M&A wrap: H&R Block, Wave, Apollo, Shutterfly, Leonard Green, Ares, Sheridan, IOP

H&Rblock
A receptionist speaks on the phone at the H&R Block, Inc. flagship office in New York, U.S., on Friday, March 3, 2012. H&R Block, Inc. provides tax services to the general public, accounting and consulting services, and consumer financial and personal productivity software. Photographer: Scott Eells/Bloomberg

H&R Block Inc. (NYSE: HRB) is buying financial services software provider Wave Financial Inc. for $405 million. Wave's technology helps small businesses with free accounting, invoices and receipt-tracking. The target generates revenue by offering additional products such as payment processing, payroll and bookkeeping services. Wave's products and services are used by more than 400,000 small businesses globally every month. The deal expands H&R Block's presence in the small business market. “Bookkeeping and cash flow management are significant pain points for small business owners and essential to successful annual tax preparation," says H&R Block CEO Jeff Jones. "Wave addresses these concerns by delivering financial solutions and a simple user experience on a single platform. Wave provides us the opportunity to accelerate our small business strategy and is a great strategic fit, as both companies can leverage each other's capabilities to bring tax and financial solutions to small business owners, serving more clients in more ways.” Adds Wave co-founder Kirk Simpson: "By helping with tax, we are confident that we can serve small business owners even more effectively." Following the deal close, Wave's leadership team led by Simpson is expected to remain in place, and will operate independently from its Toronto headquarters.

DEAL NEWS
Apollo Global Management LLC (NYSE: APO) is buying Shutterfly Inc. (Nasdaq: SFLY) for $51 a share in cash. The deal values the online retailer at about $1.74 billion, based on the company’s outstanding shares at the end of March. Apollo will also assume Shutterfly’s more than $1 billion in debt. The buyout firm plans to merge Shutterfly with rival Snapfish LLC, whose owners will become minority shareholders in the combined business, Apollo said. Read the full story by Bloomberg News: Apollo buys Shutterfly and will merge with rival Snapfish.

A consortium led by Leonard Green & Partners and Ares Management Corp. (NYSE: ARES) are buying Press Ganey from EQT. Press Ganey offers safety, patient experience and workforce engagement services, including surverys, to healthcare organizations. Advisors to the sellers include: Barclays, Goldman Sachs (NYSE: GS) and Simpson Thacher & Bartlett.

Angeles Equity Partners has bought Mini Pharmacy Enterprises, a pharmacy that specializes providing diabetic supplies. Advisors to the target include: Intrepid Investment Bankers and Sheppard, Mullin, Richter & Hampton LLP. The legal advisor to Angeles is Nelson Hardiman.

Sheridan Capital Partners has invested in vision practice company Atlantic Vision Partners. The legal advisor to Sheridan is McGuireWoods LLP. Financiing was provided by Twin Brook Capital Partners.

Industrial Opportunity Partners has acquired pressure pipe manufacturer United Poly Systems. Advisors to IOP include: Lincoln International and Winston & Strawn. Financing was provided by TCW Asset Management and Norwest Mezzanine Partners.

Milliken & Co. is buying textiles producer Polartec from Versa Capital Management.

Acuity Capital bought gift card manufacturer Sterling Card Solutions. The target was advised by Capstone headwaters.

Fast-casual restaurant chain Sweetgreen made its first ever acquisition in meal delivery company Galley Foods.

Hunter Street Partners has invested in Bridges MN, a provider of services and housing options to individuals with disabilities.

PEOPLE MOVES
Melissa Mounce was hired by private equity firm GTCR as a managing director, leadership talent. She is focusing on recruitment and executive assessment at GTCR portfolio companies. Mounce was previously with Baird Capital.

David Fischer, Nick McDearis, Dan Letizia, Tommy Ryan, Jack Bernstein, Alex Patil and Stewart Hanlon have joined Monroe Capital. Fischer and McDearis were previously with AloStar Capital Finance; Letizia and Ryan come from Twin Brook Capital Partners; Bernstein was most recently with HIG Capital; Hanlon was previously with Oak Global Advisors; and Patil comes from Medley Management.

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.

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.

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.

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.

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.

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.

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 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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