M&A wrap: Coronavirus, Riverside, Nixon Peabody, Aon, Willis Towers, Madison Dearborn, Compass Diversified, PEWIN

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Investors fears continued to spread on Wall Street on Monday, as worldwide cases in coronavirus rise and oil prices plummet. 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 threat is the type of risk that material adverse change, or MAC, clauses are designed to address in M&A. The MAC clauses are used to qualify representations, warranties and covenants in an acquisition agreement, establish a threshold for determining the scope of disclosure or compliance relating to risks associated with the target’s business, and to delineate the circumstances in which a bidder is permitted to a transaction without liability. Read our full Q&A with Nixon Peabody's Dick Langan: Why the coronavirus makes material adverse change (MAC) clauses more important than ever.

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.

DEAL NEWS
Aon plc (NYSE: AON) is buying Willis Towers Watson plc (Nasdaq: WLTW) for almost $30 billion that combines the world’s second and third biggest insurance brokerages. The all-stock deal, the largest ever for the industry, comes almost exactly a year after previous talks between the two companies broke down. Brokerages, which help connect businesses looking for coverage with insurers, have been aggressively merging to diversify, boost commissions and serve customers who increasingly want to deal with fewer intermediaries. Read the full story by Bloomberg News: Aon purchases Willis Towers for $30 billion.

Madison Dearborn Partners and CoVant Management are buying a majority stake in Aevex Aerospace, a provider of intelligence, surveillance, and reconnaissance to the U.S. Department of Defense. William Blair and Haynes and Boone are advising Aevex. CSP Associates, the Chertoff Group, Kirkland & Ellis and Crowell & Moring are advising the buyers. GSO Partners and Carlyle Global Credit are providing financing.

Compass Diversified Holdings (NYSE: CODI) is buying Marucci Sports, a maker of baseball and softball bats and gloves, for $200 million. Jefferies is advising the target.

Bessemer Investors has acquired Leonard Valve Co., a manufacturer of water temperature control valves and monitoring devices.

For more deal announcements, see Weekly wrap: AEI, Gilead, Palladium.

For more on fundraising, see PE fundraising scorecard: CapRock, Crystal View, Five Arrows, HarbourVest.

DEAL TRENDS
For International Women’s Day, Private Equity Women Investor Network PEWIN has initiated a #HerWorth challenge: ask your financial advisor “what percent of their portfolio is managed by female managers” and post their percent online with the hashtag #HerWorth.

In North America, women represent only 19.6 percent of private equity professionals, a less than 1 percent increase compared with 2017, according to Preqin. The numbers do not look any better in senior roles, with less than 12 percent of females employed as managing directors, partners, senior managing directors/advisors, managing general partners and C-suite executives. “Young women need women whose career they can look up to. Regardless of what the numbers say, there is a persistent issue with keeping senior women in the industry," says PEWIN CEO Kelly Williams.

PEOPLE MOVES
Lori Hardwick has been named to Genstar Capital's strategic advisory board. Hardwick previously co-founded Advisor Innovation Labs.

Thomas Leverton was hired by Pritzker Private Capital as an operating partner. He most recently servced as CEO of CEC Entertainment, the parent company of Chuck E. Cheese and Peter Piper Pizza.

Neal Reenan and Ian Bushner were hired by law firm Latham & Watkins where they are focusing on private equity and M&A. They were most recently with Kirkland & Ellis.

FEATURED CONTENT
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.

“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.” Read our full coverage: 5 trends driving manufacturing M&A.

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 March 31-April 1 at the Raleigh Marriott Crabtree Hotel in Raleigh.

ACG Global's InterGrowth 2020 is taking place at the Aria Resort & Casino in Las Vegas April 20-22.

The Most Powerful Women in Banking is hosting LEAD at Pier 60 in New York 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 place 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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