M&A wrap: Sentinel, Holley Performance, Lincolnshire, IBM, Red Hat, Mitsubishi UFJ

fuelinjectionsystem
car sequential gas injection

Sentinel Capital Partners has acquired auto parts maker Holley Performance Products from Lincolnshire Management and will combine the target with Driven Performance Brands. Sentinel formed the latter in 2015. Holley manufactures fuel injection systems, engine tuning systems, carburetors and exhaust systems under the Holley, Sniper EFI, MSD, Accel, Diablosport, Superchips, Edge, and Hooker Blackheart brands. Driven produces mufflers, exhaust kits, transmission kits and shifters under the Flowmaster, B&M, Hurst, APR, and Dinan brands. "Holley is a strong, consumer-focused company with a portfolio of powerful brands and a meaningful edge in engineering and technology," says Sentinel partner Jim Coady. "Holley operates in the large, highly-fragmented, and steadily growing automotive enthusiast market." Sentinel is a lower middle-market private equity firm that invests in businesses that have up to $65 million in Ebitda across the business services, consumer, industrials and restaurant sectors. Earlier in 2018, the firm raised around $2.5 billion across two funds. Lazard Middle Market, UBS Investment Bank and Kirkland & Ellis advised Holley.

IBM’s (NYSE: IBM) $33 billion purchase of Red Hat Inc. (NYSE: RHT), the world’s second largest technology deal ever, is aimed at catapulting the company into the ranks of the top cloud software competitors. The cash deal, IBM’s biggest by far, boosts the 107-year-old computer-services giant’s credentials overnight in the fast-growing and lucrative cloud market and gives it much-needed potential for real revenue growth. The company once synonymous with mainframe computing has been slow to adopt cloud-related technologies and has had to play catch-up to market leaders Amazon.com Inc. (Nasdaq: AMZN) and Microsoft Corp. (Nasdaq: MSFT) in offering computing and other software and services over the internet, reports Bloomberg News. Read the full story: IBM pursues Amazon with Red Hat Deal.

Deal news
Mitsubishi UFJ Lease & Finance Co. Ltd. is acquiring ENGS Commercial Finance from Aquiline Capital Partners. ENGS offers equipment and working capital finance services. J.P. Morgan Securities LLC (NYSE: JPM) and Latham & Watkins are advising ENGS.

Altas Partners is buying roofing company Tecta America Corp. from Oncap.

Capital Constellation has invested in financial technology company Motive Partners.

Clearlake Capital-backed Wheel Pros has acquired ReadyLift, a maker of suspension, lift and leveling kits.

Perficient Inc. (Nasdaq: PRFT) has bought digital marketing firm Elixiter.

Featured content
The New England Patriots take on the Buffalo Bills Monday night to wrap up NFL Week 8. Off the field, Patriots quarterback Tom Brady recently teamed with former Giants defensive end Michael Strahan, who is the co-host of ABC’s Good Morning America, to launch a sports media startup called Religion of Sports Media, which has raised $3 million in venture capital funding from CourtsideVC and Advancit Capital. Many NFL players invest in companies. Muhsin Muhammad, who played wide receiver for the Carolina Panthers and the Chicago Bears, is a managing director of private equity firm Axum Capital Partners. Steve Young, former San Francisco 49ers quarterback, is a co-founder of private equity firm HGGC. Mergers & Acquisitions takes a look at star players who invest in companies through private equity, venture capital and other investment vehicles.

Mergers & Acquisitions identifies 15 cities as fertile communities for dealmaking. We look at metropolitan areas from Austin (where Michael Dell launched a PC business out of his dorm room back in the day and where thousands gather every year for SXSW) to St. Louis(home of private equity firm Thompson Street Capital Partners). Be sure to check out Milwaukee (with private equity firm Robert W. Baird & Co. and investment bank Clearly Gull) and Minneapolis (home of strategic buyers 3M, Best Buy, General Mills, Hormel and Target). And don’t forget Boston, Chicago, New York, San Francisco and Los Angeles and more. See our list, Dealmaker's guide to 15 cities where M&A thrives.

Why investors like diversity. "Companies that are inclusive and also diverse tend to outperform companies that aren't," says investor Lorine Pendleton of Pipeline Angels and Portfolia in this video interview shot at Exponent Exchange, a gathering of 200 female dealmakers. Watch the full video: M&A Insights: Inclusion investing.

Canada legalized recreational marijuana on Oct. 17, marking the first G7 nation and the second country in the world to enact full legalization. To investors in the still developing cannabis industry, many believe the market is just now approaching its own inflection point, as it transitions from a black to gray market, characterized by a more attractive risk profile and outsized growth potential. The sticking point is that as a Schedule I drug illegal under federal law, cannabis still presents imposing obstacles for traditional investors, ranging from capital markets that remain inaccessible to uncertainty over bankruptcy proceedings. Yet, ironically, it’s these very same obstacles that make the opportunity so appealing to investors willing to operate in an indefinite gray area to create an ecosystem for a market expected to reach $75 billion in size by 2030. Salveo Capital managing partner Jeffrey Howard shares advice about investing in cannabis in a guest article. Read the full story: How to seize M&A opportunities in marijuana’s gray market.

Events
ACG Chicago's Family Office Conference, held Nov. 8, at the Westin Chicago River North, brings deamakers together for a "deep dive" into family offices. The event features a keynote by Laurent Roux, Gallatin Wealth Management, and panels, including: Current State of Family Office Direct & Co-Investment Activity, with Gary Levenstein, Nixon Peabody; and Impact of Millennial Generation on Family Office Investment Strategy including Social Impact Investing, with Adam Lieb and Tony Oommen, Fidelity Family Office Services.

ACG Florida Capital Connection, held Nov. 12-14, at the Vinoy Renaissance St. Petersburg Resort & Golf Club, puts “sun and fun” into dealmaking for the middle market, bringing together hundreds of dealmakers. The keynote speaker is Forbes Media CEO Steve Forbes, and the featured speaker for the Women’s Forum is Valerie Crites Fowler, who served as a diplomat in the U.S. Foreign Service for over 29 years, reaching the rank of Minister Counselor in the Senior Foreign Service.

Middle Market Week, hosted by ACG New York and held Nov. 26-30 at various locations throughout New York, brings together leading global middle-market dealmaking professionals to develop and enhance their dealmaking activities, strengthen their long-term relationships, and provide numerous opportunities for networking all week long. Mark your calendar for the Private Equity Annual Wine Tasting Gala on Nov. 28 at Gotham Hall. The building was constructed in the 1920s as the headquarters of the Greenwich Savings Bank. The gala brings together the leading middle market private equity firms for an evening of fine wines and networking.

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