M&A wrap: Monroe Capital, Duane Morris, Chicago White Sox, Francisco Partners
While some of the firms that were instrumental in launching the middle market back in the 1980s and 1990s have long since been shuttered, their legacy lives on. They proved to be excellent training grounds for many successful dealmakers. Heller Financial certainly belongs in this category, and Mergers & Acquisitions featured its alumni a few years ago. Another firm with a far reach is Holleb & Coff, a Chicago law firm that closed in 2000, after a nearly 50-year run. Founded by Marshall Holleb and Morris Coff in 1951, the firm advised prestigious clients, such as American National Bank, Hollinger International Inc. and LaSalle Bank. Revenue topped $40 million in 1997. In its heyday, Holleb & Coff employed 130-plus attorneys; it was the law firm to work for in the Midwest. Drawn to the supportive culture, new associates and seasoned partners alike enjoyed working at the venerated firm. Many of the lawyers who worked at Holleb & Coff back in the day are making a significant impact on M&A today, including:
· John Corvino is enjoying his dream job today as the general counsel to the Chicago White Sox.
· Brian Kerwin chairs Duane Morris’ global corporate practice and serves on the executive committee.
· Theodore (Ted) Koenig is the founder and CEO of Monroe Capital, the Chicago-based lending firm that works with many well-known private equity firms today.
· Kenneth Serota is president of Hu-Friedy Manufacturing Co., a global leader in dental instrument manufacturing.
· Michelle Warner serves as senior vice president, general counsel and corporate secretary at USG Corp. (NYSE: USG), a publicly-traded Fortune 1000 company that makes sheetrock and is currently being acquired by German manufacturer Gebr. Knauf KG for $7 billion. Warren Buffet’s Berkshire Hathaway Inc. (NYSE: BRK.A) is USG’s largest shareholder.
For more, read the full story: Holleb & Coff alumni: Where are they now?
Valuations in the lower middle market remained lofty in Q2, with multiples averaging 7.4x Ebitda, according to GF Data, which provides proprietary data on private equity-sponsored M&A transactions with enterprise values of $10 million to $250 million. Deal volume dropped off in comparison with 2017, likely due to uncertainty over trade policy, impending tax changes and broader market conditions prevalent at the time these deals would have come to market, GF Data says. The volume drop was pronounced in the manufacturing sector, while completed business service deals showed gains. Use of equity vs. debt increased—topping 50 percent in the $50 million to $100 million deal sector.
Francisco Partners has completed its $3.4 billion acquisition of Verifone Systems Inc., a world leader in payment and commerce solutions. Francisco Partners has raised more than $14 billion in committed capital and has invested in more than 200 technology companies since its founding in 1999. In 2016, the San Francisco firm bought Dell Inc.'s software group for $2.4 billion, subsequently carving out Quest Software and SonicWall. In April, the firm announced it is buying Bomgar, a seller of secure access software for computer systems and devices, from Thoma Bravo.
General Atlantic has invested in European Wax Center. In addition to waxing services, the target sells a line of skincare products.
Huron Capital has partnered with Scott Wick and Randy Koch to form High Street Partners, which will pursue deals in the insurance agency sector. High Street has purchased insurance company Peterson McGregor and Associates.
Methode Electonics Inc. (NYSE: MEI) is buying Grakon Parent Inc., a maker of lighting systems for the automotive sector, for $420 million. Kirkland & Ellis is advising Grakon.
New Water Capital has purchased Trillium Health Care Products, a contract manufacturer of over the counter products for pharmaceutical companies. Stikeman Elliot and Kirkland & Ellis represented New Water. Lincoln International advised Trillium.
Post Oak Energy Capital has made a $100 million investment in oil and gas company Saxet III Minerals. Saxet focuses on buying oil and gas properties throughout the U.S.
Sonoma Brands, a food and beverage products incubator and private equity firm, has bought Vintage Wine Estates. The targets owns 34 wine brands and wineries including Clos Pegase Winery.
Sverica Capital Management has acquired a majority stake in Gener8 LLC. The target manufactures life science instruments and advanced industrial systems.
Unitek Global Services has acquired Graycliff Enterprises Inc. Graycliff provides construction and engineering services to the telecommunications sector. Acquest International advised Unitek.
Waud Capital Partners has a formed a partnership with healthcare executive Chris Rucker to pursue investments in the home care sector. Rucker was most recently the COO of home care provider Jordan Health Services.
Ali Zaidi has joined Kirkland & Ellis as a counsel, where he is focusing on environment risks related to M&A. Zaidi was most recently with Morrison & Foerster and he previously served as associate director for natural resources, energy and science in the White House office of management and budget.
Middle-market companies are hiring and promoting, with recent developments coming from AEI, Cowen, Keefe Bruyette & Woods and PJ Solomon. See: People moves: Rajib Sarkar joins Keefe Bruyette & Woods' insurance group as an MD.
Mergers & Acquisitions has announced 11 Rising Stars of Private Equity, including John Kos, GTCR; Ethan Liebermann, TA Associates; Jennifer Roach, Yellow Wood Partners; and Afaf Ibraheem Warren, Siris Capital . The up-and-coming investors are expected to play significant leadership roles in the future. See: Meet Mergers & Acquisitions' 11 Rising Stars of Private Equity.
Exponent, a new group of women dealmakers, brought together 200 women from private equity funds, investment banks, startups and M&A advisory firms for the Exponent Exchange, featuring Sallie Krawcheck as the keynote speaker. Previously the CEO of Wall Street banks, including Merrill Lynch Wealth Management and Citi Private Bank, Krawcheck serves as the CEO of Ellevest, an online investing platform for women. Mergers & Acquisitions participated as an in-kind sponsor, and editor-in-chief Mary Kathleen Flynn moderated a panel. Check out our slideshow, Exponent drew 200 women dealmakers to event featuring Sallie Krawcheck.
See Mergers & Acquisitions' look at 10 PE firms that have succeeded in raising new funds recently despite an overall slowdown in PE fundraising, including the Carlyle Group (Nasdaq: CG), PPC Partners, Soundcore Capital Partners and Sycamore Partners. For the latest on PE fundraising, see PE fundraising scorecard: Ridgemont Equity and Yellow Wood.
Procter & Gamble Co. (NYSE: PG) is focusing on growing its top 25 brands, including Bounty paper towels, Charmin toilet paper, Crest toothpaste, Pampers diapers, Nyquil cough and cold medicine, and Tide laundry detergent, while seeking acquisitions. In April, P&G announced plans to buy Merck KGaA’s consumer-health business for $4.2 billion. The deal includes the Femibion and Neurobion over-the-counter healthcare brands. P&G is also purchasing skincare brand First Aid Beauty. “What you have to have is the brand consumers prefer, because then retailers want to carry it, because it builds the basket,” P&G CEO David Taylor explains. Read the full story: Why P&G is changing its M&A strategy.
Summer reading list: From stories of star athletes Arnold Palmer, Keith Hernandez and Tiger Woods to advice from entrepreneurs Bridgewater Associates’ Ray Dalio, KPCB’s John Doerr, Nike’s Phil Knight and Brava Investments’ Nathalie Molina Niño, plus strategies to help business leaders in general, and female dealmakers in particular, the 15 books on Mergers & Acquisitions’ list entertain, instruct and inspire. Check out our listicle: Dealmaker’s guide to summer reading: 15 new books.