M&A wrap: Apollo, Hertz, Panasonic in deal news, plus coronavirus survey results and Rising Stars nominations due
Nominations for the Rising Stars of Private Equity are due May 22. Sophia Popova (pictured) of Summit Partners, Pavan Tripathi of Bregal Sagemount and Christine Wang of Francisco Partners were among the 10 individuals Mergers & Acquisitions named the 2019 Rising Stars of Private Equity. Who should be on our list for 2020? We have opened up the nomination process, and we are seeking individuals who are full-time private equity investors and whose best days are yet to come. These are the folks you predict will one day play a key leadership role at your PE firm – or will head up their own. New for 2020: This year, we will be taking a close look at how Rising Stars candidates are ce of the Coronavirus Pandemic, how they are excelling in dealmaking while Working from Home and how they are helping portfolio companies pivot to the future New Normal. Read the full story: Rising Stars of Private Equity 2020: Call for Nominations.
Apollo Global Management Inc. (NYSE: APO) has raised its third disclocated credit fund at $1.75 billion. The fund focuses on acting as a liquidity provider during times of broad-based market stress by purchasing high-quality, secured cross-asset credit risk. “We saw significant investment opportunities in the first quarter driven by the volatile environment, and we expect volatility to continue as markets respond to the crisis and structural conditions," says John Zito, deputy CIO of credit and co-head of global corporate credit at Apollo.
Panasonic has acquired a 20 percent stake in Blue Yonder. Backed by Blackstone and New Mountain Capital, Blue Yonder aims to help companies modernize their supply chains using the cloud, artificial intelligence and machine learning. The deal values Blue Yonder at $5.5 billion.
Warburg Pincus has led a $75 million financing round in digital workplace SaaS company BetterCloud. Existing investors Accel, Bain Capital Ventures, Flybridge Capital Partners, New Amsterdam Growth Capital, Greycroft and e.ventures also participated in the round. The investment comes at a time when more businesses are implementing work from home policies.
Bain Capital Life Sciences has led a $215 million series D financing round in Atea Pharmaceuticals, which recently received FDA approval for a investigational coronavirus treatment drug. "Atea’s team has an outstanding track record in developing novel, potent DAAs, which we believe can contribute to the urgent fight against the Covid-19 pandemic and other RNA viruses,” says Bain Capital managing director Andrew Hack.
Bain Capital Double Impact has made a growth investment in Broadstep Behavioral Health, a provider of programs and services to individuals living with intellectual, developmental or behavioral disabilities.
Bain Capital Tech Opportunities has invested in sports analysis software firm Hudle. The target has a library of over one billion videos that coaches and teams can use for scouting.
TA Associates and MCI EuroVentures have acquired Klikpojisteni.cz, a.s., an online insurance brokerage firm in the Czech Republic and Slovakia, from Benson Oak Capital. Corpin and Weinhold advised the sellers.
Newlight Partners LP has invested in Zing Health Holdings Inc., a physician-led Medicare Advantage HMO plan designed for Medicare-eligible beneficiaries. Willkie Farr & Gallagher LLP advised Newlight, and Perkins Coie LLP advised Zing.
Less than three months ago, Hertz Global Holdings Inc. (NYSE: HTZ) executives were touting a solid fourth-quarter performance and saying they’re entering 2020 in a strong position. Today, they’re managing a crisis that has the company on the brink of bankruptcy, saddled with almost $21 billion of debt and a bloated fleet of vehicles that are depreciating in value as the Covid-19 crisis has ground much of the economy to a virtual standstill. For Hertz, the No. 2 U.S. car renter, travel restrictions and shutdowns have brought about comeuppance for years of management missteps. Read the full story by Bloomberg News: Hertz runs into cash crunch after years of management tumult.
The struggles of a U.S. electronics recycler looking for a $10 million lifeline is exposing a weakness in the $700 billion market for collateralized loan obligations. 4L Holdings Corp. is seeking a cash infusion that would help it outlast the economic pain the coronavirus outbreak has had on its business. That’s sparking the ire of CLO managers who could see their stakes in the firm wiped away, according to people with knowledge of the matter. Read the full story by Bloomberg: A weakness in giant CLO market exposed in tiny stock deal.
Alex Rohan and Greg Urban have joined investment bank Stifel as a managing directors. Rohan was most recently with B. Riley FBR, and he concentrates on corporate restructurings. Urban comes from UBS, and focuses on restructurings in the automotive sector.
