M&A wrap: Piper Jaffray, Sandler O'Neill, Vertex, AEI, Avista

chadabraham

Bank M&A soared all summer, with dozens of deal announcements, creating the perfect backdrop for Piper Jaffray’s July news that it would acquire Sandler O’Neill. “There has been a lot of consolidation in the bank space,” Piper Jaffray CEO Chad Abraham told Mergers & Acquisitions. “Frankly that’s been very consistent over the last 10 years and has created a great opportunity for Sandler. But there are still 5,000 banks, and we expect the pace of consolidation to continue.” Piper Jaffray is determined to be the market leader in all the industries it does business in. The Minneapolis-based boutique investment bank currently dominates some of the sectors it serves, especially healthcare. With the acquisition of New York-based Sandler O’Neill & Partners LP, the renamed firm Piper Sandler will instantly become a leading investment bank in financial services, a sector it has sought to expand in for several years. “We’ve had conversations with Sandler for many years, and we’ve admired their franchise” Abraham explained. “Jon Doyle and Jimmy Dunne, who have run Sandler for many years, will be very active going forward.” Dunne, senior managing principal at Sandler, will become a vice chairman of Piper Sandler and senior managing principal of the company’s financial services business. Doyle, senior managing principal at Sandler, will become a vice chairman, senior managing principal and head of Piper Sandler’s financial services group. He will also join the Piper Sandler board and the company’s leadership team. For Sandler, the deal caps an 18-year effort to rebuild the firm after tragedy. Sixty-six of the firm’s 171 partners and employees died in the September 11 World Trade Center attacks. Herman Sandler, a co-founder, and Chris Quackenbush, the head of investment banking and Dunne’s best friend since childhood, were among those who perished. As Bloomberg News reported, to remember Quackenbush, Dunne bought ties decorrated with ducks at the Brooks Brothers store across the street from Sandler O’Neill’s midtown office and distributed the “quack ties” the day the deal was announced. For analysis of the Piper Sandler deal, see Counting on bank M&A: Why Piper Jaffray bought Sandler O'Neill.

DEAL NEWS
Vertex Pharmaceuticals Inc. (Nasdaq: VRTX) is buying Semma Therapeutics for $950 million. The target focuses on developing potential treatments for diabetes. “This acquisition aligns perfectly with our strategy of investing in scientific innovation to create transformative medicines for people with serious diseases in specialty markets,” says Vertex CEO Jeffrey Leiden.

MAM Software Group Inc. is acquiring Kerridge Commercial Systems for $154 million. Kerridge provides software services to trade, wholesale, manufacturing and distribution customers. Mirus Capital Advisors and Sullivan & Worcester LLP are advising MAM. The advisor to Kerridge is Kirkland & Ellis.

AE Industrial Partners has bought Triman Industries, a distribution, supply chain and repair management business for the aerospace and defense sectors. Kirkland & Ellis advised AEI. The target was advised by Blank Rome.

Avista Capital Partners has acquired GCM Holding Corp. from May River. GCM is an outsourced manufacturer of precision parts mainly for the medical technology industry. Advisors to GCM include William Blair and Paul Hastings. The advisor to Avista is Ropes & Gray.

Arsenal Capital-backed CPS Performance Materials has acquired GEO Specialty Chemicals, a supplier of chemicals and materials to the coatings, adhesives, medical, water treatment and construction sectors. The Valence Group advised the buyers.

Waud Capital Partners has bought the Health & Safety Institute from the Riverside Co. The target offers online safety training, CPR , first aid and chemical management services to businesses. Harris Williams advised the target.

Brightstar Capital Partners is buying Capstone Nutrition. The latter produces vitamins, minerals, nutrition, anti-aging, and general wellness products.

Investcorp has completed its majority acquisition of CM Investment Partners LLC, which acts as the investment adviser to Investcorp Credit Management BDC Inc.

Investor in Female Entrepreneurs and Next Act Fund have made investments in Joylux and Pomp and Whimsy. The latter is a gin liqueur brand and Joylux is a women's health technology company.

RISING STARS
Looking for a glimpse of what’s to come in the private equity industry? Meet the 10 dealmakers named by Mergers & Acquisitions as the 2019 Rising Stars of Private Equity:

Austin Collier, Branford Castle Partners
Kevin Cunningham, LNC Partners
Shawn Domanic, Sterling Partners
Stephen Jeschke, GTCR
Danielle Lalli, Huron Capital
Jason Mironov, TA Associates
James Oh, Transom Capital Group
Sophia Popova, Summit Partners
Pavan Tripathi, Bregal Sagemount
Christine Wang, Francisco Partners

The Rising Stars share a common set of core values. They are passionate about building companies. They are naturally curious and interested in changing things for the better. They enjoy working with portfolio company managers, investment bankers and other deal team members. They appreciate the responsibility and autonomy their firms have given them. They are grateful for the leaders who have helped shape their careers, and they are generous with their own time when it comes to nurturing the next generation. As the PE industry goes through a generational shift and many firm founders retire, it's well worth getting to know these emerging leaders. They represent the future of private equity. For profiles and video interviews, see Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity For Q&As, see 10 Rising Stars of Private Equity tell their tales.

