M&A wrap: Harvest Partners, Goldman Sachs, Petershill, SolarWinds, Silver Lake, Thoma Bravo

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Goldman Sachs Asset Management’s Petershill program has acquired a 15 percent stake in middle-market private equity firm Harvest Partners. The investment will allow Harvest Partners to expand the ownership of the firm and further develop its platform. "The investment by Petershill enables us to build on our 37-year history and execute our long term strategy to broaden our middle market franchise," says Harvest Partners partner Thomas Arenz. New York-based Harvest Partners, founded in 1981, focuses on the business services, consumer, healthcare, industrials and manufacturing sectors. In 2018, the firm acquired Dwyer Group, a franchised operator that offers residential and commerical maintenance and repair services. PE firms are taking on minority investors to raise capital for expansion and to provide liquidity for some partners. Dyal Capital Partners backed Clearlake and Vector Capital, and Petershill along with Blacktsone Group LP (NYSE: BX) took a minority in Francisco Partners. Evercore Inc. (NYSE: EVR) and Kirkland & Ellis advised Harvest Partners.

Shares of SolarWinds Corp. (NYSE: SWI) rose more than 3 percent in the enterprise software developer’s initial public offering on the morning of Oct. 19, giving it a market value of about $4.80 billion. It’s not the first time SolarWinds has been traded publicly. The company, which is highly acquisitive and boasts such clients as Accenture plc (NYSE: CAN), Chevron Corp. (NYSE: CVX) and Lockheed Martin Corp. (NYSE: LMT), was taken private in 2016 in a $4.5 billion deal by tech-focused private equity firms Thoma Bravo LLC and Silver Lake Partners. After the offering, Silver Lake and Thoma Bravo will own approximately 88 percent of the common stock, making SolarWinds a controlled company. Both firms are retaining board positions. Read our Q&A with SolarWinds CEO Kevin Thompson, SolarWinds goes public again, with Silver Lake and Thoma Bravo retaining control.

Canada legalized recreational marijuana on Oct. 17, marking the first G7 nation and the second country in the world to enact full legalization. To investors in the still developing cannabis industry, many believe the market is just now approaching its own inflection point, as it transitions from a black to gray market, characterized by a more attractive risk profile and outsized growth potential. The sticking point is that as a Schedule I drug illegal under federal law, cannabis still presents imposing obstacles for traditional investors, ranging from capital markets that remain inaccessible to uncertainty over bankruptcy proceedings. Yet, ironically, it’s these very same obstacles that make the opportunity so appealing to investors willing to operate in an indefinite gray area to create an ecosystem for a market expected to reach $75 billion in size by 2030. Salveo Capital managing partner Jeffrey Howard shares advice about investing in cannabis in a guest article. Read the full story: How to seize M&A opportunities in marijuana’s gray market.

Deal news
MUFG Union Bank is acquiring middle-market investment bank Intrepid Investment Bankers. After the deal closes, Intrepid will keep its name and operate as part of MUFG's commercial banking and wealth markets group. "The addition of this highly successful boutique M&A advisory team will greatly complement the product and coverage capabilities of our commercial Banking team and drive accretive asset growth in our wealth Market businesses," says MUFG West coast president Tim Wennes. Intrepid recently advised the Riverside Co.-backed Blue Microphones on its sale to Logitch International S.A. (Nasdaq: LOGI).

Oaktree Capital Management is buying construction services firm MWH Constructors from Stantec. Perella Weinberg Partners and Paul, Weiss, Rifkind, Wharton & Garrison LLP are advising Stantec.

eBay (Nasdaq: EBAY) has acquired Motors.co.uk, a U.K.-based classifieds site.

For more deal announcements, see the weekly wrap: Carlyle, Crestview, Walmart.

For more on PE fundraising, see PE fundraising scorecard: Gallant Capital and Larson Capital.

