced he would pay off all the student loans of the HBCU’s 2019 graduates, providing a helping hand in the student debt crisis facing many U.S. families. The financial services sector saw a lot of consolidation in 2019. Piper Jaffray wins our 2019 Deal of the Year for buying Sandler O’Neill to form Piper Sandler, which instantly became a leading investment bank in the financial services sector. And Stifel wins our 2019 Investment Bank of the Year for growing dramatically and making several acquisitions. Read our full awards coverage: Meet the winners of Mergers & Acquisitions’ M&A Mid-Market Awards.

Editor's Note: In observance of the Passover and Easter holidays, there will be no M&A wrap column on April 9 and 10. The daily column will resume on April 13. Also, our weekly columns, PE fundraising scorecard and Weekly wrap, which usually appear on Fridays, will be published on April 13.

CORONAVIRUS IMPACT
FaceBank Group has purchased FuboTV for $610 million to create a new digital entertainment and live streaming company. "Technology-driven cable TV replacement services are more important than ever, especially at this time when people are staying safe at home watching television for needed information, entertainment and escape," says David Gandler, the CEO of the combined company. Loeb & Loeb represented FaceBank.

Credit markets are a chaotic mess, riven by deeply distressed prices, sudden downgrades and warnings of bankruptcy. To some money managers, it’s a perfect, once-in-a-lifetime opportunity. Read the full story by Bloomberg News: Prices gone haywire attract billions to dislocated debt funds.

Jamie Dimon said the coronavirus pandemic will lead to a major economic downturn and stress mirroring the meltdown that nearly brought down the U.S. financial system in 2008. “At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008,” the chief executive officer of JPMorgan Chase & Co. said in his annual letter to shareholders. “Our bank cannot be immune to the effects of this kind of stress.” Read the full story by Bloomberg News: Jamie Dimon sees ‘bad recession’ and echoes of 2008 crisis ahead.

The coronavirus continues to impact the global economy. In the middle market, companies are proactively drawing down on revolving lines of credit and other sources of financing to put cash on the balance sheet to weather the storm. Mergers & Acquisitions interviews dealmakers from Alvarez & Marsal, Merrill Corp., M33 Growth, M-III Partners, Paul Hastings and the Riverside Co. Read our full coverage: “Brace for impact,” say private equity firms to portfolio companies about the coronavirus

There is no question the global pandemic is disrupting the M&A landscape, injecting significant uncertainty into the deal-making market. In addition to delaying or derailing potential transactions, Covid-19 is forcing M&A practitioners to assess appropriate risk allocation mechanisms to address the impact of the virus on global business operations, including Representations and Warranties Insurance (RWI). Read the full story: How the coronavirus forces dealmakers to assess effectiveness of RWI policies.

Genuine economic deterioration is a primary risk to private capital markets – PE tends to behave as a GDP-linked business. As consumer spending and business investment is set to decline, we expect to see a slowdown in PE transaction volume that follows the expected economic contraction. Read the full story: Private equity deals will slow down, as global economy stalls amid coronavirus pandemic.

While the long-term economic impact on American companies remains uncertain, there are important lessons to learn on how to manage future pandemic risks. Read the full story: Coronavirus contingency planning checklist for the middle market.

The coronavirus threat is the type of risk that material adverse change, or MAC, clauses are designed to address in M&A. Why the coronavirus makes material adverse change (MAC) clauses more important than ever.

DEAL NEWS
SoFi has has agreed to pay $1.2 billion to purchase payments firm Galileo Financial Technologies. The deal would give SoFi control of a technology platform that is currently used by some of its competitors in digital banking. Read the full story by PaymentsSource: SoFi to buy payments firm Galileo for $1.2 billion.

Saudi Arabia’s sovereign wealth fund built a stake worth about $200 million in Equinor ASA as the kingdom navigates the impact of the coronavirus pandemic and plummeting crude prices. Read the full story by Bloomberg News: Saudi wealth fund builds $200 Million stake in Norway’s state oil company.

Leichtman Capital Partners-backed Therapeutic Research Center has bought CriticalPoint and Clinical IQ. The two targets offer education, training and consulting services to healthcare providers.

Clearlake Capital-backed Wheel Pros has acquired Zbroz Racing, an aftermarket manufacturer of snowmobile parts.

PEOPLE MOVES
Richard NeJame has joined middle-market investment bank FocalPoint Partners as a managing director where he is focusing on restructuring and special situations. He was previously with Oppenheimer.

Sean Murphy was hired by Houlihan Lokey (NYSE: HLI) to lead the firm's transaction advisory services. He was most recently with KPMG.

Matthieu Pigasse has joined investment bank Centerview Partners as a managing director to lead the firm's new Paris office. Nicolas Constant has also joined as a partner and Pierre Pasqual joined as a managing director.

Erik Einwalter was promoted to managing director at managing director at middle-market investment bank Cascadia Capital. He joined the firm in 2011, and focuses on the food and beverage sector.

FEATURED CONTENT
Once venture capital-backed startups themselves, today’s tech giants know a thing or two about VC seed money. It’s fitting that many of them have created corporate venture capital groups of their own. These CVCs help their owners experiment and nurture new technologies and ideas in the early stages, without requiring the commitment of an acquisition. The CVC strategy often augments a company’s research and development efforts as well as complementing its M&A strategy. Middle-market dealmakers would be wise to track the VC investments of the five companies we highlight: Amazon.com Inc. (Nasdaq: AMZN), Google (Nasdaq: GOOG), Intel (Nasdaq: INTC), Microsoft Corp. (Nasdaq: MSFT) and Salesforce.com Inc. (NYSE: CRM. Read our full coverage: Venture forth: How five of the biggest tech companies explore new territory through early-stage investments.

In a period of accelerating technology innovation and investment, it’s critical to stay aware of new technologies, offerings, data and analytics types and business models in your space, and adjacent spaces. Most companies are looking for ways to get better and earlier access to the startup space. While corporate venture capital (CVC) is only one method, it can be a fairly powerful one. Read full coverage: How corporations can benefit from VC investments in technology

Houlihan Lokey, Lincoln International, Jefferies Financial Group, William Blair and Piper Sandler Cos. rank as the top five most active M&A investment banks in 2019, based on the volume of completed private equity-backed deals in the U.S., according to PitchBook. Besides advising on M&A deals, the investment banks on the top 10 list also had a busy year with acquisitions of their own in 2019, including two acquisitions by Houlihan Lokey and three by Stifel Financial. Piper Sandler Cos., was created when Minneapolis-based Piper Jaffray Cos. acquired New York-based Sandler O’Neill & Partners in a deal representing more than half of Piper Jaffray’s $930 million market capitalization. The firm also had another acquisition in 2019 and sold a company to exit the traditional asset management business. See our full coverage: Top investment banks for PE-backed deals in 2019: Houlihan Lokey led the pack.

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.

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.

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