M&A wrap: Starbucks, Brightloom, James Harden, Eaton, TransDigm, GTCR
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 (pictured)
Danielle Lalli, Huron Capital
Jason Mironov, TA Associates
James Oh, Transom Capital Group
Sophia Popova, Summit Partners
Pavan Tripathi, Bregal Sagemount
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.
With highly anticipated initial public offerings still in the works for Airbnb and The WeWork Co., parent of shared office space manager WeWork, another report is declaring VC records broken. According to EFront, venture capital funds’ performance globally hit their peak in the fourth quarter of 2018 — the highest level on record — and 2018 was the best year ever for VC performance. This follows PitchBook-NVCA Venture Monitor’s recent report that venture-backed exit activity reached a record $138.3 billion in the second quarter. For more, see Venture capital’s day at the beach: ADPT, BBIO, BYND, CRWD, PINS, WORK, ZM.
National Basketball Association star James Harden and his company, 13 Endeavors LLC, has joined the ownership group of the Houston Dynamo, a Major League Soccer team; the Houston Dash, a National Women’s Soccer League team; and BBVA Stadium. The ownership group is led by Gabriel Brener, CEO of Brener International Group, a private investment firm and family office. Harden, the 2018 NBA Most Valuable Player, plays for the Houston Rockets. Morgan Lewis represented Harden in the deal.
Starbucks Coffee Co. (NASDAQ: SBUX) is acquiring an equity stake in the Brightloom tech company, formerly Eatsa. In exchange, Brightloom is receiving a software license to components of Starbucks “digital flywheel” software, including mobile, loyalty and engagement technology, to develop software for restaurant industry merchants.
Power management company Eaton Corp. plc (NYSE: ETN) is acquiring Souriau-Sunbank Connection Technologies, an aerospace electrical components manufacturer, from TransDigm Group Inc. (NYSE: TDG) for $920 million. TransDigm had acquired Souriau-Sunbank, named Esterline Technologies Corp. (NYSE: ESL) at the time, in March. “Souriau-Sunbank’s extensive connectors capabilities will accelerate our participation in the growing market for electrical content on aircraft, and also give us a strong portfolio of connectors for the industrial, energy and transport markets that we serve today,” says Craig Arnold, Eaton CEO. The deal is expected to close by yearend.
Colony Capital Inc. (NYSE: CLNY) real estate investment firm is investing $320 million, and potentially up to $500 million, to drill wells in a California Resources Corp. (NYSE: CRC) oil and gas field near the San Joaquin Basin in California. Colony is investing through its energy investment management arm, Colony HB2 Energy, which has formed a joint venture with California Resources. Willkie Farr & Gallagher LLP represented Colony Capital on the deal.
Abry Partners -owned AddSecure has acquired Offentlig Säkerhet, a Swedish provider of public-sector workplace security and safety solutions. Abry Partners, a Boston private equity firm, had purchased AddSecure, a Stockholm, Sweden, provider of monitored alarms and Internet-of-Things communications, in 2016. AddSecure CEO Stefan Albertsson says the acquisition will help build his company’s Smart Rescue business with public sector customers. Offentlig Säkerhet will continue to be operated and managed as a separate company. Lincoln International advised Offentlig Säkerhet on the deal.
Hello Alfred, a building management technology company, has acquired the Bixby building management technology platform to expand its business in multi-family buildings. Bixby’s assets and employees will operate under the Hello Alfred brand.
Octo, a portfolio company of middle-market private equity firm Arlington Capital, has acquired Connexta, an open-source software developer for government and commercial customers. Octo is a software and services provider for U.S. government customers. Connexta will operate as a wholly owned subsidiary of Octo.
Median, a Waterland Private Equity portfolio company, is acquiring the Eschenburg drug and alcohol addiction treatment clinic and the Rhein-Reha ambulatory cardiological rehabilitation center, both in Germany. Median, a private rehabilitation company in Germany, also acquired the Wied GmbH & Co. KG clinics in January. Since Waterland became a shareholder, Median has acquired 21 clinics and clinic groups.
David Seider has been hired by Weatherford Capital as a vice president responsible for investment analysis, transaction execution and portfolio management. He previously worked at Roper Technologies, Ballast Point Ventures and Raymond James Financial.
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.
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.
"We don’t have a fixed timeframe for a sale," says the Stephens Group managing director Aaron Clark. "We just pursue a strategy that can add value and help businesses mature." Mergers & Acquisitions recently spoke with Clark and managing director Clay Hunter to explore the firm’s investment strategy. The Little Rock, Arkansas firm bought Sound Seal, a maker of noise control products, earlier in 2019. Read the full story: Investing for the long term: Q&A with the Stephens Group family office.
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.
ACG Seattle hosts the Northwest Middle Market Growth Conference at the Fairmont Olympic Hotel in Seattle on July 25.
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.