M&A Wrap: Q3 Rebound, Election Issues, OEP, Simplura Health Group, Providence, Pam Hendrickson, Advent, Accel-KKR, TA

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As M&A rebounds in the third quarter, healthcare deals continue to soar, fueled by the coronavirus pandemic. Providence Service Corp. (Nasdaq: PRSC) is buying Simplura Health Group, a provider of home care services for the elderly and disabled, from One Equity Partners for $575 million. The demand for home care services is continuing to increase, as more states seek to transition seniors and disabled patients out of long-term care facilities and into home and community-based settings. Simplura provides over 20 million hours of non-medical personal care annually mainly to Medicaid patients, including seniors and disabled adults that are in need of care monitoring and assistance performing daily living activities in the home setting. "Simplura brings us a complementary higher-margin business in non-medical personal care—a large, rapidly growing sector of healthcare that dovetails well with non-emergency medical transportation," says Providence CEO Daniel Greenleaf. Jefferies LLC, Deutsche Bank Securities and Gibson, Dunn & Crutcher LLP are advising Providence. Guggenheim Securities LLC and Kirkland & Ellis LLP are advising the sellers. For more, see: Covid-19 vaccines, tests and treatments spur healthcare M&A.

Worldwide M&A total deal value is up 80 percent in the third quarter, compared with the second quarter, according to Refinitiv. The quarter delivered 10,893 transactions, valued at just over $1 trillion, making it the strongest quarter-to-date for global dealmaking since the second quarter of 2019. (Note: Data is through the Sept. 28) . “Whether it’s delayed merger announcements held over from this past Spring, the arrival of opportunistic strategic buyers or private equity buyers flush with cash and friendly credit markets or the desire to strike deals before the results of the upcoming U.S. presidential election," says, Matt Toole, director of deals intelligence, Refinitiv. Read the full story: M&A is rebounding dramatically in September, with Q3 deal value up 80 percent from previous quarter.

As the presidential election looms, we turn to Pam Hendrickson, the Riverside Co.’s COO and vice chairman, strategic initiatives, who serves as a member of the board of the American Investment Council and is a voice for the PE industry on public policy. See full coverage: Election Spotlight: Businesses of all kinds will face a tax increase, if no action is taken.

DEAL NEWS
Advent International has raised $2 billion for its seventh Latin American private equity fund. The firm has now raised more than $8 billion for Latin American investments since 1996. “We continue to see compelling investment opportunities in the region, driven by attractive valuations and positive, long-term market dynamics," says Advent managing partner Patrice Etlin. Advent managing partner Juan Pablo Zucchini adds: "Many Latin American sectors remain highly fragmented, and a large percentage of mid-sized businesses are family-owned. This presents opportunities to create value by consolidating industries, professionalizing businesses and accelerating growth.”

Sun Communities Inc. (NYSE: SUI) is buying marina owner and operator for Safe Harbor Marinas $2.1 billion. "Safe Harbor’s scale and unique positioning, coupled with the fragmented marina industry, should provide us with incremental channels to drive shareholder value in the coming years," says Sun CEO Gary Shiffman.

Clipper Logistics Plc is attracting interest from buyout firms as the British company benefits from the rise in online shopping, reports Bloomberg News. Cinven is among private equity firms that have been evaluating the Leeds-based company. The coronavirus crisis has created rising e-commerce demand, with customers stuck indoors ordering everything from food delivery to clothing and items for home improvement. Read the full story by Bloomberg: Logistics firm Clipper attracts private equity interest.

Accel-KKR has invested in Blue Mountain Quality Resources, a developer of enterprise asset management products and services for the life sciences industry. Blue Mountain’s software enables lifecycle management of assets and workflow automation to help with productivity and compliance.

TA Associates has invested in data security company Netwrix. “Given the ongoing growth in the global data security market, we see ample new business opportunities for Netwrix,” says Harry Taylor, a managing director at TA.

Trilantic North America has acquired a minority stake in Rarebreed Veterinary Partners, a technology-enabled veterinary services platform. The target offers management infrastructure to handle non-medical functions of veterinary practices.

PEOPLE MOVES
Kathy Park has joined alternative asset management firm Grafine Partners as a managing director. She was previously with Goldman Sachs.

Kelli Marti was hired by Churchill Asset Management as a managing director. She was previously with Crestline Denali Capital.

Jairo Romero has been hired as a managing director at LLR. He was previously the chief revenue officer at Acquia.

Jon Canarick and Alison Minter have both been promoted from partners to managing partners at private equity firm North Castle Partners.

