M&A wrap: Barnes & Noble, Elliott, Waterstones, The Prom, Advent

Elliott Management Corp., run by Paul Singer, is buying Barnes & Noble Inc. (NYSE: BKS) for $683 million. The acquisition will give Barnes & Noble “more leeway to work on a long-term strategy, even if it means pain in the short term,” reports Bloomberg News. Barnes & Noble, with more than 600 stores, has tried strategies such as offering food and coffee and selling non-book merchandise, but has failed to stem the onslaught of Amazon.com Inc. (Nasdaq: AMZN). Elliott has experience in the book business. It acquired Waterstones, a U.K. book retailer, in 2018. Waterstones, the U.K.’s last major bookstore chain, had 283 stores at the time of the sale to Elliott. Waterstones CEO James Daunt will become CEO of Barnes & Noble. Elliott will run both brands independently. "Physical bookstores over the world face fearsome challenges from online and digital, a complex array of difficulties that for ease and some evident reason we lay at the door of Amazon," Daunt says in a statement. "Our purpose is to create, by investment an old fashioned bookselling skill, bookshops good enough to be a pleasure in their own right and to have no equal as a place in which to choose a book. We counter thereby Amazon’s siren call and defend the continued existence of real bookshops. We do so now with all the more confidence for being able to draw on the unrivalled bookselling skills of these two great companies." Credit Suisse and Debevoise & Plimpton are advising Elliott. Evercore Inc. (NYSE: EVR) and Baker Botts are advising the special committee of Barnes & Noble. Guggenheim Securities LLC and Paul, Weiss, Rifkind, Wharton & Garrison LLP are advising its board. Read the full story by Bloomberg News: Waterstones owner Elliiot buys Barnes & Noble.

The Prom is up for seven Tony Awards, including Best Musical. Co-producer Jane Dubin, a former financial services executive, discusses investing in Broadway plays, including The Prom. “You can’t make a living but you can make a killing,” Dubin says. Read the full story: Investing in Broadway: Jane Dubin on backing The Prom, up for 7 Tony’s.

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.

DEAL NEWS
Advent International has raised $17.5 billion for its largest fund yet, exceeding its target by $1.5 billion as return-hungry investors plow cash into private equity. The firm closed Advent International GPE IX LP at its hard cap -- the maximum size allowed -- after fundraising for six months, according to a statement. It raised $13 billion in 2016 for its predecessor fund. Read the full story by Bloomberg News: Advent raises global buyout fund.

Regions Bank is buying Highland Associates Inc., an institutional investment firm that provides objective, research-driven investment counsel to not-for-profit healthcare entities and mission-based organizations. Maynard Cooper & Gale is advising Regions, and Bradley is advising Highland.

For more deal announcements, see Weekly wrap: Google, Genstar, Infineon.

For more on PE fundraising, see PE fundraising scorecard: Aurora, Nav Capital, Pawson, QL.

FEATURED CONTENT
Healthcare companies are spending more on information technology than ever before. Private equity firms including: Bain Capital, GTCR, Great Hill Partners, The Riverside Co. and New Heritage Capital, are investing in the innovations most in demand, including big data, SaaS and artificial intelligence, as we explore in depth in Mergers & Acquisitions' feature, Healthcare's must-have technologies. “Healthcare IT is the largest cottage industry in the world,” says Sam Hendler, who leads healthcare IT deals at Harris Williams.“Healthcare IT is a highly fragmented, multi-billion-dollar market with thousands of companies focused on different $250 million to $500 million sub-markets. Savvy investors see there is an opportunity to aggregate assets and build platforms of scale. It’s an incredibly exciting time in healthcare IT.” For recent transactions that showcase the trends, see 5 private equity-backed healthcare IT deals.

May featured deals closed by ACI Worldwide Inc. (Nasdaq; ACIW)., Genstar, Morgan Stanley (NYSE: MS) and Tesla Inc. (Nasdaq: TSLA). Read the full story: Deals that closed in May: ACI Worldwide, Genstar, Morgan Stanley, Tesla.

Today's active M&A market demands a robust set of tools and services. Enter service providers. From online marketplaces, such as Axial, led by CEO Peter Lehrman (pictured), to offerings that help private equity firms administer funds, such as Frazier & Deeter's FD Fund Administration, the service providers featured in Mergers & Acquisitions' updated annual dealmaker's guide help get transactions done. For the full guide, read: Dealmaker's guide to service providers: Accordion, Axial, BluWave, Frazier & Deeter.

Big data, Artificial Intelligence (AI), the Internet of Things (IoT) and 5G are transforming the business world. By embracing these technologies, organizations across the globe are realizing untapped potential in efficiency, customer experience, talent and profitability, and have been able to make better, more streamlined mergers and acquisitions, writes Bank of America Merrill Lynch's Robert Arth in a guest article. Read the full story: Why the middle market needs big data.

Tech dominates dealmaking. The technology, media and telecom, or TMT, sector accounted for about 40 percent of total private equity deal volume and one-third of total capital invested by PE firms over the last five years, according to EY Private Equity. Looking forward, the next five years of M&A activity will be fueled by a whole new set of developments. As one wave of technological innovation crests, another is forming. “With themes such as cloud computing and mobility now mainstream, PE firms are focusing on the next wave of disruption — technologies such as artificial intelligence and machine learning, robotic process automation (RPA), Internet of Things (IoT), robotics, drones, blockchain, augmented reality and virtual reality,” finds the April edition of EY’s quarterly PE Pulse report. Read our full coverage: Smart cities, IoT, AI, robots, edge computing will fuel next wave of tech 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.

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
ACG Minnesota hosts the the Upper Midwest ACG Capital Connection at the Renaissance Minneapolis Hotel, The Depot, June 10-11.

ACG Boston brings together 700-plus dealmakers for DealFest Northeast and DealSource Select 2019 at the Cyclorama and the State Room, June 12-13.

Exponent Women hosts the Annual Exchange, which brings a trusted network of women dealmakers together for a focused day of robust content and networking, at Second in New York, on July 11. The Exchange provides attendees with opportunities to establish new connections, reinforce existing ones and absorb timely and relevant knowledge from industry leaders.