M&A wrap: BluWave, Adams Street, Enlightenment, Angeles, Accel-KKR

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Today's active M&A market demands a robust set of tools and services. Enter service providers. From third party providers such as BluWave, led by founder Sean Mooney (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. “Private equity funds have no choice today but to leverage third parties as force multipliers. They no longer have the time or room to full-time hire their way out of problems,” says Mooney. “However, at the same time it’s really hard to know who’s good and even harder to hold service providers accountable. That’s where we come in. We’re the expert of experts.” For the full guide, read: Dealmaker's guide to service providers: Accordion, Axial, BluWave, Frazier & Deeter.

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
Adams Street Partners has raised about $1 billion in a new secondary investment fund. The firm has raised over $2 billion in capital for secondary investments since 2016. Adams Street's secondary investment group manages over $6 billion in assets and has completed around 210 deals since 1986.

Enlightenment Capital is going to operate a new small business investment company (SBIC) fund. The fund will give the PE firm more capacity to make investments in small and mid-sized businesses in the aerospace, defense and government sector.

Angeles Equity Partners-backed ERP Power has acquired Lumenetix Inc., a maker of digital light controls. O'Melveny & Myers LLP advised Lumenetix, and Irell & Manella advised the buyers.

Accel-KKR has invested in Cendyn, a sales software provider for the hospitality sector.

The Halifax Group has invested in StrataTech Education Group, a provider of secondary education services in the welding and heating, ventilation, air conditioning and refrigeration sectors.

For more deal announcements, see Weekly wrap: United Technologies, Salesforce, Dassault.

For more fundraising news, see PE fundraising scorecard: Clarion, Monomoy, Rockwood, Rotunda.

PEOPLE MOVES
Simon Britton has joined private equity firm Welsh, Carson, Anderson & Stowe as an operating partner. He previously held positions at Premier Research, Icon plc (Nasdaq: ICLR) and GlaxoSmithKline (NYSE: GSK).

Andrew Cahill was hired by middle-market investment bank TrueNorth Capital Partners as a managing director, where he is focusing on distressed and turnaround situations. Cahill was most recently with Shore Capital.

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.

It’s important to understand that driving employee engagement isn’t about yoga classes, company-paid lunches, or a casual dress code. While these perks can create short-term joy, they aren’t the type of benefits that propel employees to do their best. Read the full guest article by Alpine Investors' Graham Weaver: Focus on the human factor to drive value creation, urges Alpine.

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.

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.

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 andPelham 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 Tennessee hosts the Mid-South ACG Capital Connection at the Omni Louisville Hotel in Louisville, Kentucky from June 20-21.

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.

ACG Seattle hosts the Northwest Middle Market Growth Conference at the Fairmont Olympic Hotel in Seattle on July 25.

The Great Lakes ACG Capital Connection is taking place at the Westin Book Cadillac Detroit Hotel in Detroit from Sept. 4-6.

ACG New York's summer dealmaking conference is being held from July 31-Aug.1 at Gurney's Star Island Resort & Marina in Montauk, NY.

M&A East is taking place at the Pennsylvania Convention Center in Philadelphia from Oct. 21-23.

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