M&A wrap: Genstar, Advarra, Linden. Google, CVC Riverside, Anthem, The Prom

drugresearch
An employee holds a glass flask in the oncology research laboratory at the Bayer AG pharmaceutical division factory in Berlin, Germany, on Wednesday, March 20, 2019. Bayer reports earnings on April 25. Photographer: Krisztian Bocsi/Bloomberg

Genstar Capital is buying a majority stake in Advarra from Linden Capital Partners. The latter is reinvesting a minority stake in Advarra. The target offers institutional review board (IRB), institutional biosafety committee and research quality and compliance services, which are mandated by regulatory agencies for all trial protocols, patient forms, site initiations and trial modifications in drug development and research. "IRBs are required and critical to the drug development process and the increasing complexity of clinical trials and need to adhere to evolving and strict FDA guidelines will continue to drive the importance of our services. "IRBs are required and critical to the drug development process and the increasing complexity of clinical trials and need to adhere to evolving and strict FDA guidelines will continue to drive the importance of our services," says Advarra CEO Pat Donnelly. "Advarra is devoted to enhancing the safety of clinical trial subjects around the world and to improving the efficiency of clinical trial execution for all stakeholders including sponsors, academic institutions, hospital systems, and CROs." Genstar has previously invested in healthcare and drug research companies such as CRF Bracket, eResearchTechnology, and PRA Health Sciences. Advisors to Linden and Advarra include: Jefferies, Houlihan Lokey (NYSE: HLI) and Kirkland & Ellis. Ropes & Gray is representing Genstar.

Genstar ranked as the most active U.S. private equity firm of 2018, based on volume of completed deals, according to PitchBook. The San Francisco firm recently raised its largest fund ever. Check out Mergers & Acquisitions' profiles of 21 firms that led the league tables. Top private equity firms: Genstar, Audax, HarbourVest and more

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.

DEAL NEWS
Alphabet Inc.’s (Nasdaq: GOOG) Google agreed to buy Looker Data Sciences Inc. for $2.6 billion, expanding its offerings to help customers manage data in the cloud. The acquisition gives Google a new tool in its campaign to sell more cloud storage and software. The deal is Google’s biggest since it acquired smart home company Nest Labs for $3.2 billion in 2014. Read the full story by Bloomberg News: Google buys Looker to expand cloud offerings.

Industrial Scientific, a subsidiary of Fortive Corp. (NYSE: FTV), is buying Intelex Technologies from JMI Equity and HarbourVest for $570 million. Intetlex offers Software-as-a-Service for environmental, health and safety services. Advisors to Intelex include: Evercore Inc. (NYSE: EVR), Goodwin Procter and Osler, Hoskin & Harcourt.

CVC Capital Partners is buying a majority stake in cloud-based financial administration services company Vitech Systems Group. Advisors to Vitech include: RBC Capital Markets, Clearsight Advisors and Orrick, Herrington & Sutcliffe LLP. Advisors to CVC include: Citi, Goldman Sachs (NYSE: GS), and White & Case.

The Riverside Co. has invested in Champion Healthcare Technologies, a Software-as-a-Service provider that helps hospitals manage surgical implants throughout their life cycle, from Jump Capital.

Anthem Inc. (NYSE: ANTM) is buying Beacon Health Options, the largest independently held behavioral health organization in the country, from Bain Capital Private Equity and Diamond Castle Holdings.

Hillhouse Capital Management is buying Scottish whiskey producer Loch Lomond Group from Exponent Private equity.

S&T Bancorp has agreed to buy DNB Financial. The $7.2 billion-asset S&T said that it will pay $206 million in stock for the $1.2 billion-asset DNB. The acquisition allows S&T to enter the Philadelphia area, where DNB has 14 branches. Read the full story: S&T is Philadelphia bound after agreeing to buy DNB Financial.

PEOPLE MOVES
David Duran has been hired as a CEO at Forest Lane Capital-backed automated hygiene technology company Meritech. Duran is a former vice president and general manager at Checkers Safety Group.

Diane Daych, managing Partner and co-Founder at Granite Growth Health Partners; Ryan Drant, founder and managing director at Questa Capital; Patrick Enright, managing Director at Longitude Capital; Charles Hudson, managing partner at Precursor Ventures; Nagraj Kashyap, corporate vice President and global head at M12; Mohamad Makhzoumi, general partner at NEA; Doug Pepper, managing director at Shasta Ventures; Renata Quintini, venture partner at Lux Capital; Scott Raney, partner at Redpoint Ventures; and Dana Settle, co-founder and partner at Greycroft, have been named to the board of the the National Venture Capital Association.

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.” For recent transactions that showcase the trends, see 5 private equity-backed healthcare IT deals.

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.

The Prom is up for seven Tony Awards, including Best Musical. Co-producer Jane Dubin, a former financial services executive, discusses investing in Broadway plays in this Q&A with Mergers & Acquisitions.

May featured deals closed by ACI Worldwide Inc. (Nasdaq; ACIW)., Genstar, Morgan Stanley (NYSE: MS) and Tesla Inc. (Nasdaq: TSLA). Read the full story: Deals that closed in May: ACI Worldwide, Genstar, Morgan Stanley, Tesla.

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.

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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