Featured content
NFL Week 7 is underway as the Denver Broncos defeated the Arizona Cardinals. Off the field, New England Patriots quarterback Tom Brady recently teamed with former Giants defensive end Michael Strahan, who is the co-host of ABC’s Good Morning America, to launch a sports media startup called Religion of Sports Media, which has raised $3 million in venture capital funding from CourtsideVC and Advancit Capital. Many NFL players invest in companies. Muhsin Muhammad, who played wide receiver for the Carolina Panthers and the Chicago Bears, is a managing director of private equity firm Axum Capital Partners. Steve Young, former San Francisco 49ers quarterback, is a co-founder of private equity firm HGGC. Mergers & Acquisitions takes a look at star players who invest in companies through private equity, venture capital and other investment vehicles.

Mergers & Acquisitions identifies15 cities as fertile communities for dealmaking. We look at metropolitan areas from Austin (where Michael Dell launched a PC business out of his dorm room back in the day and where thousands gather every year for SXSW) to St. Louis (home of private equity firm Thompson Street Capital Partners). Be sure to check out Milwaukee (with private equity firm Robert W. Baird & Co. and investment bank Clearly Gull) and Minneapolis (home of strategic buyers 3M, Best Buy, General Mills, Hormel and Target). And don’t forget Boston, Chicago, New York, San Francisco and Los Angeles and more. See our list, Dealmaker's guide to 15 cities where M&A thrives.

Why investors like diversity. "Companies that are inclusive and also diverse tend to outperform companies that aren't," says investor Lorine Pendleton of Pipeline Angels and Portfolia in this video interview shot at Exponent Exchange, a gathering of 200 female dealmakers. Watch the full video: M&A Insights: Inclusion investing.

Events
M&A East, hosted by ACG Philadelphia and held Oct. 24-25, at the Pennsylvania Convention Center in Philadelphia, brings together 1,300 top strategic and financial dealmakers and leading middle-market advisors for deal sourcing and networking. Featured speakers include Walter Robb, former CEO Whole Foods, and Chris Voss, former FBI lead hostage negotiator. The Women in Dealmaking session will focus on Women in the Board Room.

Exponent Evening with Tequila Casa Dragones, hosted by Exponent Women LLC, a networking group for female dealmakers, held Oct. 25 at The Dream Downtown in New York, features tequila, food and a conversation between Bertha Gonzales Nieves, co-founder and CEO of Tequila Casa Dragones, and Mary Kathleen Flynn, editor-in-chief of Mergers & Acquisitions. For more on networking group’s previous event, see Exponent drew 200 women dealmakers to event featuring Sallie Krawcheck.

ACG Chicago's Family Office Conference, held Nov. 8, at the Westin Chicago River North, brings deamakers together for a "deep dive" into family offices. The event features a keynote by Laurent Roux, Gallatin Wealth Management, and panels, including: Current State of Family Office Direct & Co-Investment Activity, with Gary Levenstein, Nixon Peabody; and Impact of Millennial Generation on Family Office Investment Strategy including Social Impact Investing, with Adam Lieb and Tony Oommen, Fidelity Family Office Services.

ACG Florida Capital Connection, held Nov. 12-14, at the Vinoy Renaissance St. Petersburg Resort & Golf Club, puts “sun and fun” into dealmaking for the middle market, bringing together hundreds of dealmakers. The keynote speaker is Forbes Media CEO Steve Forbes, and the featured speaker for the Women’s Forum is Valerie Crites Fowler, who served as a diplomat in the U.S. Foreign Service for over 29 years, reaching the rank of Minister Counselor in the Senior Foreign Service.

Middle Market Week, hosted by ACG New York and held Nov. 26-30 at various locations throughout New York, brings together leading global middle-market dealmaking professionals to develop and enhance their dealmaking activities, strengthen their long-term relationships, and provide numerous opportunities for networking all week long. Mark your calendar for the Private Equity Annual Wine Tasting Gala on Nov. 28 at Gotham Hall. The building was constructed in the 1920s as the headquarters of the Greenwich Savings Bank. The gala brings together the leading middle market private equity firms for an evening of fine wines and networking.

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