M&A wrap: Monroe, HGGC, Dyal, McDonald's, Uber, Careem, Spotify

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A Mobile Order Curbside sign is displayed outside of a McDonald's Corp. fast food restaurant in Carrolton, Kentucky, U.S., on Monday, Jan. 21, 2019. McDonald's is scheduled to release earnings figures on January 30. Photographer: Luke Sharrett/Bloomberg

Monroe Capital LLC, led by Theodore (Ted) Koenig, has won Mergers & Acquisitions' M&A Mid-Market Award for 2018 Lender of the Year. The Chicago lender has enjoyed impressive growth over the last five years, continuing the upward trajectory in 2018. The lender has increased its assets under management at a compound annual growth rate of 38 percent over five years, bringing the total to $7 billion, up from $1.9 billion in 2014. In 2018, the firm’s AUM soared by $1.8 billion, or 35 percent, over the previous year. Monroe funded a firm record of 72 direct middle-market transactions, with fundings totaling over $2.5 billion, solidifying the firm’s focus on businesses with $5 million to $50 million of Ebitda. Monroe is a private credit asset management firm that specializes in direct lending and opportunistic private credit investing. The firm’s offerings provide senior and junior debt financing to businesses, special situation borrowers and private equity sponsors. Investment types include unitranche financings; cash flow, asset-based and enterprise value-based loans; and equity co-investments. The firm currently invests out of 19 funds, comprised of small business investment company (SBIC) funds, institutional private credit funds, separate managed accounts, a publicly-listed business development company (BDC), and collateralized loan obligations (CLO) vehicles. In 2018, the firm launched the inaugural Chicago Middle Market Business Conference, featuring panelists from the city’s top private equity firms, investment banks, and law firms. More than 600 professionals attended.

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 the Monroe Capital, award winners include: Nike, Fortive, TA Associates, the Riverside Co., Harris Williams, Goodwin and Luminate Capital Partners' Hollie Haynes and more. Read our full coverage: Meet the winners of the M&A Mid-Market Awards: Nike, Fortive, TA, Harris Williams.

Related: Read more about Mergers & Acquisitions' three annual special reports, including the M&A Mid-Market Awards, the Rising Stars of Private Equity, and the Most Influential Women in Mid-Market M&A.

Deal news
Dyal Capital Partners, a division of Neuberger Berman, has acquired a minority stake in PE firm HGGC. For PE firms, selling minority stakes is a path to raising capital for expansion and for some general partners to gain liquidity. In 2018, Dyal bought a minority stake in American Securities LLC; the same firm also acquired a minority stake in Clearlake Capital Partners and Vector Capital. "Attracting this minority investment from Dyal is further evidence of our successful strategy and the results we are generating for our limited partners," says HGGC co-founder and former San Francisco 49ers quarterback Steve Young. Separately, HGGC announced that Les Brown, John Block, Steven Leistner, Harv Barenz and Lance Taylor were promoted to partners.

McDonald’s Corp. (NYSE: MCD), in its largest acquisition in 20 years, is buying a decision-logic technology company to better personalize menus in its digital push.The world’s biggest restaurant chain is spending more than $300 million on Dynamic Yield Ltd., according to Bloomberg News. With the new technology, McDonald’s restaurants can vary their electronic menu boards’ display of items, depending on factors such as the weather -- more coffee on cold days and McFlurries on hot days. Read the full story from Bloomberg News: McDonald's tech deal is its largest in 20 years.

Uber Technologies Inc. is buying Middle Eastern ride-hailing competitor Careem Networks FZ for $3.1 billion. Read the full story from Bloomberg News: Uber buys Mideast rival Careem.

Frontier Capital has invested in Clearwave Corp., a provider of digital check-in, insurance eligibility and patient payment services to healthcare providers. Clearwave was advised Healthcare Growth Partners.

Resilience Capital Partners has acquired Systron Donner Inertial, a supplier of microelectromechanical systems that are used in sensing products that offer precision guidance, navigation and location services.