William Chaney has been named CEO at Gryphon Investors-backed PestRoutes, a software provider to the pest control, lawn and pool industries. He was most recently an executive at RealPage Inc. (Nasdaq: RP).

Scott Hardy has been named CEO at HKW-backed Urban Armor Gear. He was previously with Blue Zones Brands.

Manoj Sahoo has been hired as an operating partner at private equity firm Ara Partners. He was most recently chief commercial officer at plant-based technology company Calyxt.

Tim FitzSimons has joined law firm King & Spalding as partner where he is concentrating on M&A. He was previously with Jones Day.

Ivan Presant has joined law firm Mintz where he is focusing on M&A. He was previously with McDermott, Will & Emery.

CORONAVIRUS IMPACT
The coronavirus pandemic has disrupted entire industries in 2020, but perhaps none so much as healthcare. Contained in one industry is the global competition to develop test, manufacture and distribute a Covid-19 vaccine in record time and the fight to save patients from a virus that has infected more than 5 million people and killed more than 190,000 in the U.S. alone. The healthcare industry is also developing Covid-19 treatments; producing, administering and interpreting tests; and adapting new technologies and better methods for healthcare delivery and interaction with patients. For the full story, see: Covid-19 vaccines, tests and treatments spur healthcare M&A deals.

Teladoc’s $18.5 billion acquisition of Livongo results from the combination of two of the largest publicly-traded virtual care companies; and is the third-largest acquisition of a U.S. company this year. Among other deals, direct-to-consumer telehealth company Thirty Madisonraised $47 million from partners including Johnson & Johnson,Humana invested $100 million into Heal, and telehealth startup Ro raised $200 million in a new round of funding; all strong signals to investors that digital health is beginning to disrupt the market. See full coverage: Soaring demand for virtual healthcare services in the pandemic fuels M&A.

Interest in distressed assets has risen to an all-time high in recent months—and private equity professionals are adapting new tactics to get ahead in this competitive distressed environment. This includes new valuation calculations, strategies for due diligence, mitigating emerging risks, and tax considerations. Read the full story: How to get ahead of the competition in today's distressed investing.

Earnouts, which involve tying some portion of deal consideration to post-closing performance, are taking on a new level of importance in constructing M&A transactions. Aligning the expectations of buyers and sellers is difficult during periods of economic uncertainty, and especially during the Covid-19 pandemic when business operations are being disrupted by social distancing and government-mandated closures. See the full story: How to use earnouts to adjust to the Covid-19 M&A landscape.

Today’s private equity firms face greater risk and uncertainty when evaluating potential portfolio acquisitions, in light of the Covid-19 pandemic. While things like market size and product quality are still important factors, private equity firms must also gauge a portfolio company’s character and ability to withstand economic turbulence. Read the full article: Agility matters: 4 signs PE firms should examine when considering acquisitions.

With everything from Broadway to indoor dining closed, people are starved for entertainment. Enter mobile gaming. Despite restrictions slowly easing, mobile games are expected to see strong interest in the long-term and game makers are looking for acquisitions to keep their portfolios fresh. “There’s a lot of supply of great companies out there, big, small and different categories in different regions of the world," Zynga CEO Frank Gibeau recently told investors. Read the full story: Quarantine drives M&A in mobile gaming.

Deal activity in the cybersecurity sector is being driven by a combination of rising cyber threats and more people working from home. Earlier in 2020, Francisco Partners and Vector Capital-backed cybersecurity company WatchGuard Technologies acquired network security provider Panda Security. Mergers & Acquisitions spoke with WatchGuard CEO Prakash Panjwani about the Panda deal and M&A trends in the sector. ead our full coverage: Work from home and increasing cyber threats will drive cybersecurity M&A.

While the novel coronavirus has reshaped the U.S. economy and the healthcare industry, pharmaceutical manufacturing has proven resilient—both in terms of business durability and its increasingly critical role in the global response to the virus. Read the full article: Why investors need to consider pharmaceutical manufacturing services.

EQUALITY AND INCLUSION
Bank of America Corp. invested $50 million in three Black-owned banks as part of its $1 billion pledge over four years to advance racial equality. The second-largest U.S. lend er took equity stakes of about 5% in three minority depository institutions: First Independence Corp. in Detroit, Liberty Financial Services Inc. in New Orleans and SCCB Financial Corp. in Columbia, South Carolina. The bank also laid out plans for other initiatives aimed at promoting racial and economic equality, including $200 million allocated to direct equity investments in Black- and Hispanic-owned businesses. Read the full story by Bloomberg News: BofA invests $50 Million in black-owned banks in equality drive.

