M&A wrap: Oak Hill, Clarion Capital, Two Six Capital, Most Influential Women

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"Data and artificial intelligence are necessary conditions for private equity today,” says J. Taylor Crandall, a managing partner and a founding member of Oak Hill Capital Partners, which began investing in 1986 as the family office for Robert Bass, one of four brothers who founded Bass Brothers Enterprises, based in Fort Worth, Texas. “Historically, the data wasn’t available. Businesses were run on visceral intuitions. Now, the data is readily available and exponentially created. Every time you click on the Internet, it’s creating data for somebody to analyze how to run their businesses better. Data analytics is the low-hanging fruit to create value in every portfolio company we own.” There are several underlying technology trends at play to enable the rise of big data, including enormous increases in computing power, cloud computing architecture and inexpensive storage. At the same time, “more and more data is being created every day, as companies increasingly rely on technology to scale and improve their operations, as consumers shift to a digital lifestyle,” says Sajjad Jaffer, co-founder of Two Six Capital, a San Francisco firm that is pioneering the use of data science in due diligence and value creation. Private equity firms, such as Oak Hill and Clarion Capital Partners, a New York PE firm that invests in lower middle-market companies, are engaging Two Six to analyze customer datasets of potential targets and existing portfolio. For example, with help from Two Six, Clarion is able to see the cohort dynamics of businesses on a customer-by-customer basis, something that would have been “impossible even 10 years ago,” says Clarion founder Marc Utay. Private equity firms are eager to tap into the power of data science. Ninety-four percent of PE firms say they will use more predictive (applied) analytics within the next two years, and 83 percent are seeking operating partners with digital or technology expertise, according to Ernst & Young LLP’s Private Equity Global Divestment Study 2018. For more, read the full story: Due diligence meets big data: Two Six Capital, Oak Hill, Clarion among pioneers.

Mergers & Acquisitions has opened up the nomination process for the fourth edition of The Most Influential Women in Mid-Market M&A. Efforts to recruit and retain women in the financial services industry have increased in recent years; nevertheless, women still make up only about 14 percent of dealmakers in the middle market. By identifying and featuring dozens of influential women, Mergers & Acquisitions nurtures the community of female leaders and provides role models for women who are at earlier stages of their careers. To be considered, candidates must be women who are outstanding dealmakers both inside and outside of their firms. Evidence of influence in the broader M&A industry is essential. When nominating a candidate, please explain how she outperforms her colleagues at her firm and in the industry. Please provide examples of deals she has led, initiatives she has launched and other instances that show evidence of her influence in the middle market. While considering the merits of candidates, it’s helpful to read about women who have met our criteria in the past, such as Sarah Bradley, who co-founded private equity firm Kainos Capital and graced our 2018 cover. See the profiles of 35 women in our previous edition. Nominations must be received by Monday, October 15, 2018. Click here to learn more about the criteria and to submit a nomination.

Deal news
Asian-focused private equity funds have the largest portion of dry powder, $246 billion, and have $722 billion in assets as of the end of 2017, according to Preqin. China accounts for almost a third of investors in Asia. Asia-focused vintage 2015 funds returned more than 17 percent, outperforming North America- and Europe-focused vehicles.

Romano's Macaroni Grill is buying Sullivan's Steakhouse, an operator of 14 steakhouses, from Del Frisco's Restaurant Group Inc. (Nasdaq: DFRG) for $32 million. The deal is part of Romano's strategy of growing through acquisitions, while it allows Del Frisco's to focus on its core brands. Del Frisco's agreed to acquire Barteca Restaurant Group from Rosser Capital Partners and General Atlantic for $325 million in cash in May. Piper Jaffray Cos. (NYSE: PJC) and Kirkland & Ellis are advising Del Frisco's on the Romano's deal. Gibson, Dunn & Crutcher LLP is advising Mac Acquisition LLC, an affiliate of Romano's.

Clarim Holdings, a private holding company formed by 1-800 Flowers.com Inc. (Nasdaq: FLWS) founder Jim McCann, has acquired Techonomy Media, a media company that fosters debate on how technology is transforming business and society. Technonomy was founded by David Kirkpatrick, a tech journalist who wrote The Facebook Effect: The Inside Story of the Company that is Connecting the World (Simon & Schuster: 2010).

Accel-KKR has invested in Team Software. The target offers cloud-based technology for contractors in the janitorial and security industries. Mooreland Partners advised Team.

Center Rock Capital Partners has invested in Linc Systems LLC, a distributor of fastener and packaging tools.

SunTx Capital Partners has invested in Anchor Partners, a holding company that provides customized metal manufacturing services for the construction, defense and transportation sectors.

Quad-C Management and NJRetina have invested in NJEye LLC, a regional eye care organization that operates 15 clinical sites throughout New Jersey. Debevoise & Plimpton LLP is advising NJRetina.

Featured content
Food & beverage M&A offers plenty of mouth-watering deals. Giants Coca-Cola Co. (NYSE: KO) and PepsiCo Inc. (Nasdaq: PEP) update their product lines with healthy offerings, while private equity firms, such as Brynwood Partners, breathe new life into tried and true brands, like Pillsbury. And lots of buyers experiment with meal kits and delivery methods, fueling M&A. Read the full story: 9 food & beverage companies loved by consumers and dealmakers alike.

Strategic buyers leverage data, sell more snacks and cater to seniors. Mergers & Acquisitions outlines the M&A strategies of 8 corporations, including Best Buy, Energizer, Fortune Brands, Hershey, Nike, P&G, Stanley Black & Decker and Tyson Foods. See the full story: Best Buy, Hershey, Nike, P&G and more wield M&A to grow.

Tyson Foods Inc. (NYSE: TSN), the owner of Hillshire Farm, wants to “feed the world” with its protein brands and will seek acquisitions to help. How Tyson is focusing on what it does best through M&A.

Between 70 and 80 percent of all M&A integration projects fall short of delivering anticipated value. This isn't because the acquisition target is somehow subpar, it's because the acquiring firm lacks a strong integration strategy. Read the full story: How to accelerate value in the first 100 days after an acquisition.

Why investors like diversity. "Companies that are inclusive and also diverse tend to outperform companies that aren't," says investor Lorine Pendleton of Pipeline Angels and Portfolia in this video interview shot at Exponent Exchange, a gathering of 200 female dealmakers. Watch the full video: M&A Insights: Inclusion investing.

Meet Mergers & Acquisitions 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. See: Meet Mergers & Acquisitions' 11 Rising Stars of Private Equity.

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