M&A wrap: CVC, Al Gore, Generation Investment, Convoy, Apollo, Industrial Growth, AEI

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CVC Capital Partners has raised its second growth fund at 1.6 billion. The PE firm invests in middle-market tech-enabled businesses across North America and Europe including: software, Software-as-a-Service, cloud computing, payments, security, financial technology and healthcare information. The fund will target investment sizes that are betweeen $50 million and $250 million in equity. "The companies we partner with often operate in competitive markets and face significant challenges on their journey to success," says CVC managing partner John Clark. "That is where we come in; we collaborate with their management teams to help them overcome obstacles to growth, and to successfully execute their strategy, so that they can become leaders in their field.” Separately, CVC has led a $64 million investment round in SheerID, an identity marketing verification provider, joining previous investors Centana Growth Partners and Voyager Capital.

Mergers & Acquisitions has launched a new weekly 7-part series on retail technology M&A. We’re kicking it off with an in-depth look at how the Internet of Things is transforming retail and how the trend is playing out in dealmaking. Nike (NYSE: NKE) is making acquisitions to enhance its customer experiences. Nike bought Zodiac and Invertex Ltd., a pair of innovative digital startups helping the athletic apparel maker get closer to customers. McDonald’s Corp. (NYSE: MCD), the world’s largest restaurant chain, is gobbling up digital startups to improve customer experiences by capitalizing on IoT innovations- a strategy new CEO Chris Kempczinski supports. The company is buying personalization company Dynamic Yield for a reported $300 million in its largest deal in more than 20 years, and will use the software to customize drive-thru menus. Check back every Friday throughout the holiday shopping season for a new installment.

DEAL NEWS
Al Gore's sustainability-focused investing fund, Generation Investment Management LLP, led a $400 million funding round for Convoy, which makes software to connect freight shippers with truck drivers. T. Rowe Price Group Inc. co-led the investment with Gore’s firm. The deal values the startup at $2.75 billion. Bill Gates, Jeff Bezos and Marc Benioff are also investors in Convoy. Read the full story by Bloomberg News: Al Gore’s fund leads $400 million deal with trucking startup.

Apollo Global Management Inc. (NYSE: APO) is buying technology distrisbutor Tech Data (Nasdaq: TECD) for $5.4 billion. Citi (NYSE: C), J.P. Morgan (NYSE: JPM), Wells Fargo (NYSE: WFC), Paul, Weiss, Rifkind, Wharton & Garrison LLP and Wachtell, Lipton, Rosen & Katz are advising Apollo. Financing is provided by Citi, J.P. Morgan, Wells Fargo, Barclays and RBC Capital Markets. Clearly Gottlieb is representing Tech Data.

Saint-Gobain is buying construction materials manufacturer Continental Building Products Inc. (NYSE: CBPX) for $1.4 billion. Citi (NYSE: C) and Gibson, Dunn & Crutcher LLP are advising CBP.

Industrial Growth Partners has bought Aspeq Heating Group, a maker of electric‐heating and thermal‐management technologies, from Bunker Hill Capital. Hennepin Partners and Morgan Lewis & Bockius advised the sellers.

AE Industrial Partners-backed BHI Energy has acquired electrical contractor Plaska Transmission Line Construction. Akerman and Crowe advised BHI.

DEAL TRENDS
Fifty-eight percent of dealmakers expect an increase in M&A activity involving privately owned businesses in the next 12 months, down from 82 percent in 2018, according to law firm's Dykema’s 15th Annual M&A Outlook Survey. One-third of M&A professionals feel bullish, one-third feel bearish and another one-third say they are neutral about the upcominv dealmaking environment in 2020. The survey was completed between September and October 2019 by M&A professionals and advisors in a diverse group of professions in more than a dozen sectors.

