M&A wrap: FP, Frank Banker, Siris Capital, L Brands, AMC, Ardian, AEI, GI, Wellspring, GTCR
Francisco Partners has raised $9.7 billion across three funds. The technology-focused PE firrm capped about $8.9 billion combined across two equity funds and $750 million in a opportunistic credit fund. “The $3 trillion IT market continues to outgrow GDP, and it is no longer only a vertical market. Technology is now pervasive across all sectors of the economy, impacting every aspect of our lives,” says FP co-founder Dipanjan “DJ” Deb (pictured, center). “Through our three pools of capital, our team has the flexibility to pursue opportunities across the globe and help management teams and portfolio companies execute operational and strategic transformation.” In its 20-year history, FP has invested in or acquired more than 275 technology companies. Some of the firm's previous investments include: BeyondTrust, ClickSoftware, GoodRx, Ichor Systems, iconectiv, LegalZoom, Quest and Verifone. Kirkland & Ellis advised FP on the two equity funds, while Simpson Thacher & Bartlett LLP advised on the credit fund.
Frank Baker, founder and managing partner of Siris Capital Group LLC, a New York private equity firm focused on investing in technology and telecommunications companies, and his wife, Laura Day Baker, an interior designer and philanthropist focused on empowering historically underserved communities, have announced a $1 million gift toward the establishment of a scholarship for Spelman College graduates. Spelman is an historically black college for women in Atlanta that counts Starbucks Group president and COO Rosalind Brewer among its alumnae. Initially, the scholarship will pay for the existing spring tuition balances of nearly 50 members of Spelman’s 2020 graduating class. Thereafter, the scholarships will provide support to ensure that future high achieving graduating seniors have the financial resources to graduate. “We are all aware of the headwinds that people of color - especially women - face in our country, the challenges of which are made even more apparent by the economic and health impact of the Covid-19 pandemic,” said the Bakers in a statement. “We believe it is critical that talented women finish college and confidently enter – free of undue financial stress – the initial stage of their professional careers. We hope that this gift will help lessen their financial burden as they start this promising next chapter in their lives and encourage them to persevere over life’s challenges.” The gift comes on the heels of Spelman’s end-of-the-year celebration and virtual Senior Salute designed to celebrate the 480 graduates of the 2020 graduating class. The gift also follows the $34 million contribution by Vista Equity Partners founder Robert F. Smith to Morehouse College, an historically black college for men in Atlanta. That gift included paying off the student loans of the school's 2019 class. Mergers & Acquisitions named Smith the winner of the 2019 M&A Mid-Market Award for Dealmaker of the Year. As the private equity industry matures, industry leaders are increasingly focusing on philanthropy. For more, see Private equity gives back: Vista's Robert F. Smith, Clearlake's José E. Feliciano, Riverside employees.
L Brands Inc. is looking to raise $1.25 billion in its first bond sale since losing a key deal with Sycamore Partners that would have given the private equity firm control of Victoria’s Secret. The now-abandoned deal, in which Sycamore was poised to take a 55 percent stake in Victoria’s Secret for about $525 million, was thrown into jeopardy in late April when Sycamore sued to terminate the transaction, arguing that L Brands violated the terms of the agreement by failing to pay rent and furloughing thousands of workers amid the coronavirus pandemic. Read the full story by Bloomberg: L Brands turns to bond market after Victoria’s Secret deal fails.
Theater chain AMC Entertainment Holdings Inc. is seeking to tame its debt load by asking subordinated bondholders to accept a steep haircut on existing debt as it casts doubt on its ability to repay future borrowings. AMC forced to close all of its approximately 600 U.S. locations in March after public officials placed limits on public gatherings to prevent the spread of the virus. The pandemic may have sounded the death knell for movie theaters, many of which were already struggling to survive in the era of streaming media. On the other hand, drive-in theaters are making something of a comeback this summer. Read the full story by Bloomberg: AMC Entertainment seeks debt relief in distressed bond swap.
Ardian has raised $19 billion in a secondaries fund to buy secondhand stakes in private equity funds. "The fundraise highlights how the secondaries market has matured to become an important source of liquidity for investors, including insurance companies, pension funds and family offices, as they look to re-balance private equity portfolios and seek yield opportunities for savers amid the global Covid-19 pandemic," the firm said in a release.
OurCrowd, the world’s largest crowdfunded-venture investment platform, plans to raise $100 million for investment in urgent technological services. The fund will target the medical, business, educational and social needs triggered by global pandemics and other health emergencies.
AE Industrial Partners has acquired Deep Space Systems, a provider of payloads, systems and other parts to the space industry. BRG and Akerman LLP advised AEI. Holland & Hart LLP advised DSS.
