M&A wrap: Thoma Bravo, Ellie Mae, Constitution, Summit, Patriot, LLR
Tech-focused private equity firm Thoma Bravo is buying mortgage loan origination system developer Ellie Mae Inc. (NYSE: ELLI) in a take-private all-cash transaction valued at $3.7 billion. “Ellie Mae delivers powerful and innovative mortgage technology solutions across every channel of the residential mortgage sector, enabling lenders to originate more loans while reducing costs and driving efficiency, quality and compliance throughout the mortgage process,” said Holden Spaht, a managing partner at Thoma Bravo. “Ellie Mae is leading the digital transformation of the residential mortgage industry, and we look forward to building on the company’s successes and to our partnership through this next chapter of growth.” As Mergers & Acquisitions' sister publication National Mortgage News reports, Thoma Bravo's current investments in mortgage-related companies include: MerdianLink, whose technology includes the LendingQB loan origination system; Kofax, which offers document capture software; and Hyland Software, which does electronic document management technology. Based in Chicago and San Francisco, Thoma Bravo is one of the most active PE investors in technology. In January, the firm finished raising Thoma Bravo Fund XIII. Closing at $12.6 billion, the firm's latest flagship fund, which focuses on backing enterprise software company, is significantly larger than its $7.6 billion predecessor, which closed in 2016. The firm recently completed the acquisition of Veracode Software, a provider of application security testing technology, from Broadcom Inc., in an all-cash transaction valued at $950 million. The firm also recently completed a take-private deal for Imperva Inc., a provider of cybersecurity software and services.
Constitution Capital Partners, multi-asset alternative investment firm, has announced the formation of Constitution Capital Real Estate Partners, comprised of professionals previously employed by Lone Star Funds and its affiliates. With offices in New York and Chicago, the group will be led by Hugh J. Ward III, an industry veteran and most recently senior managing director and co-head of real estate investments at Lone Star North America. The team will focus on identifying undermanaged and undercapitalized assets and seek to create value by improving management, performing incremental leasing and increasing rents via strategic capital improvements. Primary target asset classes include Class B apartments/workforce housing, Class B/A- office buildings, e-commerce oriented industrial properties and full and select service hotels located across the U.S. “As a firm that is constantly seeking ways to improve and enhance performance for both our portfolio and our investors, we believe the addition of the Real Estate team will be another method to create further value,” said Daniel Cahill, a managing partner at Constitution Capital Partners.
Celero Commerce, an LLR Partners-backed provider of payment processing services, business management software and data intelligence to small and medium-sized businesses, has acquired RazorSync LLC, a developer of Software-as-a-Service applications that aims to streamline operations for companies in the field service industry. LLR Partners formed Celero in December alongside CEO Kevin Jones, a payments industry executive and the current president of the Electronic Transactions Association. The acquisition of RazorSync follows Celero’s recent strategic investment in payments processor UMS Banking.
Summit Partners-backed Patriot Growth Insurance Services has acquired Turner Insurance & Bonding Co. The partnership comes just weeks after Patriot launched its growth-focused national insurance platform in collaboration with 17 independent insurance agencies and True Network Advisors. The addition of Turner is designed to deepen Patriot’s property and casualty insurance capabilities and to fuel growth.
Investcorp has acquired a controlling stake in Revature, a technology talent development company, for undisclosed terms. “Through Revature’s mission of empowering the next generation of technology professionals, it has completely redefined the way companies find, train and retain technology talent,” said Investcorp managing director Maud Brown. “With the race for computer science talent continuing to gather pace, we are excited to help Revature accelerate its remarkable growth and further expand its Fortune 500 client base.” Investcorp has a history of investing in the education and information technology staffing industries, through past investments such as Nobel Learning Communities and Pro Unlimited. More broadly, Investcorp’s past and present portfolio includes more than 150 investments totaling over $36 billion in transaction value. Jefferies LLC served as exclusive financial advisor to Revature.
Darby Private Equity, a private equity arm of Franklin Templeton, has announced that Darby Latin American Private Debt Fund III LP has completed an investment in Pharma Consulting Group S.A., known as Biopas, a specialty pharmaceutical distribution company focused on in-licensing, selling and marketing innovative prescription pharmaceutical products, cosmetics and medical devices.
Mark Mikullitz has joined Investment bank Houlihan Lokey (NYSE:HLI) as a managing director in the M&A group, to lead the firm’s shareholder activism defense practice and to strengthen its public company M&A focus. Based in New York, Mikullitz joins from Deutsche Bank, where he was head of activism and contested situations in the M&A group. Prior to Deutsche Bank, he spent seven years in J.P. Morgan’s M&A group and was previously an M&A attorney with the law firm of Skadden, Arps, Slate, Meagher & Flom.
Technology M&A is thriving, and private equity 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. 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.
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.
Bank volume was steady, but deal values would have been the lowest in years if not for one big, and very intriguing, transaction. For more, see: Bank M&A: What January data hints about 2019.
Not only do carve-outs account for 10 percent of all M&A activity, the percentage of carve-outs conducted by buyout firms (as opposed to strategic buyers) is on the rise, and sharply at that. And that’s important, because, at the risk of overextending the curveball analogy, the carve-out is ‘filthy stuff.’ The inherent complexities of the deal can puzzle even serial acquirers. Write Accordion's Gary Appelbaum and Eric Salit in this guest article: Carve-out curveball: How to hit a home run.
Consumerization of healthcare, high-deductible health plans, and more self-payment by patients are contributing to the overall increased demand for PT services, write Battery Ventures general partner Chelsea Stoner in this guest article: Rising demand for physical therapy drives deals.
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.
The SBIA and the AM&AA are hosting a Deal Summit at The Doral in Miami from Feb. 20-22. The gathering offers networking opportunities with senior-level M&A advisors and lower middle-market private equity investors.
ACG New York hosts the 11th Annual Healthcare Conference at the Metropolitan Club in Manhattan on Feb. 28. Dealmakers network with healthcare-focused private equity investors and other industry professionals.
ACG Minnesota and Corvus North are hosting AIM: A Women's Leadership Conference at the Minneapolis Hyatt on March 7. The conference is designed to support and encourage female leaders to grow and achieve success throughout their career journeys.
ACG New York's Women of Leadership is hosting a golf event and reception on March 21 at Konnect Golf in Manhattan. The event brings together female dealmakers from private equity firms, investment banks and lenders.