Marc Pressler was hired by Monroe Credit Advisors as a managing director where he is responsible for originating middle-market debt and lease transactions. Pessler was most recently the commercial banking segment leader at Associated Bank.
Jeff Bistrong was hired by middle-market private equity firm HKW as a partner where he is focusing on the technology sector. Bistrong was most recently with Harris Williams.
David Fowkes has joined Raymond James as a managing director and co-head of the aviation and aerospace group. He was most recently Imperial Capital.
Jay Hughes has joined law firm Willkie Farr & Gallagher LLP as a partner. Previously with McGuireWoods, Hughes focuses on M&A in the energy sector.
Katherine Krause has joined law firm Simpson Thacher & Bartlett LLP as a partner. She was previously with Goldman Sachs, and focuses on private equity and M&A.
Arizent, the parent company of Mergers & Acquisitions, released a new survey May 15 to understand how executives across industries were dealing with the impacts of the Covid-19 crisis after operating in a “new normal” environment for two months. As the coronavirus pandemic continues to extend its grip on the globe — infecting more than 1.41 million Americans (over 4.44 million globally) by the middle of May — executives must navigate their organizations through uncharted territory, with the possibility that the virus may not disappear any time soon. This is forcing C-suites to make big, lasting decisions with few guideposts to aid them. The April survey found that there was a surprisingly smooth, albeit hurried transition to remote, with most companies, including private equity firms and investment banks, feeling that they performed on par or above their own expectations. However, technology gaps did arise, as some companies found that customers either didn’t have the equipment to access their accounts digitally or needed training from staff working remotely. In the middle market, dealmakers report that “opportunities have thinned somewhat but have not disappeared," as one private equity investor put it. "Investor base still has liquidity to invest." Said one investment banker focused on real estate: "Pending deals were either put on hold, cancelled or delayed. Asset prices for listings are being re-evaluated or renegotiated with the sellers and buyers expecting discounts." For more, see: Exclusive survey: How private equity firms, investment banks and other companies are surviving the pandemic.
What do you do when you’re a dealmaker under quarantine, and face-to-face meetings are out of the question? For Work from Home (WFH) strategies, Mergers & Acquisitions turns to eight prominent dealmakers from private equity firms, investment banks, lenders and law firms. “I miss the excitement of a great conference; wearing my nice clothes, early morning breakfasts, the one-on-ones, drinks with my women ‘tribe,’ and dinner at a steakhouse, even though I am a vegan,” says Amy Weisman, managing director, business development, Sterling Investment Partners. In some respects, it is easier to build relationships now, explains Nanette Heide, partner, co-chair, private equity group, Duane Morris. “Meeting folks over a video conference from their home is immediately humanizing.” M&A pros also point out that human factors play a role. "Emotional Quotient (EQ) is more important than ever during trying times,” says Jeremy Holland, managing partner, origination, The Riverside Co. “It’s critical to remember that the dealmaker on other side of the (now figurative) deal table is a person, too. They have good and bad days and presumably know many people in high-risk categories, potentially even themselves. Being extra thoughtful about each interaction is important." Read our full coverage: Dealmaking under quarantine: 8 private equity and M&A pros share strategies while social distancing.
The Covid-19 pandemic turned America—a nation long committed to easy mobility—upside down. Driving has dramatically declined and new vehicle production has ground to a halt, leaving no doubt that the impact on M&A within this space will go well beyond this black swan event. Read the full story: Auto parts sellers turn to e-commerce, as coronavirus quarantine keep drivers off the roads.
Volkswagen, Ford Motor Co. (NYSE: F), Toyota Motor Corp. (NYSE: TM), General Motors Co. (NYSE: GM) and Daimler have recently shut down plants due to the coronavirus pandemic. The impact is also hurting pending auto deals. And car dealerships are feeling the brunt from the slowdown in production and sales too. Read the full story: Automakers struggle with quarantine forcing people to work from home.
The coronavirus pandemic will change the world and how we live in it profoundly, with dramatic shifts in how we gather and meet, work and learn, make products and distribute them. But exactly how the transformations will play out in the middle market is difficult to discern. Several recent reports and surveys aim to provide a sense of direction. Read the full story: Coronavirus crisis is changing everything, including private equity and M&A.
To explore how the coronavirus is affecting the middle market, Mergers & Acquisitions interviews dealmakers from Alvarez & Marsal, Merrill Corp., M33 Growth, M-III Partners, Paul Hastings and the Riverside Co. Read our full coverage: “Brace for impact,” say private equity firms to portfolio companies about the coronavirus.
