M&A wrap: Blackstone, Senator Investment Group, Piper Sandler, Valence Group, Morgan Stanley, E*Trade, Kronos, Ultimate Software, Wipro, Manufacturing M&A

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M&A in the manufacturing industry is flourishing, despite many challenges in the sector - or rather, because of those challenges. The Institute for Supply Management said that its manufacturing index fell in December 2019 to 47.2. That’s its lowest level since June 2009, when it hit 46.3. This, in addition to a tight labor market, China’s retaliatory tariffs and the upcoming presidential election, has made manufacturing a tricky sector to do business in these days. But M&A remains active. Interest rates are low, and companies as well as investors have cash to invest. Additional factors come into play, including the need for consolidation and globalization in the manufacturing industry. Robots are playing a role as well, and manufacturing automation has become appealing. “The tight labor market and increasing wages have led us to pursue a number of different initiatives at our companies to counteract the resulting pressures created,” says Brad Roberts, a partner with the Riverside Co. “Where economical, we are investing in increased automation to enable us to meet growing sales volume amidst this difficult hiring environment.” Read our full coverage: 5 trends driving manufacturing M&A.

Hedge fund Senator Investment Group is breaking up, according to multiple sources, including Reuters and the Wall Street Journal. Alexander Klabin, intends to leave Senator in the spring to “pursue entrepreneurial investments” and spend more time with his family, the hedge fund firm wrote in an investor letter. His departure triggers a special chance for the hedge fund’s investors to withdraw their money, reports Reuters. Senator co-founder Douglas Silverman will continue to run the hedge fund. Partner Jay Bharadwa currently heads credit investing for the fund and is being promoted to co-investment chief alongside Silverman, according to the letter. Silverman and Klabin founded Senator in Senator with backing from Blackstone.

DEAL NEWS
Piper Sandler Cos. (NYSE: PIPR) is buying chemicals-focused investment bank the Valence Group. The target was founded by Peter Hall, Telly Zachariades, Kirk McIntosh and Ariel Levin in 2007 after previously leading the global chemicals investment banking practice at Bear Stearns. "We believe there are significant opportunities to partner with the Valence Group team to increase the overall scale of the business and drive towards our goal of $1 billion in annual investment banking revenue over the next several years,” says James Baker, global co-head of investment banking at Piper Sandler. Piper Sandler and Sullivan & Cromwell are advising Piper. Houlihan Lokey (NYSE: HLI) and Dentons are advising Valence.

Kronos Inc. and Ultimate Software are merging to form one of the world's largest cloud companies. The combined company will have an enterprise value $22 billion, and Blackstone (NYSE: BX) will own a minority stake. Kirkland & Ellis is advising Blackstone. Morgan Stanley is advising Kronos and Goldman Sachs (NYSE: GS) is advising Ultimate.

Wipro Ltd. (NYSE: WIT) is buying digital marketing firm Rational Interaction. "Capturing customer sentiment in real time and using AI to engage with customers in more meaningful ways will drive higher engagement, purchase and loyalty," says Nitin Parab, senior vice president and global head, technology business Unit, Wipro Ltd. Petsky Prunier is advising Rational.

For more deal announcements, see Weekly wrap: Ally Financial, Franklin Resources, Morgan Stanley

For more on fundraising, see PE fundraising scorecard: Lakeshore, Pamlico, Water Street.

DEAL TRENDS
Morgan Stanley’s E*Trade deal is being interpreted by analysts, investors and investment bankers as just the start of a long-predicted series of deals big enough to reshape the upper echelons of the U.S. financial industry. Many of the largest banks are wielding highly valued stock at a time that Silicon Valley innovators are looking to wrest away business. M&A are one way for banks to both scale up and adapt. Read the full story by Bloomberg News: Morgan Stanley ignites banking takeover buzz.

PEOPLE MOVES
Ann Chung has Blackstone as a managing director in its growth equity platform, Blackstone Growth. Chung was previously with J.H. Whitney Capital Partners.

FEATURED CONTENT
Artificial intelligence in healthcare saw about $4 billion in funding across 367 deals in 2019, according to data and research firm CB Insights. Amazon.com Inc. (Nasdaq; AMZN) is no exception. The tech conglomerate is using its recent deals for Health Navigator and PillPack to launch new software services in healthcare. Health Navigator works with companies like Microsoft Corp. (Nasdaq: MSFT) in offering services such as remote diagnoses, and with triage to help patients figure out whether to stay at home, see a doctor or go straight to the emergency room. Read our full coverage: How Amazon is using M&A to revolutionize healthcare.

Pushed by a groundbreaking California law mandating it, more companies are putting women on their public corporate boards. The law faces pressure in court and may not stand, but its rippling effect has already started to increase the visibility and awareness of the important benefits of board diversity. Investors are taking notice and trying to get ahead of the curve. According to a study published by MSCI in March 2018, having three or more women on a company’s board of directors translates to a 1.2 percent median productivity above competitors. Read the full guest article by Venable's Belinda Martinez Vega: Why businesses are adding women to their boards.

If there’s anything M&A professionals dislike, it’s uncertainty. And heading into 2020, there’s more than enough uncertainty to go around, including questions about the economy, international trade, impeachment, domestic politics and more. The funny thing is, the lack of clarity may actually make the first half of the year a great time for M&A, as dealmakers push to close transactions before the looming uncertainty of Election Day and its outcome. We conducted interviews with 8 investment bankers and other M&A advisors. Some said the first half of the year will be robust, while others said the uncertainty may have a negative impact throughout 2020. Read the full story, What’s ahead for M&A in 2020? We ask 8 advisors.

Mergers & Acquisitions has named the 2020 Most Influential Women in Mid-Market M&A. This marks the fifth year we have produced the list, which recognizes female leaders with significant influence inside their companies and in the wider dealmaking world. It’s been gratifying to watch the project evolve over the years – and become more influential itself. This year, we received more nominations than ever before. As a result, we expanded the number honored to 42 in 2020, up from 36 in 2019. Many dealmakers are new to our list, including Rockwood Equity Partners' Kate Faust, William Blair's Shay Brokemond and Avante Capital Partners' Ivelisse Simon. Read our full coverage of all the champions of change on our list, including Q&As with each individual.

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 Influenital Women in Mid-Market M&A. For an overview of what we're looking for in each project, including timelines, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
ACG New York is hosting the 12th annual healthcare conference and bourbon tasting at the Metropolitan Club in New York on Feb. 27.

ACG Raleigh Durham's 18th annual capital conference is being from March 31-April 1 at the Raleigh Marriott Crabtree Hotel in Raleigh, North Carolina.

InterGrowth 2020 is taking place at the Aria Resort & Casino in Las Vegas from April 20-22.

The 4th annual Emerging Manager Connect conference is taking place at the Harvard Club in New York on July 22nd.

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