M&A wrap: Facebook, Alibaba, NetEase, High Road, Saw Mill

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Logos for the Bharatiya Janata Party (BJP), center, and Facebook Inc. are displayed on a computer at the Boom Live office in Mumbai, India, on Friday, March 28, 2019. Boom is one of seven tiny fact-checking firms at the heart of Facebook's efforts to rebuild some of its credibility during India's elections. Photographer: Dhiraj Singh/Bloomberg

Facebook Inc. (Nasdaq: FB) plans to double its headcount to compete with financial services companies, aiming to hire more than 3,000 people over the next three to five years, according to Bloomberg News. About half of its existing staff in the city are engineers, or some 1,600, and poaching such workers from the finance sector is “quite common” at Facebook. The expansion could set up Facebook for a clash with some of the biggest firms in finance, like Goldman Sachs Group Inc. (NYSE: GS), which is looking to recruit more than 100 coders for tech-related roles over the next few months in its biggest hiring spree in years. Goldman has said it plans to raid rivals in technology and finance. Facebook’s plans further boost the Big Apple’s profile as a leading technology hub. The city has been actively supporting the sector in recent years since it can no longer count on Wall Street as its business engine after it was hobbled in the financial crisis. Meanwhile West Coast tech giants have been bulking up in New York, snapping up real estate and adding thousands of employees. Alphabet Inc.’s (Nasdaq: GOOG) Google has more than 8,000 people mostly in Manhattan and is planning to double that over the next 10 years. Read the full story by Bloomberg: Facebook woos engineers at New York banks in hiring spree.

“We know that different people from different walks of life make us a better firm,” said Adam Miller, director of global talent management at the Riverside Co., which employs more than 200 people across four continents, including two female co-fund managers and a female chief operating officer. “We’re creating more opportunities for broader demographics.” Indeed, just about every private equity firm you talk to these days seems intent on becoming attractive to diverse candidates—whether it’s by hiring a chief diversity officer and loosening its dress code (KKR); giving employees flexible hours to spend more time with children (Riverside); offering up to 12 weeks of paid maternity leave and 16 weeks off altogether (ParkerGale); hosting weekly wine-and-cheese gatherings in the summer (Kinzie Capital); or providing on-site professional development and training (Riverside and ParkerGale). Check out: 5 hiring trends in private equity.

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.

DEAL NEWS
Alibaba Group Holding Ltd. bought NetEase Inc.’s Kaola e-commerce platform for about $2 billion and invested in its music streaming service, forging a rare partnership between two of China’s largest internet giants.The deal hands Alibaba the biggest Chinese online marketplace for foreign brands after its own Tmall Import and Export. Read the full story by Bloomberg News: Alibaba buys NetEase online mall in rare pact.

High Road Capital Partners-backed Banner Solutions has bought door locks distributor Specialized Builder’s Hardware. Jones Day represented High Road and Monroe Capital provided financing.

Saw Mill Capital has acquired DPIS Builder Services, a provider of outsourced engineering, inspection, energy efficiency, and quality assurance services to single-family homebuilders.

For more deal news, see Weekly wrap: Prudential, Resonetics, TPG.

For more on fundraising, see PE fundraising scorecard: Avitas, Comvest, L Catterton, Platinum.

FEATURED CONTENT
Bank M&A soared all summer, with dozens of deal announcements, creating the perfect backdrop for Piper Jaffray’s July news that it would acquire Sandler O’Neill. “There has been a lot of consolidation in the bank space,” Piper Jaffray CEO Chad Abraham told Mergers & Acquisitions. “Frankly that’s been very consistent over the last 10 years and has created a great opportunity for Sandler. But there are still 5,000 banks, and we expect the pace of consolidation to continue.” Piper Jaffray is determined to be the market leader in all the industries it does business in. The Minneapolis-based boutique investment bank currently dominates some of the sectors it serves, especially healthcare. With the acquisition of New York-based Sandler O’Neill & Partners LP, the renamed firm Piper Sandler will instantly become a leading investment bank in financial services, a sector it has sought to expand in for several years. “We’ve had conversations with Sandler for many years, and we’ve admired their franchise” Abraham explained. For analysis of the Piper Sandler deal, see Counting on bank M&A: Why Piper Jaffray bought Sandler O'Neill.

The New York Yankees are in first place in the American League East division and have one of the best overall records in Major League Baseball. Alex Rodriguez is best known as the former Yankees star who hit 696 home runs over the course of his 22-year baseball career, but today he’s making a name for himself as an investor as the founder and CEO of A-Rod Corp. One recent example: While serving as a guest judge on CNBC’s Shark Tank, Rodriguez backed Ice Shaker, an insulated bottle maker founded by former National Football Leaguefullback Chris Gronkowski. Rodriguez talked about his life off the field as a savvy investor since his 20’s as the keynote speaker at EisnerAmper’s 4th annual Alternative Investment Summit at the The Museum of Modern Art on June 19. Among the topics discussed in a conversation led by Charles Weinstein, CEO of EisnerAmper: Rodriguez’ childhood as the son of a single mom; his investment thesis, which shares much with other middle-market investors; how he’s helping singer/dancer/actress Jennifer Lopez (to whom he became engaged in March) transition her business initiatives from licensing her brands to owning them; and how one day he just might buy a baseball team. Read the full story: A-Rod talks Ice Shaker, NRG eSports, J. Lo & maybe buying a baseball team.

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. They represent the future of private equity. 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.

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 sellers' 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.

BC Partners has joined the growing group of private equity firms selling a minority stake to another PE firm to fuel expansion plans. The firm, which is headquartered in London with additional offices in New York, Paris and Hamburg, announced it had sold an interest in the firm to New York’s Blackstone Alternative Asset Management for undisclosed terms. PE firms increasingly are selling minority stakes to fund expansion plans. For more see, Why private equity firms sell stakes to other firms.

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

ACG Boston and ACG Connecticut are hosting the 5th Annual ACG New England Fall Conference at Gurney's Newport Resort & Marina in Newport, Rhode Island from Sept. 17-18.

Exponent Women is hosting a fall rooftop networking session at RSM in New York on Oct. 7.

M&A East is taking place at the Pennsylvania Convention Center in Philadelphia from Oct. 22-23.

Third Annual Women in Alternative Investments Career Forum is taking place at the New York Hilton on Nov. 8.

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