The coronavirus pandemic has already quashed a number of previously announced deals, including Xerox’s hostile takeover bid for HP. More deals are expected to fail, as companies focus on preserving cash and ensuring debt access just to make it through the challenging economic cycle. The auto, retail, restaurant, travel and manufacturing sectors have been particularly hit hard, as they face declining sales and location closures. Automotive manufacturers are restructuring their businesses, and car dealerships are seeing fewer people walk in the door. For more, read our full coverage: 5 derailed deals: HP, TGI Fridays among those losing buyers during coronavirus crisis.
Deal structures are changing, especially in terms of what happens after a deal is completed. Read our story: How to manage post-closing disputes in M&A as a result of the coronavirus.
Covid-19 is forcing M&A practitioners to assess appropriate risk allocation mechanisms to address the impact of the virus on global business operations, including Representations and Warranties Insurance (RWI). Read the guest article: How the coronavirus forces dealmakers to assess effectiveness of RWI policies.
As consumer spending and business investment is declining, we expect a slowdown in private equity transaction volume. Read the story: Private equity deals will slow down, as global economy stalls amid coronavirus pandemic.
For more on how to cope with these challenging times, see: Coronavirus contingency planning checklist for the middle market.
In the challenging times we face now, it’s more important than ever to come together as a community and recognize the people and companies that excel and lead. We invite you to join us in honoring the 2019 winners of Mergers & Acquisitions’ M&A Mid-Market Awards. In contrast with the volatile coronavirus-driven conditions unfolding in 2020, the dealmaking environment of 2019 was remarkably stable. Among the PE firms benefitting from the auspicious fundraising climate was Vista Private Equity, which raised a $16 billion fund – the largest technology-focused PE fund ever raised. Mergers & Acquisitions is honoring Vista founder and CEO Robert F. Smith with our 2019 Dealmaker of the Year award. In addition to leading his firm’s unprecedented fundraising, Smith excelled in philanthropy. When he spoke at the commencement of Morehouse College, he announced he would pay off all the student loans of the HBCU’s 2019 graduates, providing a helping hand in the student debt crisis facing many U.S. families. The financial services sector saw a lot of consolidation in 2019. Piper Jaffray wins our 2019 Deal of the Year for buying Sandler O’Neill to form Piper Sandler, which instantly became a leading investment bank in the financial services sector. And Stifel wins our 2019 Investment Bank of the Year for growing dramatically and making several acquisitions. Read our full awards coverage: Meet the winners of Mergers & Acquisitions’ M&A Mid-Market Awards.
Houlihan Lokey, Lincoln International, Jefferies Financial Group, William Blair and Piper Sandler Cos. rank as the top five most active M&A investment banks in 2019, based on the volume of completed private equity-backed deals in the U.S., according to PitchBook. Besides advising on M&A deals, the investment banks on the top 10 list also had a busy year with acquisitions of their own in 2019, including two acquisitions by Houlihan Lokey and three by Stifel Financial. Piper Sandler Cos., was created when Minneapolis-based Piper Jaffray Cos. acquired New York-based Sandler O’Neill & Partners in a deal representing more than half of Piper Jaffray’s $930 million market capitalization. The firm also had another acquisition in 2019 and sold a company to exit the traditional asset management business. See our full coverage: Top investment banks for PE-backed deals in 2019: Houlihan Lokey led the pack.
Audax, HarbourVest and Genstar ranked as the top three most active private equity firms in 2019, based on the volume of completed deals in the U.S., according to PitchBook. Three companies tied for fourth place: Abry, Carlyle and Shore Capital. Where were these PE firms looking for deals? Eight of the firms on our list name the software and technology sector among their top investment targets, and seven put healthcare companies on their priority list. Financial services and consumer services are each named by five of the firms as industries they focus on, with four naming business services companies. Fundraising from investors in 2019 led to two notable fund launches earlier in 2020: KKR’s Global Impact Fund and HarbourVest’s $2.6 billion HarbourVest Fund XI. See our full coverage: Top private equity firms in U.S. deals in 2019: Audax Private Equity ranked No. 1.
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.
Editor's Note: M&A wrap is a bi-weekly column, published on Mondays and Thursdays. In observance of Memorial Day, we will publish the next M&A wrap on Tues. May 26.
Also, our regular weekly columns, the Weekly wrap and PE fundraising scorecard, usually published on Fridays, will be published on Tues. May 26.