M&A wrap: Monroe, Main Post, Forrester, SiriusDecisions, Huron, #GivingTuesday
Monroe Capital has raised its third private credit fund at $1.3 billion. The fund, which received commitments from 50 new institutional investors, is Monroe's 17th investment vehicle since the firm was founded in 2004. The fund will invest in private credit transactions originated and underwritten by Monroe, and will have more than $2.5 billion of buying power or capital available for investment. “Private credit is an appealing area for institutional investors due to the ability to generate consistent absolute returns in a low yield environment," says Monroe CEO Ted Koenig. "Investors have many choices in this space, many of which are recently created firms." The fund will target mainly private equity sponsored and non-sponsored private credit transactions with companies that have up to $35 million in Ebitda. Monroe recently raised its seventh CLO fund, and its third in the last 13 months, at $476 million. Fundraising activity is robust. Audax Group recently raised $3.5 billion and Center Rock Capital raised $580 million.
In time for #GivingTuesday, private equity firms are giving back - organizing groceries at food pantries, mentoring students in schools, running races for cancer cures and pitching in at animal shelters. In the spirit of holiday giving, Mergers & Acquisitions highlights the philanthropic and volunteering initiatives of 5 PE firms: the Carlyle Group LP (Nasdaq: CG), Frontier Capital, Huron Capital, the Riverside Co. and Star Mountain Capital. At Carlyle, charity starts at the top, with CEO David Rubenstein's signing of The Giving Pledge, a commitment by the world’s wealthiest individuals and families to dedicate the majority of their wealth to philanthropy. Community involvement is more important than ever to today’s work force. Millennials, defined as people born between 1981 and 1996 by the Pew Research Center, are “for sustainability, diversity, inclusion and giving back to the community,” says Carlyle managing director Christopher Ullman. “We are finding this more and more. Yes, we are here to make money, secure retirement for pensioners, but the firm wants to support people’s efforts to make the world a better place.” Frontier Capital supports several causes, including The Miracle League, a baseball organization for people who are mentally and physically challenged. “There’s more to life than work and material things, and our people understand that,” says Frontier managing partner Andrew Lindner. At Detroit-based Huron Capital, the firm’s philanthropic efforts are focused on local groups. “We want to leave our footprint in this community where we live and work while being as helpful as possible,” says partner Gretchen Perkins. “The charitable activities we do as a group, the ability for each employee to influence where Huron’s donations go, and the ability to perform community service during work hours, or receive matching funds for an employee’s personal non-profit passion, all contribute to a portion of an employee’s sense of purpose and contributing to the greater good.” Read the full story, The Big Give.
Capital Roundtable hosts Best Practices for Sourcing Private Equity Investment Opportunities, chaired by Kate Faust, Rockwood Equity Partners LLC, at the University Club on Nov. 27. Mergers & Acquisitions editor-in-chief Mary Kathleen Flynn chairs a panel on Going Beyond One Handshake at a Time: How to Use Branding & Marketing to Source Deals, with panelists Sash Rentala, Moelis & Co.; Cortney Stapleton, Bliss Integrated Communication; and Amy Weisman, Sterling Investment Partners LP.
In New York, it's Middle Market Week. Hosted by ACG New York Nov. 26-30, events throughout the city bring together leading global middle-market dealmaking professionals. The highlight is the Private Equity Annual Wine Tasting Gala on Nov. 28 at Gotham Hall. The building was constructed in the 1920s as the headquarters of the Greenwich Savings Bank. The evening brings together the leading middle market private equity firms for fine wines and networking.
Main Post Partners has raised its second fund at $700 million.The PE firm raised inaugural fund in 2016 at $400 million. M20 Private Fund Advisors served as Main Post's placement agent and Ropes & Gray provided legal counsel on the latest fundraise.
Forrester (Nasdaq: FORR) is buying SiriusDecisions, a business-to-business research and advisory firm, for $245 million. William Blair and Skadden Arps Slate Meagher & Flom LLP are advising Forrester. Centerview Partners and DLA Piper are advising SiriusDecisions. JPMorgan Chase Bank NA is providing financing.
PNC Research Captial has acquired Pirtek Europe, a provider of on-site hydraulic hose replacement services across Europe, from the Halifax Group. Duff & Phelps and Mayer Brown advised Pirtek and Halifax.
Huron Capital-backed Albireo Energy has acquired energy management company Taylor Consulting & Contracting.
Alpine Investors-backed Team Public Choices has invested in home care services provider Advantage Nursing Services. Ziegler advised Advantage.
Genstar-backed Mercer Advisors has acquired investment advisory firm McDermott Advisory Group.
Alain Harfouche has been promoted from director to managing director at KeyBanc Capital Markets, focusing on chemicals M&A, and Chris Hogan has been named the head of chemicals M&A at the same firm.