GI Partners has acquired a majority stake in Blue Stream Fiber, which offers video and broadband services in South Florida, from Twin Point Capital. Lazard Middle Market and Cooley advised the sellers. Paul Hastings LLP advised GI.
Wellspring Capital Management has purchased Steele Solutions, a manufacturer of complex steel infrastructure in distribution, warehousing and manufacturing facilities. Kirkland & Ellis LLP advised Wellspring. Baird and Godfrey & Kahn S.C. advised the target.
Shamrock Capital has purchased advertising and marketing publication Adweek from Beringer Capital. CG Petsky Prunier advised the sellers.
GTCR has purchased a 25 percent stake in investment advisor Captrust, valuing the target at $1.25 billion. SunTrust Robinson Humphrey and Kirkland & Ellis advised GTCR. Ardea Partners LP and Alston & Bird LLP advised Captrust.
Emigrant Partners has acquired a minority stake in investment advisor Pure Financial Advisors. Seward & Kissel LLP advised Emigrant.
Oppenheimer & Co. is buying Tallman LLC, an investment bank that specializes in the underwriting and placement of municipal debt for California issuers.
Osceola Capital has invested in Central Medical Group, a provider of outsourced equipment management services for hospices.
Sverica Capital Management LP and Salesforce Ventures have invested in Coastal Cloud LLC, one of the largest and fastest growing independent Salesforce consulting partners in the United States.
Information management services provider Access has acquired International Data Depository, Off-Site Records Management Inc. and the records storage business of ImageFreeway Inc.
Shore Capital-backed EyeSouth Partners has completed an affiliation Mitchell Refractive Surgery & Eye Center, an eyecare practice in Florida.
There were 279 artificial intelligence deals in 2019, compared with 261 for 2018 and 2019 combined, according to a report from Hampleton Partners. “New norms such as health checks and social distancing at work are driving AI adoption and adaptation. Companies are having to find new ways of automating processes and drive cost-efficiency as, in many sectors, their profits are coming under pressure," says Heiko Garrelfs, sector principal, Hampleton Partners.
Joseph Konzelmann has joined TPG as a partner and head of fundraising for the Eastern U.S., Canada, Europe and the Middle East. He was most recently with Goldman Sachs.
Nathan Flynn was hired by KeyBanc Capital Markets as a managing director. Most recently with Crowe LLP, he is responsible for business development and execution of debt finance services to Indiana and Midwest government and non-profit entities.
Andy Schwartz was hired by Raymond James as a managing director where he is focusing on M&A in the industrials services sector. He was previously with Lincolin International.
Kevin McAllister, former president and CEO of Boeing commercial airplanes, has joined private equity firm AE Industrial Partners as a senior operating partner
Daniel Blood has joined BTIG's investment banking unit as head of speciality finance. He was previously the group head of real estate at FBR.
Amy Wierenga has joined alternative asset management firm GCM Grosvenor as chief risk officer. She was most recently with Blue Mountain Capital Management.
David Darragh was hired by private equity firm LongueVue Capital as an operating partner to support the firm's food and beverage investment strategy. He was previously the CEO of Reily Foods.
Lindsay Ferguson and Allen McConnell were hired by law firm Sheppard, Mullin, Richter & Hampton LLP as partners where they are concentrating in private equity and M&A. They were both recently with Hunton Andrews Kurth.
Christian Moretti was hired by law firm Cozen O' Connor where his focus will be on M&A.
Since March 14, when the Centers for Disease Control and Prevention issued a no-sail order, cruise ships have been sitting idle with no passengers. The order is set to expire on July 24. The coronavirus has impacted the hospitality and tourism sectors, including cruises, greatly. Operators are raising capital so they can stay above water, and others even reportedly held talks with investors. Carnival Corp. (NYSE: CCL), which raised $6 billion through a combination of debt, stocks and convertible notes, was in talks with Blackstone for financing before settling on the public deal, according to Bloomberg News. See the full story: Why cruise lines are raising capital to stay afloat during pandemic.
