M&A wrap: Lincoln, Piper Jaffray, Palladium, Gryphon, Thompson Street

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Activity and urgency characterize the current dealmaking environment, say investment bankers and other M&A advisors interviewed by Mergers & Acquisitions. "On the deal side, competition for A-quality assets has never been greater," says Lincoln International's Christopher Stradling (pictured). "This is driving not only higher prices, but abbreviated sale and due diligence processes as well. In many cases, the winning buyers try to jump ahead of a sale process and perform third-party due diligence in advance of any formal bid." 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, for our interviews with these prominent advisors:

Paul Aversano, Alvarez & Marsal
Cole Bader, Stifel
Karen Davies, Huntington National Bank
J.R. Doolos, KeyBanc Capital Markets
Andrew Jessen, William Blair
Derek Lewis, Harris Williams
Peter Lombard, Piper Jaffray & Co.
Christopher Stradling, Lincoln International

DEAL NEWS
Palladium Equity-backed coffee condiments distributor GoodWest Industries has bought Skinny Mixes, a provider of coffee syrups, flavorings, whipped foam toppings and beverage mixes. Palladium invested in GoodWest in 2015.

Gryphon Investors-backed Cora Physical Therapy has acquired Elite Physical Therapy in St. Louis; Advanced Physical Therapy in Central Florida; Coastal Physical Therapy and Coastal Hand Therapy in South Carolina; and Dynamic Physical Therapy in Florida. Cora now operates over 200 physical therapy clinics throughout the U.S.

Thompson Street Capital Partners-backed Revenue Management Solutions has purchased healthcare payment technology company i8 Health Solutions.

Alpine Investors-backed Team Services Group has acquired home healthcare services provider Circle of Life Home Care Anishinaabe.

Ampersand Capital Partners has bought biopharmaceutical contract manufacturer Vibalogics.

Gen Cap America has bought Mayflower Sales, a distributor of locks and other hardware security products.

Ardian has acquired a minority stake in French sales representative recruitment platform Uptoo.

BC Partners--backed United Group is buying European telecom company Tele2 Croatia.

For more deal announcements, see Weekly wrap: Global Payments, TSYS, Genstar, Insight Partners.

For more on PE fundraising, see PE fundraising scorecard: G Squared, Summit Investors, Warburg Pincus.

PEOPLE MOVES
Nate Sleeper has been named CEO at private equity firm Clayton, Dubilier & Rice, and David Novak and Rick Schnall have been named co-presidents effective January 1, 2020. Donald Gogel will remain chairperson. Novak, Schnall and Sleeper will continue in their investment roles, and will work together on a newly-formed executive committee that will focus on firm governance-related issues.

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.

After five years, Fulton Financial in Lancaster, Pa., is finally free of regulatory orders. The $21 billion-asset company now has a wide array of opportunities open to it, and management has had years to mull over the course it will set. Read the full story: Fulton emerges from regulatory gantlet. Is M&A in its future?

The stocks of a wide swath of publicly traded payments companies are rising faster than the overall S&P 500 index, potentially fueled by several mega mergers in the first half of 2019. Read the full story: Fintech M&A zeal causes payments stocks to surge.

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.

Genstar Capital, Audax and HarbourVest ranked as the top U.S. private equity firms of 2018, based on volume of completed deals, according to PitchBook. Check out Mergers & Acquisitions' profiles of 21 firms that led the league tables. Top private equity firms: Genstar, Audax, HarbourVest.

Also see: Top investment banks in PE-backed deals: KPMG, Houlihan, GS, William Blair.

At least two-thirds of U.S. homes have at least one pet, and people are spending more money on their pets than ever, driving M&A across the entire pet care sector. Read the full story: Demand for animal health products and services rises, driving deals.

One of the most significant opportunities to impact the success of due diligence is understanding how to leverage data. In today’s market, the ability to tap into the volume and variety of big data can provide private equity stakeholders with the competitive edge in operational due diligence. Read the full guest article by Maine Pointe's Mark McTigue and Nathanael Powrie: How data can help PE accelerate value at due diligence.

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 New York, ACG Boston and ACG Philadelphia are holding the Industrial Conference with Value Creation at the Infor in New York on June 6. The event is part of the Northeast Industry Tour.

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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