MORE FEATURED CONTENT
The New York Yankees are in first place in the American League East division and have one of the best overall records in Major League Baseball. Alex Rodriguez is best known as the former Yankees star who hit 696 home runs over the course of his 22-year baseball career, but today he’s making a name for himself as an investor as the founder and CEO of A-Rod Corp. One recent example: While serving as a guest judge on CNBC’s Shark Tank, Rodriguez backed Ice Shaker, an insulated bottle maker founded by former National Football Leaguefullback Chris Gronkowski. Rodriguez talked about his life off the field as a savvy investor since his 20’s as the keynote speaker at EisnerAmper’s 4th annual Alternative Investment Summit at the The Museum of Modern Art on June 19. Among the topics discussed in a conversation led by Charles Weinstein, CEO of EisnerAmper: Rodriguez’ childhood as the son of a single mom; his investment thesis, which shares much with other middle-market investors; how he’s helping singer/dancer/actress Jennifer Lopez (to whom he became engaged in March) transition her business initiatives from licensing her brands to owning them; and how one day he just might buy a baseball team. Read the full story: A-Rod talks Ice Shaker, NRG eSports, J. Lo & maybe buying a baseball team.

Activity and urgency characterize the current dealmaking environment, say investment bankers and other M&A advisors interviewed by Mergers & Acquisitions. After a record-breaking 2018, forecasts for 2019 remain bullish. Advisors point to a lot of cash that must be deployed by strategic buyers and private equity firms alike; a healthy U.S. economy; and low interest rates. Competition for high-quality targets has never been more intense, especially for technology providers, they report, which means sellers are commanding high prices. It all adds up to a sellers' market. A mood of urgency prevails, as dealmakers seek to close deals quickly, while conditions remain favorable. The advisors interviewed for this story say they don’t see signs of a recession this year; however they are closely monitoring bellwethers, including corporate earnings, wage pressure, global supply chains and slowdowns abroad. They are recommending that clients be prepared for an economic slowdown in the next two years. Specialization is the name of the game, and investment bankers advise clients to seek targets with business-model stability, limited cyclical exposure and a recurring revenue business model. Technology, business services, healthcare, consumer and manufacturing are among the most promising sectors. Read the story: 8 M&A advisors urge closing deals now, while economy stays strong.

“We know that different people from different walks of life make us a better firm,” said Adam Miller, director of global talent management at the Riverside Co., which employs more than 200 people across four continents, including two female co-fund managers and a female chief operating officer. “We’re creating more opportunities for broader demographics.” Indeed, just about every private equity firm you talk to these days seems intent on becoming attractive to diverse candidates—whether it’s by hiring a chief diversity officer and loosening its dress code (KKR); giving employees flexible hours to spend more time with children (Riverside); offering up to 12 weeks of paid maternity leave and 16 weeks off altogether (ParkerGale); hosting weekly wine-and-cheese gatherings in the summer (Kinzie Capital); or providing on-site professional development and training (Riverside and ParkerGale). Check out: 5 hiring trends in private equity.

Prokanga is a unique recruiting firm that offers full-time and flexible recruiting services. Prokanga is managed by
co-founders Jamie Cheney and Lesley Finer (pictured). Mergers & Acquisitions spoke with Finer, who has more than 10 years of recruiting for the finance industry and leads the finance practice at Prokanga. For more, see Why financial services pros need flexibility.

BC Partners has joined the growing group of private equity firms selling a minority stake to another PE firm to fuel expansion plans. Earlier in August, the firm, which is headquartered in London with additional offices in New York, Paris and Hamburg, announced it had sold an interest in the firm to New York’s Blackstone Alternative Asset Management for undisclosed terms. PE firms increasingly are selling minority stakes to fund expansion plans. For more see, Why private equity firms sell stakes to other firms.

To celebrate deals, dealmakers and dealmaking firms, Mergers & Acquisitions produces three special reports every year: the M&A Mid-Market Awards; the Rising Stars of Private Equity; and the Most Influential Women in Mid-Market M&A. For more on the timeline and nomination process for each, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
The Association of Asian American Investment Managers (AAAIM) is holding its annual conference from Sept. 4-5 at Convene at 730 Third Avenue in New York.

The Great Lakes ACG Capital Connection is being held at the Westin Book Cadillac Detroit Hotel in Detroit from Sept. 4-6.

ACG Boston and ACG Connecticut are hosting the 5th Annual ACG New England Fall Conference at Gurney's Newport Resort & Marina in Newport, Rhode Island from Sept. 17-18.

Exponent Women is hosting a fall rooftop networking session at RSM in New York on Oct. 7.

M&A East is taking place at the Pennsylvania Convention Center in Philadelphia from Oct. 22-23.

Third Annual Women in Alternative Investments Career Forum is taking place at the New York Hilton on Nov. 8.

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