M&A wrap: Digital Colony, Zayo, EQT, Teledyne, Warburg Pincus

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Digital Colony Management, a firm that invests in companies focused on the Internet of Things, or IoT, and other digital infrastructure technologies, has raised its debut fund at $4.05 billion. Digital Colony was formed in 2018 by mobile and internet connectivity investment company Digital Bridge Holdings, along with real estate investment firm Colony Capital Inc. (NYSE: CLNY). “Digital communications are evolving at an unprecedented rate; as a result, demand is surging for network infrastructure across towers, small cells, fiber and data centers,” says Marc Ganzi, CEO of Digital Bridge. “No one has ever raised a fund solely dedicated to this sector, but it is clear that new capital will be needed on a global basis to support network buildout and prepare for the implementation of 5G, IoT, AI and other forms of next generation networks. We believe this one-of-a-kind investment platform is well-positioned to seize attractive opportunities in an increasingly connected world.” The fund has already invested in: Andean Tower Partners, an independent operator of wireless communications infrastructure in Colombia, Peru and Chile that was originally started by Digital Bridge; Digita Oy, an owner and operator of broadcast tower infrastructure in Finland; and Peer 1, a provider of network connectivity and managed services. The fund is also partnering with EQT to buy fiber-network owner Zayo Group for $14.3 billion. “Digital infrastructure represents the most compelling investment opportunity we see today, and this demonstrates our long-term commitment to the sector,” adds Colony Capital CEO Thomas Barrack.

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.

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.

DEAL NEWS
Teledyne Technologies Inc. (NYSE: TDY) is buying 3M Co.'s (NYSE: MMM) gas and flame detection business for $230 million. The deal includes the Oldham, Simtronics, Gas Measurement Instruments and Detcon brands. Houlihan Lokey Inc. (NYSE: HL) is advising 3M.

Warburg Pincus is buying packaging materials manufacturer Pregis from Olympus Partners. Advisors to Olympus include: Evercore Inc. (NYSE: EVR), Barclays, Harris Williams and Kirkland & Ellis.

BDT Capital Partners is buying fishing and hunting gear supplier Lew's Holding Corp. from Peak Rock Capital. Advisors to the sellers include: Baird and McDermott WIll & Emery.

Main Street Capital bought Trantech Radiator Products from Industrial Opportunity Partners. The target is a designer, manufacturer and supplier of radiators, coolers and cooling systems for transformers used in the generation, transmission and distribution of electric power. Advisors to IOP include: Gulfstar Group and Winston & Strawn.

JMI Equity-backed Raptor Technologies has acquired LobbyGuard Solutions LLC, a provider of visitor management and front office automation systems.

Online marketing company QuinStreet Inc. (Nasdaq: QNST) has bought personal finance website MyBankTracker.com.

PEOPLE MOVES
James Baker has been promoted to head of capital markets at investment bank B.Riley FBR. Baker joined the firm in 2010, and will also continue to serve as executive vice president of brokerage.

Jonathan Borell was hired by specialty materials-focused private equity firm SK Capital Partners as a managing director. He was most recently with Sun Capital Partners. Shawn Abrams was also hired by the PE firm as an operating director. He was most recently with Arsenal Capital Partners.

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.” F

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.

Concerns about leveraged lending risks are still just academic, but a vigorous debate about the threat posed by corporate credit is already in high gear. Commentators, Democratic lawmakers and other observers are increasingly sounding the alarm that growth in credit to highly leveraged firms could spur the next crisis. Read the full story: Is a leveraged lending crisis imminent? Depends who you ask.
or recent transactions that showcase the trends, see 5 private equity-backed healthcare IT deals.

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.

Genstar Capital, Audax and HarbourVest ranked as the top U.S. private equity firms of 2018, based on volume of completed deals, according to PitchBook. Check out Mergers & Acquisitions' profiles of 21 firms that led the league tables. Top private equity firms: Genstar, Audax, HarbourVest.

Also see: Top investment banks in PE-backed deals: KPMG, Houlihan, GS, William Blair.

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 New York, ACG Boston and ACG Philadelphia are holding the Industrial Conference with Value Creation at the Infor in New York on June 6. The event is part of the Northeast Industry Tour.

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.

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