M&A wrap: GTCR, Apollo, EQT, CPPIB, Arsenal, Apax, Bregal Sagemount

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Looking for a glimpse of what’s to come in the private equity industry? Meet the 10 dealmakers named by Mergers & Acquisitions as the 2019 Rising Stars of Private Equity:

Austin Collier, Branford Castle Partners
Kevin Cunningham, LNC Partners
Shawn Domanic, Sterling Partners
Stephen Jeschke, GTCR
Danielle Lalli, Huron Capital
Jason Mironov, TA Associates
James Oh, Transom Capital Group
Sophia Popova, Summit Partners
Pavan Tripathi, Bregal Sagemount (pictured)
Christine Wang, Francisco Partners

The Rising Stars share a common set of core values. They are passionate about building companies. They are naturally curious and interested in changing things for the better. They enjoy working with portfolio company managers, investment bankers and other deal team members. They appreciate the responsibility and autonomy their firms have given them. They are grateful for the leaders who have helped shape their careers, and they are generous with their own time when it comes to nurturing the next generation. As the PE industry goes through a generational shift and many firm founders retire, it's well worth getting to know these emerging leaders. 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.

DEAL NEWS
GTCR is buying the broadband assets of Eagle Communications, which serves customers in Kansas, Nebraska and Colorado. The acquisition will be completed through GTCR’s previously established management partnership with Mega Broadband Investments and comes less than a year after MBI’s initial platform investment in Northland Communications. GTCR formed MBI in October 2017 to focus on acquiring rural broadband assets. “The acquisition of Eagle represents an excellent fit with the existing MBI footprint and strategy,” says MBI CEO Phil Spencer. "Further, we plan to build upon Eagle’s strong reputation by investing millions of incremental dollars into network upgrades over the coming year to be able to rollout enhanced high-speed data services to both our residential and commercial customers.” Advisors to GTCR and MBI include: PwC and Kirkland & Ellis.

Chuck E. Cheese isn’t going public after all. The parent company of CEC Entertainment Inc., which runs Chuck E. Cheese and Peter Piper Pizza, will no longer merge with shell company Leo Holdings Corp. in order to go public on the New York Stock Exchange. The now-defunct deal between CEC owner Queso Holdings Inc., its controlling stockholder Apollo Global Management LLC and so-called blank-check company Leo would have offered an alternative route from an initial public offering. Read the full story by Bloomberg News: Apollo deal to take Chuck E. Cheese owner public falls apart.

EQT and CPPIB are buying a majority stake in healthcare technology company Waystar from Bain Capital Private Equity in a deal that values the target at $2.7 billion. Bain is keeping a minority stake in Waystar. Advisors to EQT include: Barclays, Triple Tree and Simpson Thacher & Bartlett LLP. Advisors to Bain include J.P. Morgan (NYSE: JPM), Deutsche Bank and Ropes & Gray.

Arsenal Capital Partners is buying Seal For Life Industries from Berry Global Group Inc. (NYSE: BERY) for $328 million. Seal For Life offers corrosion protection and sealing services under the Anodeflex, Stopaq, Polyken, Covalence and Powercrete brands. The company has about $120 million in annual sales. Advisors to Arsenal include: William Blair and Jones Day. J.P. Morgan Securities (NYSE: JPM) is advising Berry.

Apax Digital Fund, the technology-focused growth equity fund of Apax Partners, is buying MetaMetrics from Pamlico Capital. The target is a provider of of predictive analytics and data science designed to improve educational outcomes. Raymond James & Associates advised MetaMetrics.

McNally Capital has invested in Altamira Technologies, which offers analytics and engineering services to the U.S. national security sector. ClearSky and Nio Advisors LLC invested alongside McNally. Ropes & Gray represented McNally.

FFL Partners has acquired a majority stake in consulting and staffing services company Alku. Exisiting minority investor WestView Capital Partners has also reinvested in the target. Advisors to Alku and WestView include: William Blair and Latham & Watkins. FFL was represented by Kirkland & Ellis.

For more deal news, see Weekly wrap: Apple, Etsy, Yellow Wood.

FUNDRAISING
Welsh, Carson, Anderson & Stowe has raised its thirteenth fund at $4.3 billion. The PE firm, which focuses on the healthcare and technology sectors, has received $700 million from new investors. Some of the firm's recent investments include: Kindred at Home; MMIT; InnovAge; Avetta; Clearwater Analytics; and Intoxalock.

Hamilton Lane has closed its fifth strategic opportunities fund at $760 million. The fund is focused on making credit-oriented investments with consistent cash yield, shorter duration and attractive risk-adjusted returns.

For more fundraising news, see PE fundraising scorecard: Carlyle, Lincolnshire, Varsity, VMG.

PEOPLE MOVES
Jessica Nels was hired by lender Churchill Asset Management as a principal in the firm's capital markets and syndication team. She is responsible for middle market club transactions, syndication and lender relationship management. Nels was previously with Twin Brook Capital Partners.

DIVERSITY IN DEALMAKING
Women hold just 9.4 percent of senior positions at PE firms globally, according to a recent study by HEC Paris. The low representation underscores the importance of projects that feature successful female dealmakers, such as Mergers & Acquisitions' Most Influential Women in Mid-Market M&A. The special report profiles 36 women M&A pros and includes interviews with them.

“There is this idea in sociology: You've got to see it to be it,” said NBC News correspondent Stephanie Rhule about the importance of building communities of women in the financial services sector, where they are woefully underrepresented. Rhule spoke at the second annual Exponent Exchange, hosted by Exponent Women, a group devoted to nurturing the financial services careers of its female members. Read the full story: Exponent Exchange brings together 200 women dealmakers for second annual event.

Gender-diverse PE investment committees outperformed all-male investment committees substantially, finds a recent study by HEC Paris professor Oliver Gottschalg. The results are compelling: Gender-diverse PE investment committees outperformed all-male investment committees substantially, as measured by several metrics: 7 percent more alpha; .52x more total value to paid-in multiple; and 12 percent higher internal rate of return. Also impressive: the failure rate of gender-diverse investment committees was 8 percent lower. The findings provide concrete evidence showing the value of including women on deal teams and may help to convince skeptics. For more, read Why private equity firms should include more women on deal teams.

A new payment company is attacking the hurdles professional women face when returning to the workforce after time away, a distinct problem borne out of the broader gender gap in financial services. “This is an economic problem, where you have something like a parent who left the workforce and then could not get back in,” said Samantha Ettus, founder and CEO of Park Place Payments. Read the full story: Behind a payment startup's battle to bridge the gender gap.

FEATURED CONTENT
Alex Rodriguez is best known as the New York 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 League fullback 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.

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.

Organizations in industries, ranging from manufacturing to healthcare, are using M&A to add automated technology in their processing systems. Advances in robotic technology are making it possible to complete more complex tasks at higher speeds and with improved control and outcomes. Read the full story: Accelerating automation through M&A.

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.

EVENTS
ACG New York's summer dealmaking conference takes place at Gurney's Star Island Resort & Marina in Montauk, NY, July 31-Aug.1.

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.

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

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