Arizent, the parent company of Mergers & Acquisitions, released a new survey May 15 to understand how executives across industries were dealing with the impacts of the Covid-19 crisis after operating in a “new normal” environment for two months. As the coronavirus pandemic continues to extend its grip on the globe — infecting more than 1.41 million Americans (over 4.44 million globally) by the middle of May — executives must navigate their organizations through uncharted territory, with the possibility that the virus may not disappear any time soon. This is forcing C-suites to make big, lasting decisions with few guideposts to aid them. The April survey found that there was a surprisingly smooth, albeit hurried transition to remote, with most companies, including private equity firms and investment banks, feeling that they performed on par or above their own expectations. However, technology gaps did arise, as some companies found that customers either didn’t have the equipment to access their accounts digitally or needed training from staff working remotely. In the middle market, dealmakers report that “opportunities have thinned somewhat but have not disappeared," as one private equity investor put it. "Investor base still has liquidity to invest." Said one investment banker focused on real estate: "Pending deals were either put on hold, cancelled or delayed. Asset prices for listings are being re-evaluated or renegotiated with the sellers and buyers expecting discounts." For more, see: Exclusive survey: How private equity firms, investment banks and other companies are surviving the pandemic.
What do you do when you’re a dealmaker under quarantine, and face-to-face meetings are out of the question? For Work from Home (WFH) strategies, Mergers & Acquisitions turns to eight prominent dealmakers from private equity firms, investment banks, lenders and law firms. “I miss the excitement of a great conference; wearing my nice clothes, early morning breakfasts, the one-on-ones, drinks with my women ‘tribe,’ and dinner at a steakhouse, even though I am a vegan,” says Amy Weisman, managing director, business development, Sterling Investment Partners. In some respects, it is easier to build relationships now, explains Nanette Heide, partner, co-chair, private equity group, Duane Morris. “Meeting folks over a video conference from their home is immediately humanizing.” M&A pros also point out that human factors play a role. "Emotional Quotient (EQ) is more important than ever during trying times,” says Jeremy Holland, managing partner, origination, The Riverside Co. “It’s critical to remember that the dealmaker on other side of the (now figurative) deal table is a person, too. They have good and bad days and presumably know many people in high-risk categories, potentially even themselves. Being extra thoughtful about each interaction is important." Read our full coverage: Dealmaking under quarantine: 8 private equity and M&A pros share strategies while social distancing.
The coronavirus pandemic will change the world and how we live in it profoundly, with dramatic shifts in how we gather and meet, work and learn, make products and distribute them. But exactly how the transformations will play out in the middle market is difficult to discern. Several recent reports and surveys aim to provide a sense of direction. Read the full story: Coronavirus crisis is changing everything, including private equity and M&A.
To explore how the coronavirus is affecting the middle market, Mergers & Acquisitions interviews dealmakers from Alvarez & Marsal, Merrill Corp., M33 Growth, M-III Partners, Paul Hastings and the Riverside Co. Read our full coverage: “Brace for impact,” say private equity firms to portfolio companies about the coronavirus.
The coronavirus pandemic has already quashed a number of previously announced deals, including Xerox’s hostile takeover bid for HP. More deals are expected to fail, as companies focus on preserving cash and ensuring debt access just to make it through the challenging economic cycle. The auto, retail, restaurant, travel and manufacturing sectors have been particularly hit hard, as they face declining sales and location closures. Automotive manufacturers are restructuring their businesses, and car dealerships are seeing fewer people walk in the door. For more, read our full coverage: 5 derailed deals: HP, TGI Fridays among those losing buyers during coronavirus crisis.
As consumer spending and business investment is declining, we expect a slowdown in private equity transaction volume. Read the story: Private equity deals will slow down, as global economy stalls amid coronavirus pandemic.
In the challenging times we face now, it’s more important than ever to come together as a community and recognize the people and companies that excel and lead. We invite you to join us in honoring the 2019 winners of Mergers & Acquisitions’ M&A Mid-Market Awards. In contrast with the volatile coronavirus-driven conditions unfolding in 2020, the dealmaking environment of 2019 was remarkably stable. Among the PE firms benefitting from the auspicious fundraising climate was Vista Private Equity, which raised a $16 billion fund – the largest technology-focused PE fund ever raised. Mergers & Acquisitions is honoring Vista founder and CEO Robert F. Smith with our 2019 Dealmaker of the Year award. In addition to leading his firm’s unprecedented fundraising, Smith excelled in philanthropy. When he spoke at the commencement of Morehouse College, he announced he would pay off all the student loans of the HBCU’s 2019 graduates, providing a helping hand in the student debt crisis facing many U.S. families. The financial services sector saw a lot of consolidation in 2019. Piper Jaffray wins our 2019 Deal of the Year for buying Sandler O’Neill to form Piper Sandler, which instantly became a leading investment bank in the financial services sector. And Stifel wins our 2019 Investment Bank of the Year for growing dramatically and making several acquisitions. Read our full awards coverage: Meet the winners of Mergers & Acquisitions’ M&A Mid-Market Awards.
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.
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.
Editor's Note: M&A wrap is a bi-weekly column, published on Mondays and Thursdays