The National Venture Capital Association (NVCA) sent a comment letter to the Department of the Treasury and the Internal Revenue Service (IRS) raising concerns about how a proposed rule change regarding the calculation of net operating loss (NOLs) limitations would harm startups and U.S. innovation. The proposed rules will impact the ability of companies to match startup losses from R&D and similar activities with the future income generated by those activities, and depressing startup valuations and impeding new business formation and investment in innovation, argues the trade group.

FEATURED CONTENT
Esteemed M&A attorney Martin (“Marty”) Lipton was honored at a black-tie event hosted by the Institute of International Education at The Pierre in New York on Oct. 30. Called the “the king of M&A,” the co-founder of New York law firm Wachtell, Lipton, Rosen & Katz, is well known to dealmakers as the architect of the anti-takeover defense strategy known as the “poison pill.” Lipton was awarded the IIE Stephen P. Duggan Award for Mutual Understanding “in recognition of his lifetime of extraordinary achievement and his lasting contribution to international higher education. Read the full story: Martin Lipton, inventor of the “poison pill” anti-takeover defense honored by IIE.

It’s a milestone year for the Blackstone Group Inc. (NYSE: BX), which transitioned from a publicly traded partnership to a corporation on July 1. The New York firm announced the final close of its latest global real estate fund recently. With $20.5 billion of total capital commitments, Blackstone Real Estate Partners IX is the largest real estate fund ever raised. Mergers & Acquisitions spoke with Stephen A. Schwarzman, the firm’s co-founder, chairman and CEO. Read the full story: "Complete control" is the beauty of private equity, says Blackstone's Stephen A. Schwarzman.

The private equity model has held up very well over the decades, continuing to outperform the public markets, even as economic cycles come and go. But the rate of growth has slowed, leading PE firms to seek adjacent areas of business to expand. As PE firms face increased pressure to produce higher returns on their investments, many of them are turning to a familiar area of business: lending. Adams Street Partners, Balance Point Capital, Carlyle and VSS are all actively engaged in lending. Read the full story: Private equity firms are becoming lenders. Here’s why.

Prokanga is a unique recruiting firm that offers full-time and flexible recruiting services. Prokanga is managed by co-founders Jamie Cheney and Lesley Finer (pictured). Mergers & Acquisitions spoke with Finer, who has more than 10 years of recruiting for the finance industry and leads the finance practice at Prokanga. For more, see Why financial services pros need flexibility.

Looking for a glimpse of what’s to come in the private equity industry? Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity. As the PE industry undergoes a generational shift, and many firm founders retire, it’s well worth getting to know these emerging leaders, including Branford's Austin Collier, Sterling Partners' Shawn Domanic and Summit Partners' Sophia Popova. For profiles and video interviews, see Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity. For Q&As, see 10 Rising Stars of Private Equity tell their tales.

Online retailers, including Amazon.com Inc. (Nasdaq: AMZN), are adding more fulfillment centers to meet consumer demands for faster shipping times. The owners of these properties along with the contractors that build them are becoming prime M&A targets. More local fulfillment centers means faster delivery times and lower last-mile costs to both retailers and customers. Read the full story: Amazon and Walmart open more logistics centers, driving warehouse 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 Influential Women in Mid-Market M&A. For more on the timeline and nomination process for each, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
In New York, it’s Middle Market Week. The 17th Annual Private Equity Wine Tasting Gala takes place on Nov. 13 at Gotham Hall. The PE roundtable series is being held on Nov. 14, and the breakfast program takes place on the same date at the Winston & Strawn offices.

Exponent Women is hosting a Family Office Event with Owens Group at LX Gallery in New York on Nov. 21. Mergers & Acquisitions editor-in-chief Mary Kathleen Flynn is moderating a panel.

The Annual Winter Conference AM&AA is taking place in Scottsdale, Arizon fron Jan. 8-10.

Deal Wave is being hosted by ACG Orange Country at the Ritz-Carlton-Laguna Niguel in Dana Point, California on Jan. 9.

ACG San Diego is hosting the Capital Conference 2020 at the Omni San Diego Hotel on Feb. 13.

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