M&A wrap: Blackstone, Houlihan Lokey, Lincoln, Audax, Genstar, AEI, Vista, Summit, PE fundraising

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Private capital fundraising posted a banner year in 2019, with $888 billion raised across 1,064 funds, the most private capital ever raised on an annual basis, according to PitchBook’s Private Fund Strategies Report. The $26 billion flagship vehicle raised by Blackstone (NYSE: BX) marked the largest buyout fund ever. “Globally, PE firms raised more money than they have in any prior year, closing on nearly half a trillion dollars with LPs plowing both freshly allocated capital and reinvested distributions into the strategy,” says the report. “Many GPs sought to capitalize on the favorable environment by raising substantially larger amounts than they had for their previously marketed funds.” The role private funds play in institutional portfolios continued to grow. On average, institutional investors increased their allocations to private markets, generally by lowering their allocations to hedge funds and/or public equities. Read our full coverage: Private equity firms raised more money in 2019 than any other previous year.

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 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.

DEAL NEWS
AE Industrial Partners has acquired G.S. Precision, a manufacturer of metal parts used mostly in aerospace engines and defense systems. Kirkland & Ellis and PwC advised AEI. Down Rachlin Martin PLLC and Gallagher, Flynn & Co. advised the target.

Vista Equity Partners has bought Tripleseat, a booking software provider for restaurants, hotels and venues. "Today's restaurants, hotels and event venues depend on strong group booking platforms to drive value and build long-standing customer relationships," says Vista managing director Alan Cline. Tripleseat investor Level Equity is keeping a stake in the target.

Summit Partners has made a majority investment in Viroclinics Biosciences, a contract research organization for the biopharmaceutical sector. The target focuses on respiratory infectious disease research. “With the increasing global attention on respiratory infectious diseases, Viroclinics’ mission has only grown in its importance,” says Viroclinics CEO Bob van Gemen.

Paper and packaging materials maker Neenah Inc. (NYSE: NP) is buying Vectorply Corp. from MSouth Equity Partners for $155 million. Vectorply produces composite reinforcements for the aerospace and defense, industrials and transportation sectors.

Centre Partners-backed Vision Innovation Partners has acquired Baltimore Eye Physicians, an ophthalmology practice with two locations in Baltimore.

Webster Equity Partners has acquired retina physician practice group Retinal Consultants Medical Group. Bailey Southwell & Co. advised the target.

DEAL TRENDS
Banks including Barclays Bank Plc and Goldman Sachs Group Inc. (NYSE: GS) have almost $9 billion worth of high-risk loans and bonds weighing on their balance sheets and face a nervous wait for the credit markets to reopen before they can sell the debt. Financing has yet to launch for various deals including TDR Capital’s purchase of U.K. pub company EI Group, slated to bring in 1.35 billion pounds ($1.73 billion) to the high-yield bond market, and a 725 million-euro loan to back private equity firm Lone Star Funds’ acquisition of BASF’s construction chemicals unit. Read the full story by Bloomberg News: Barclays, Goldman among banks sweating over European M&A debt.

PEOPLE MOVES
Pete Stevenson and Randal Thompson were hired by private equity frim Great Hill Partners as executives-in-residences where they are helping the firm find investment opportunities in the cloud infratstructure and security sectors.

Ivan Schlager has joined law firm Kirkland & Ellis as a partner. He was most recently with Skadden, Arps, Slate, Meagher & Flom LLP and focuses on CFIUS issues.

FEATURED CONTENT
Investors struggle to assess the impact of the coronavirus on the global economy. To get a sense of how the coronavirus is playing out in the middle market, Mergers & Acquisitions asked executives from private equity firm the Riverside Co., virtual data room provider Merrill Corp. and law firm Paul Hastings to weigh in. Read our full coverage: Viral impact: How COVID-19 is affecting M&A and private equity

The coronavirus may cause a drastic change in payment habits, as consumers shift to digital channels to reduce their risk of infection from handling cash, reports PaymentsSource, published by Mergers & Acquisitions parent company, Arizent. Many regions are already seeing a rise in contactless transactions, which could be seen as less prone to spreading disease than the handling of cash or paper checks. Travel advisories could lead to a drastic drop in tourism spending, which could hurt the growth of global payment systems that rely on foreign travel for growth. At the same time, companies that have been undergoing a digital transformation, or promoting new technologies such as cashier-free checkout, may see more rapid adoption if their offerings can reduce the risks of transmitting the virus through human interactions. See the full story, How coronavirus could change the payments industry.

“The manufacturing industry is changing so quickly, and on a global basis, that the sector presents an enormous investment opportunity,” says Michael Psaros, co-founder and managing partner of KPS Capital Partners, a manufacturing-focused private equity firm that recently raised $6 billion and $1 billion funds in four weeks. “Companies and entire industries are being transformed by technology and by globalization, We see value in manufacturing where others do not and we make these manufacturers better. It’s a great time to invest in the sector and we are excited about what’s to come.” Mergers & Acquisitions explores five trends fueling manufacturing deals. Read our full coverage: 5 trends driving manufacturing M&A.

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.

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.

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 Raleigh Durham's 18th annual capital conference is being held 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 Most Power Women in Banking is hosting LEAD at Pier 60 in New Tork on May 12. The industry’s rising stars get to hear from American Banker's The Most Powerful Women in Banking honorees.

Digital Banking 2020 is taking from June 8-10 at the Austin Convention Center.

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

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