M&A wrap: CVC, AEI, Arsenal, Thomson Reuters, LNC, Huron, Summit, Elizabeth Warren

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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 (pictured)
Shawn Domanic, Sterling Partners
Stephen Jeschke, GTCR
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

DEAL NEWS
CVC Capital Partners has raised about $5.1 billion for its second opportunities fund. The fund will invest in long-term opportunities across North America and western Europe, which falls outside CVC's traditional private equity strategy. The opportunities fund has recently invested in K-12 education provider Gems Education.

Joseph Landy is stepping aside as co-chief executive officer of Warburg Pincus, the private equity firm he has helped manage since 2000, according to Bloomberg News. Landy, 58, will transition out of the co-CEO role over the next year. Read the full story by Bloomberg: Joseph Landy to be stepping aside as Warburg Pincus co-CEO.

AE Industrial Partners is buying a majority stake in helicopter operator Columbia Helicopters. Advisors to AEI include: Kirkland & Ellis, Rothschild and PwC. Advisors to Columbia include: Greenhill & Co. and Tonkon Torp.

Arsenal Capital Partners is acquiring a majority stake in plastic products manufacturer Revolution. Advisors to Revolution include William Blair and Wachtell, Lipton, Rosen & Katz. The advisor to Arsenal is Kirkland & Ellis.

Montage Partners has invested in automation software provider Advantco International LLC. Osborn Maledon PA advised Montage, and Wyrick Robbins Yates & Ponton LLP advised Advantco. Financing was provided by Pinnacle Financial Partners.

Thomson Reuters has bought HighQ, which offers software to the legal and regulatory sectors. Arma Partners advised HighQ.

CBL Markets, a commodity markets trading company, is merging with Xpansiv Data Systems. The latter is a data provider to commodities. Morrison Foerster is advising Xpansiv.

HKW-backed Fresh Direct Produce has acquired Emperor Specialty Foods. The target distributes mushrooms, pears, along with other fruits and vegetables.

Kitchen appliance maker Breville Group has bought food technology company ChefSteps.

Frontline Education is buying K-12 education company Perennial Edtech from Alpine Investors. Macquarie is advising Perennial.

REGULATORY NEWS
Elizabeth Warren (D: Mass.) unveiled a policy proposal to slap new rules on private equity and “useless speculation” on Wall Street while rolling back Donald Trump’s deregulation of the financial industry. A centerpiece of her “economic patriotism” plan is to transform private equity firms, which she said often act like “vampires” when they buy companies by “bleeding the company dry and walking away enriched even as the company succumbs.” Read the full story by Bloomberg News: Elizabeth Warren proposes new regulations on PE firms.

DIVERSITY IN DEALMAKING
Gender-diverse PE investment committees outperformed all-male investment committees substantially, finds a recent study by Oliver Gottschalg, a professor at HEC Paris. 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. Women still hold just 9.4 percent of senior positions at PE firms globally, the report found, indicating the industry still has a long way to go before reaping the benefits of gender diversity. 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. Networking groups, such as Exponent Women, play a crucial role in developing communities for women dealmakers. The New York group hosted its second annual Exponent Exchange on July 11 at Second in New York. The event last year brought together 200 women.

“There is this idea in sociology: You've got to see it to be it,” said NBC News correspondentStephanie Rhule about the importance of building communities of women in the financial services sector, where they are woefully underrepresented. She 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.

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.

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.

FEATURED CONTENT
Alex Navab, a former executive of KKR & Co. Inc. (NYSE: KKR), 53, died unexpectedly July 7 while on vacation with his family in Greece, according to Navab Capital Partners, a private equity firm he founded earlier this year. A cause of death was not provided. Navab, who was once considered a potential candidate to lead KKR, left the firm in 2017 when other executives were promoted. In April 2019, Navab launched the eponymous firm, planning to back upper mid-cap to larger enterprises in North America. Read the full story: Remembering Alex Navab, former KKR executive and founder of Navab Capital Partners.

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.

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.

EVENTS
The Women's Connection Golf Clinic & Networking event takes place on July 17 at the Granite Links Golf Club in Quincy, Massachussets. The event is being hosted by ACG Boston.
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.

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