David Grimes has joined McDemott Will & Emery as a partner. He was previously with Reed Smith and focuses on cross-border M&A.
About 55 percent of deals valued over $100 million that were completed between 2008 and 2018 have outperformed the market by 3.1 percentage points, or $227 billion, according Willis Towers Watson’s (NASDAQ: WLTW) Quarterly Deal Performance Monitor. "Some business leaders argue that organic growth is better than buying growth, but the track record of the last decade should make companies question this conventional view," says Willis Towers senior director Jana Mercereau.
Recruiting women has become a priority at private equity firms. Within the past decade, 83 percent of private equity managers based in North America, Asia and Europe said they focused on increasing gender diversity in their front-office roles, according to new research from EY. Sixty-three percent of the firms say they want more women in middle- and back-office roles as well. Check back next month when Mergers & Acquisitions will announce the2019 Most Influential Women in Mid-Market M&A. For last year's list, click here. And read the full story on EY's data from Bloomberg: Private equity firms say recruiting women is a top priority.
Valuations continued to plateau in the third quarter, according to GF Data. Valuations for transactions in the $10 million to $250 million range averaged 7.3x, essentially unchanged from the second quarter. “There is still forward momentum in some niche sectors, but more broadly, we see froth coming out of the market,” says CEO Andrew Greenberg. “Valuations may be achieving a bit of a soft landing that will enable this long-lived but fundamentally sound M&A environment to endure a bit longer.” Total debt/Ebitda ratio has edged downward from a peak of 4.4x in Q3 2017 to 3.8x in Q3 2018. “The issue is not debt availability,” says co-founder Graeme Frazier. “Buyers are making more conservative capitalization decisions.”
2018 global fundraising for insurtech startups has reached an all-time with 204 deals valued at $2.6 billion, according to Hampleton Partners' Insurtech M&A market Report. Since 2016, the sector has seen 151 deals, with 87 percent coming from strategic buyers such as Sapiens International Corp. NV (Nasdaq: SPNS). "Since organic growth and investing in R&D is a long-term game, M&A has been the natural solution to the incumbents’ problem of accelerating technological transformation and evolving their traditional business models for the 21st century," says Hampleton Partners founder Miro Parizek.
Holiday shopping shines a spotlight on the retail industry, and the pressure on purveyors is more intense than ever, with Sears’ recent bankruptcy filing serving as a cautionary tale. It's been a year since Amazon bought Whole Foods, a game-changing deal for the sector. Technology is driving many of the transactions. Best Buy Co. (NYSE: BBY) recently agreed to spend $800 million to buy GreatCall, a provider of emergency response services for seniors, from Chicago private equity firm GTCR. Meanwhile, GreatCall announced a partnership with on-demand transportation provider Lyft to make it easier for seniors to get car service. “Many of the challenges that retailers are currently facing are due more to a lack of innovation and investment in technology, and that they are not able to compete with Amazon,” said Alex Monahan, a consumer products senior analyst at tax and consulting firm RSM US LLP. “Investors want to see that retailers are adjusting to consumer’s changing preferences and striving to provide seamless multi-channel experiences, while also investing in technology to address the tight labor markets.” Amazon, Walmart, Ikea, Bed, Bath & Beyond and Farm Boy are among the retailers turning to M&A. For more, see 5 trends driving retail M&A.
We asked dealmakers at M&A East to share their thoughts on Giving Back. Check out our video interviews with Baker Tilly Capital's Judit Nagy-Eichelber: Volunteer work brings teams together and Reed Smith's Jonathan Moyer: For millennial dealmakers, giving back is part of who they are.
People moves: Gregg Byers joins Baird. Former DOJ attorney Katherine Forrest moves to Cravath. Jennifer Zhao joins Genstar Capital. Check out our slideshow: 12 top dealmakers take on new jobs.
The Texans defeated the Titans 34-17 Monday night, as NFL Week 12 wrapped up. Texans founder and owner Robert McNair died Nov. 23 at 81 after battles with multiple cancers. Off the field, many football players invest in companies. New England Patriots quarterback Tom Brady recently teamed with former Giants defensive end Michael Strahan, who is the co-host of ABC’s Good Morning America, to launch a sports media startup called Religion of Sports Media, which has raised $3 million in venture capital funding from CourtsideVC and Advancit Capital. Many NFL players invest in companies. Muhsin Muhammad, who played wide receiver for the Carolina Panthers and the Chicago Bears, is a managing director of private equity firm Axum Capital Partners. Steve Young, former San Francisco 49ers quarterback, is a co-founder of private equity firm HGGC. View our slideshow, NFL stars Tom Brady, Michael Strahan, Steve Young go PE.