Spotify Technology SA (NYSE: SPOT) is buying podcast studio Parcast. The target was advised by Houlihan Lokey (NYSE: HLI).

Featured content
The NCAA Tournament has gone from 68 to 16 teams, with all four No. 1 seeds, including overall No. 1 seed Duke University remaining in the Sweet 16. This year, March Madnessoffers fans unprecedented access to online betting, thanks to a May 2018 U.S. Supreme Court ruling. More Americans are expected to place bets on the college basketball tournament than the Super Bowl, with the American Gaming Association's predicting that about $8.5 billion in wagers will be placed on the tournament. Online betting and data companies, including sportsbooks from DraftKings, FanDuel and Caesars, are drawing basketball fans and interest from investors. M&A is rampant throughout the sector. Here's a look at recent online gaming and sports data deals.

Related: March Madness: DraftKings, FanDuel, Action Network draw fans, dealmakers.

What’s driving adaptive reuse, and how can private equity tap into this increasingly common but misunderstood and under-analyzed property segment? Adaptive reuse, which involves repurposing a building designed originally for something else, is fast becoming a global phenomenon; from turn-of-the-century warehouses to castles to train stations, developers and investors have untapped enormous value from obsolete building stock.

Related: Why private equity investors should consider adaptive reuse.

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.

Related: 10 private equity firms share strategies for tech M&A.

In Mergers & Acquisitions' annual look at strategic buyers, we see significant deals aimed at enhancing the customer relationship, including Amazon.com Inc.'s (AMZN) purchase of PillPack, Nike Inc.'s (NYSE: NKE) acquisitions of Invertex Ltd. and Zodiac Inc. and Target Corp.s' (NYSE: TGT) acquisition of Shipt. Technology plays a key role in many transactions. But while technology is enabling developments, it’s not an end unto itself for many corporations. Instead, strategic buyers are using innovations as a means to achieve goals. Based on analyzing hundreds of recent deals, Mergers & Acquisitions has identified seven goals corporate dealmakers hope to accomplish through M&A transactions today: Integrate data with software; improve the customer experience and relationship; expand and improve distribution; process payments more efficiently; leverage tech trends, like autonomous vehicles; make manufacturing processes more efficient; and achieve better outcomes and efficiencies in healthcare. “Strategics have been really active,” says John Neuner, managing director, Harris Williams. “They are aggressive in pursuing the assets they want, as long as it fits within their strategy. Scale is critical to them, and they have to meet consumer demands by adding new capabilities.”

Related: 7 reasons why smart companies Amazon, Nike, Target are doing M&A.

Mergers & Acquisitions profiles the top 28 investment banks of 2018, with KPMG, Houlihan Lokey, Goldman Sachs (NYSE: GS), William Blair and Lincoln International ranking as the five most active investment banks in private equity-backed deals. The list is based on volume of completed PE-backed deals, with PitchBook as the data provider. It was a good year for dealmaking, with activity in the U.S. middle market exceeding $400 billion, the first year to achieve the milestone.

Related: Top investment banks in PE-backed deals: KPMG, Houlihan, GS, William Blair
Related: M&A soared in 2018; companies confident about dealmaking in 2019.

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
Exponent Women LLC is hosting an evening of networking and conversation with leading economists at the New York office of Alliance Bernstein on April 4. Speakers include Lindsey Piegza, chief economist, Stifel Fixed Income, and Kathleen Fisher, head of wealth and investment strategies, Alliance Bernstein.

InterGrowth 2019 is taking place from May 6-8 at the Waldorf Astoria & Hilton Bonnet Creek in Orlando, Florida.

Innovation Works is holding its second annual AI/Robotics Venture Fair in Pittsburgh from on May 15 and 16.

ACG Chicago is hosting the Midwest Capital Connection at The Marriott Downtown Magnificent Mile from May 21-22.

ACG New York, ACG Boston and ACG Philadlephia 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 is hosting the The Upper Midwest ACG Capital Connection at the Renaissance Minneapolis Hotel, The Depot from June 10-11.

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