Technology permeates many of today’s private equity deals, and PE firms are hot on the trail of innovations that will drive sustainable value to customers and make companies more efficient, more effective and less expensive to run. Among the developments appealing to PE investors are: artificial intelligence, data management, data virtualization, digital marketing, healthcare IT, industrial automation, the Internet of Things, machine-to-machine learning, payment processing and Software-as-a-Service. “Technology, in and of itself, is invading every end market, and it is driving companies to be more competitive than their peers,” points out Richard Lawson, CEO of tech-focused PE firm HGGC. As PE firms consider the tech landscape, they are watching Amazon.com Inc. (Nasdaq: AMZN) closely. “We are always thinking about how we can help companies that are going to get dislocated and disintermediated by Amazon,” says Lawson. “End markets everywhere are being changed by Amazon. As Amazon scales, it will challenge all kinds of industries and it will have a cascading effect across all sectors. You are already seeing more companies trying to connect their brands with consumers in new ways.” To gain more insights into what kinds of tech deals will dominate the field in 2019, Mergers & Acquisitions reached out to 10 private equity firms that are active investors in technology: Francisco Partners, Genstar, Great Hill, HGGC, Insight, LLR, Riverside, Silver Lake, TA and Vista.
Related: 10 private equity firms share strategies for tech M&A.
Deadline approaches. Submit nominations by Feb. 8 for Mergers & Acquisitions' 12th Annual M&A Mid-Market Awards, which will honor leading dealmakers and deals that set the standard for transactions in the middle market in 2018. Click here to submit nominations. Looking at past winners provides a good guide to what we’re seeking. Last year’s winners included Campbell Soup, Huron Capital, Idera, LLR Partners, McGuireWoods, Stryker, Twin Brook and William Blair.
Related: Call for Nominations: 12th Annual M&A Mid-market Awards.
Deal news
The Carlyle Group (Nasdaq: CG) is acquiring a minority stake in Brazilian fast-casual restaurant chain Grupo Madero. The target operates 140 restaurants under the Madero Steakhouse, Madero Container and Jeronimo brands, and is mostly known for its burgers. "We have set ambitious goals, and we are excited that Carlyle will be our partner for the next stage of our journey," says Grupo Madero CEO Junior Durski. Pinheiro Neto, Debevoise & Plimpton and Santander are advising Carlyle. Machado Meyer Advogados is advising Grupo Madero.
Modern Media Acquisition Corp. (Nasdaq: MMDM) is merging with music streaming company Akazoo Ltd. in a deal valued at around $469 million. Jones Day is advising Modern Media.
Granite Bridge Partners-backed The InterMed Group has purchased Horizon CSA LLC, a provider of biomedical and clinical engineering equipment services to healthcare providers.
For more deal announcements, see The weekly wrap: EQT, Odyssey, Viacom.
For more on PE fundraising, see PE fundraising scorecard: Carlyle, Hancock Capital, Kinderhook.
People moves
David Quon has joined KeyBank Business Capital, the asset-based lending arm of KeyCorp (NYSE: KEY), as a senior business development executive. He is responsible for originating, structuring and growing the group’s asset-based lending portfolio for institutional and commercial clients. Quon was most recently a managing director at White Oak Global.
Featured content
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. "Actively lobby and ask from day one to work on deals, so you can gain dealmaking experience early in your career," advises Bradley. "Too often, women are steered into functions like marketing, business development, and investor relations – the 'softer side' where it is easier to place a female. The excuse often used is that the females don’t have the deal experience of their male counterparts. That is why you must be an advocate for yourself and work on deals from the very beginning."
Related: Meet the 2019 Most Influential Women in Mid-Market M&A.
Mergers & Acquisitions asked leading dealmakers about their outlook for the middle market in 2019. Watch the video conversations, shot at ACG Philadelphia's M&A East: It is a seller's market, and deal activity is expected to remain steady, says Ramsey Goodrich of Carter Morse & Goodrich: Outlook 2019: Great time to sell. Private equity firms and strategic buyers will use their excess cash and capital to look for deals, says Bharat Ramprasad of Stifel Nicolaus: Outlook 2019: Excess capital to fuel M&A. Rising interest rates and regulatory changes may increase volatility, cautions Mark Emrich of Murray Devine: Outlook 2019: Keep an eye on rising interest rates.
Family-owned businesses require a lot preparation to sell to PE firms, says Carls Marks Advisors' Warren Feder. Watch the video: How to prep a family biz for sale to private equity.
The New England Patriots and the Los Angeles Rams will face off in the Super Bowl. Off the field, 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. 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. Check out: NFL stars Tom Brady, Michael Strahan, Steve Young go PE.
Events
ACG Boston, ACG Connecticut, ACG New Jersey, ACG New York & ACG Philadelphia host ACG Northeast Dealmaking at the Mountain at Stowe Mountain Resort in Stowe, Vermont Jan. 27-29. The event provides a chance for middle-market M&A professionals from across the northeast to come together for two days of close knit networking, shared conversations and valuable time spent to deepen your relationships within the deal community.
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