Ten private equity firms have pledged to each create and post five board seats to make them available to minority and women candidates, participating in an initiative to increase diversity on company boards of directors. Aurora Capital Partners, Clearlake Capital, Genstar Capital, Grain Management, Hellman & Friedman, Hg, Insight Partners, K1 Investment Management, TA Associates and Vista Equity Partners have committed to the board initiative announced by Diligent Corp., provider of company governance software and a portfolio company of Clearlake and Insight. Read our full coverage: Clearlake, Insight, Vista and other private equity firms create 50 new board roles for diverse candidates.

Portfolia Rising America Fund "invests directly in early and growth-stage companies in the U.S. led by people of color and/or LGBTQ founders, or products and services that cater to these markets," says investment partner Lorine Pendleton in a Q&A with Mergers & Acquisitions. "These are founders, ecosystems, products and services historically overlooked by traditional venture capitalists but positioned for significant growth and profitability." The firm is led by five women of color. In addition to Pendleton, the firm's leaders are: Noramay Cadena, co-founder and managing partner of MiLA Capital; Daphne Dufresne, a managing partner of GenNx 360 Capital Partners; Juliana Garaizar, an angel investor; and Karen Kerr, executive managing director at GE Ventures. "We believe that strength lies in differences and seek out entrepreneurs and startups who are using shifting demographics and their own diversity of experience and thought to create innovation that offers outsized opportunities for returns and impact." The fund had its first close earlier in 2020 and has made two investments to date: The first investment is in MoCaFi, a fintech startup founded by Wole Coaxum, a former JPMorgan Chase commercial banking executive and entrepreneur, who is African American. "MoCaFi offers a mobile-first banking platform that brings digital banking products to underbanked or unbanked communities (an 88 million U.S. market), allowing them to build credit and financial mobility," Pendleton explains. The second investment is in a women’s tele-medicine network. For more, read the full interview: Led by 5 women of color, Portfolia Rising America Fund backs mobile banking and women's telemedicine startups.

"As stewards of capital we have an outsized role in determining which businesses to support," says Mina Pacheco Nazemi of Barings Alternative Investments. "As asset allocators, we need to hold ourselves accountable. I can do more. Will you join me?" Dealmakers begin to weigh in, as Gerge Floyd's death sparked two weeks of Black Lives Matter protests against police brutality and racial injustice. Read the story: "Justice doesn’t just happen. It requires action, dedication and accountability," says one private equity investor.

MORE FEATURED CONTENT
Mergers & Acquisitions, the oldest trade publication serving the dealmaker community, has been acquired by Middle Market Information LLC from Arizent. Started in 1965 as Mergers & Acquisitions: a Dealmakers Journal, M&A’s print and digital magazine, news website, daily email newsletters and social media channels inform private equity firms, strategic acquirers, investment banks and other deal intermediaries on breaking news, emerging trends, and rising stars in the industry. Middle Market Information, a B2B data and information company, says M&A will retain its core values of providing quality intelligence to discerning professionals in the dealmaking community. “We are delighted to have an opportunity to invest in and grow Mergers & Acquisitions, a brand that’s been trusted by dealmakers for over 55 years,” said Middle Market Information CEO Jim Beecher. “This industry needs an independent voice that can deliver thoughtful analysis and deep coverage of both private equity and corporate deal activity. Through our website, www.themiddlemarket.com, and our publication, we will build upon the foundation of the brand and deliver an even better experience for the community in the coming months and years.” Editor-in-Chief Mary Kathleen Flynn adds: "The new challenges M&A and private equity professionals are facing in 2020 underscore the need for the trusted, insightful editorial content we produce at Mergers & Acquisitions and themiddlemarket.com. We've built a great foundation under Arizent, and we're looking forward to growing and extending our brand further with Jim and Middle Market Information." See full coverage: Middle Market Information LLC buys Mergers & Acquisitions publishing brand.

Mergers & Acquisitions will soon open up the nomination process for the 2021 Most Influential Women in Mid-Market M&A. It will mark the sixth 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. Last 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 were new to our 2020 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. We will open up the 2021 nomination process in October and will publish the list in the February issue of Mergers & Acquisitions.

Most Influential Women of Mid-Market M&A is one of three special projects Mergers & Acquisitions publishes annually. For more details, see: Special reports: Advancing the middle market through Most Influential Women, M&A Mid-Market Awards and Rising Stars.

Editor's Note: M&A wrap is a bi-weekly column, published on Mondays and Thursdays

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