M&A wrap: Roark, Jimmy John's, Landry's, Adams Street, Balance Point, Carlyle, VSS

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The private equity model has held up very well over the decades, continuing to outperform the public markets, even as economic cycles come and go. But the rate of growth has slowed, leading PE firms to seek adjacent areas of business to expand. As PE firms face increased pressure to produce higher returns on their investments, many of them are turning to a familiar area of business: lending. Middle-market loans offer a potential growth path for PE firms, Including Adams Street, Balance Point. Carlyle Group (Nasdaq: CG) and VSS , many of whom view credit as a natural extension of their bread-and-butter operations. One of the largest private equity fund-of-funds managers in the world, Adams Street Partners hired Bill Sacher (pictured) and Shahab Rashid in 2016 to build a private credit platform and open a New York office. The firm said there was a good opportunity to generate attractive returns while providing capital to their general partner sponsors, who had seen banks pull back from middle-market lending. The firm set out to offer everything from first-lien loans and unitranche facilities to second-lien loans, mezzanine debt and preferred equity. “Our long-term private equity GP relationships give us an important edge in a competitive market,” says Sacher, partner and head of private credit at Adams Street. The firm sources its deals primarily from its general partners. “The vast majority of our deals come from sponsors in our private equity fund-of-funds portfolio. There are few debt providers that have the connection to private equity firms that we have. It’s one of the reasons a private credit strategy was such a natural fit for the firm.” In May 2019, the firm completed fundraising for its inaugural private credit program with approximately $1.1 billion of capital. The firm garnered investment from new and existing investors in the U.S., Europe and Asia. Read our full coverage: Private equity firms are becoming lenders. Here’s why.

At Mergers & Acquisitions, we've begun work on one of our most popular projects of the year: the Most Influential Women in Mid-Market M&A. The deadline for nominations is Oct. 14. Last year, we honored 36 women, including Marilyn Adler (Medley Capital), Jennifer Cotton (Madison Capital Funding), Nishita Cummings (Kayne Anderson), Venita Fields (Pelham S2K), Jeri Harman (Avante Mezzanine Partners), Pam Hendrickson (the Riverside Co.), Gretchen Perkins (Huron Capital) and Trisha Renner (Baird). Who will make it on this year's list? 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. An important guide to what we're looking for can be found in the dealmakers we've honored in previous years. See profiles of, and Q&As with, past honorees here.

TO NOMINATE A CANDIDATE, CLICK HERE.

DEAL NEWS
Morton's steakhouse owner Landry's Inc. is buying Del Frisco's Double Eagle Steakhouse and Del Frisco's Grill from L Catterton-backed Del Frisco's Restaurant Group. The deal does not include the Bartaco and Barcelona Wine Bar brands. L Catterton recently completed its $650 million acquisition of Del Frisco's. The advisors to Landry's include: Jefferies, Deutsche Bank and North Point Advisors.

Roark Capital-backed Inspire Brands is buying the stake it does not own in sandwich shop chain Jimmy John's Sandwiches. Roark originally invested in Jimmy John's in 2016. Inspire Brands owns Arby's, Buffalo Wild Wings and Sonic Drive-In.

EQT-backed Kodiak Gas Services is buying Pegasus Optimization Managers from Apollo Natural Resource Partners, a fund managed by affiliates of Apollo Global Management (NYSE: APO). The target offers contract compression services for the oil and gas industry. Kirkland & Ellis is advising the buyers. The sellers are being advised by Jefferies and Vinson & Elkins.

Halifax Group has invested in Prairie Industries and Nu-Pak Inc., a contract packager and manufacturer of consumer products and ready-to-eat food. “As consumer product companies continue to outsource their increasingly complex packaging and manufacturing needs, there is a growing demand for the high-quality services offered by Prairie Industries and Nu-Pak," says Halifax partner Scott Plumridge.

Graham Partners has invested in Vpet USA LLC, a manufacturer of custom and stock plastics for the food and beverage sector. Dechert represented Graham.

Arosa+LivHome is buying LifeLinks, a provider of life care services in Raleigh, North Carolina and Nashville.

PEOPLE MOVES
James Clyne has joined law firm K&L Gates as a partner, where he is focusing on M&A in the minerals and oil and gas sectors. He was previously with Allens.

Mark Birkett and Mike Jenny have been named partners at Livingstone's. They both joined the firm in 2016.

Natalya Michaels has joined middle-market private equity firm MidOcean Partners as a managing director. She is focusing on marketing, investor relations and business development across MidOcean's private equity and credit businesses. Michaels was most recently with Artisan Partners.

Sue Rechner has been named CEO at Huron Capital-backed WD Lab Grown Diamonds. She previously held positions at Merrell and Confluence Outdoor.

Adam Neumann, the charismatic entrepreneur who led WeWork to become one of the world’s most valuable startups, stepped down as chief executive officer after a plan to take the company public hit a wall. Read the full story by Bloomberg News: WeWork’s Neumann steps down as CEO, with IPO on the line.

FEATURED CONTENT
It’s a milestone year for the Blackstone Group Inc. (NYSE: BX), which transitioned from a publicly-traded partnership to a corporation on July 1. Most recently, the New York firm announced on Sept. 11 the final close of its latest global real estate fund. With $20.5 billion of total capital commitments, Blackstone Real Estate Partners IX is the largest real estate fund ever raised. Mergers & Acquisitions spoke with Stephen A. Schwarzman, the firm’s co-founder, chairman and CEO, on the occasion of his new book, What It Takes: Lessons in the Pursuit of Excellence, published by Avid Reader Press/Simon & Schuster, and released on Sept. 17. Schwarzman, who is speaking at the Economic Club of New York on Sept. 18, shared his perspective on the private equity model, its resilience during recessions and how the industry has evolved over three decades. Read the full story: "Complete control" is the beauty of private equity, says Blackstone's Stephen A. Schwarzman.

Bank M&A has been soaring, creating the perfect backdrop for Piper Jaffray’s announced acquisition of Sandler O’Neill & Partners LP. “There has been a lot of consolidation in the bank space,” Piper Jaffray CEO Chad Abraham told Mergers & Acquisitions. “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 the renamed firm Piper Sandler will instantly become a leading investment bank in financial services, a sector Piper has sought to expand in for several years. For analysis of the deal, see Counting on bank M&A: Why Piper Jaffray bought Sandler O'Neill.

That the payments landscape is dynamic is news to no one but the paradox at the core of it may escape the average observer. The demand for simplicity by consumers and businesses is making things more complex. More payment end points, payment types and disruptive innovation on the front end means a greater challenge in the back where the work is done to approve, clear and settle transactions. There have been a number of developments that have supported as well as attempted to mitigate the effects of this paradox. Read the full story: Payments M&A, mobile wave make negotiations harder.

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. Read the story: 8 M&A advisors urge closing deals now, while economy stays strong.

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 at EisnerAmper’s 4th annual Alternative Investment Summit. Among the topics discussed: 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.

Looking for a glimpse of what’s to come in the private equity industry? Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity. As the PE industry undergoes a generational shift, and many firm founders retire, it’s well worth getting to know these emerging leaders, including Branford's Austin Collier, Sterling Partners' Shawn Domanic and Summit Partners' Sophia Popova. 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.

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 Virginia Capital Conference is being held on Oct. 2 at the Jefferson Hotel in Richmond, Virginia.

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 Oct. 22-23.

ACG Charlotte is hosting Deal Crawl at the Mint Museum in Charlotte, North Carolina Nov. 6-7.

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

ACG New York is hosting Middle Market Week in New York from Nov. 11-15.

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