M&A wrap: Siris Capital, Frank Baker, TSG, L.E.K., Exponent Women, JPMorgan, Jamie Dimon, KKR, Cinven, Providence, Zynga, Avista, LLR

Register now

Frank Baker, founder and managing partner of Siris Capital Group LLC, a New York private equity firm focused on investing in technology and telecommunications companies, and his wife, Laura Day Baker, an interior designer and philanthropist focused on empowering historically underserved communities, have announced a $1 million gift toward the establishment of a scholarship for Spelman College graduates. Spelman is an historically black college for women in Atlanta that counts Starbucks Group president and COO Rosalind Brewer among its alumnae. Initially, the scholarship will pay for the existing spring tuition balances of nearly 50 members of Spelman’s 2020 graduating class. Thereafter, the scholarships will provide support to ensure that future high achieving graduating seniors have the financial resources to graduate. “We are all aware of the headwinds that people of color - especially women - face in our country, the challenges of which are made even more apparent by the economic and health impact of the Covid-19 pandemic,” said the Bakers in a statement. “We believe it is critical that talented women finish college and confidently enter – free of undue financial stress – the initial stage of their professional careers. We hope that this gift will help lessen their financial burden as they start this promising next chapter in their lives and encourage them to persevere over life’s challenges.” The gift comes on the heels of Spelman’s end-of-the-year celebration and virtual Senior Salute designed to celebrate the 480 graduates of the 2020 graduating class. The gift also follows the $34 million contribution by Vista Equity Partners founder Robert F. Smith to Morehouse College, an historically black college for men in Atlanta. That gift included paying off the student loans of the school's 2019 class. Mergers & Acquisitions named Smith the winner of the 2019 M&A Mid-Market Award for Dealmaker of the Year. As the private equity industry matures, industry leaders are increasingly focusing on philanthropy. For more, see Private equity gives back: Vista's Robert F. Smith, Clearlake's José E. Feliciano, Riverside employees.

The chiefs of some of the biggest U.S. banks called on their workers to fight racism after an unarmed black man died as a result of a white police officer kneeling on his neck, prompting nationwide protests. "This week's terrible events in Minneapolis, together with too many others occurring around our country, are tragic and heartbreaking," JPMorgan Chase CEO Jamie Dimon and Brian Lamb, the bank's newly appointed diversity chief, wrote in a memo to U.S. employees Friday. "Let us be clear — we are watching, listening and want every single one of you to know we are committed to fighting against racism and discrimination wherever and however it exists." See the full story, Big-bank execs condemn racism after George Floyd death.

The consumer landscape has been transformed overnight by the coronavirus and quarantine. In the new consumer paradigm, who wins and who loses? Mergers & Acquisitions Editor-in-Chief Mary Kathleen Flynn is moderating a discussion about the sector with two leading consumer dealmakers: Blythe Jack, managing director of private equity firm TSG Consumer; and Maria Steingoltz, managing director of L.E.K. Consulting. The event is hosted by Exponent Women LLC, a networking group of female dealmakers based in New York, and takes place online on Tues., June 2, at 12:00 pm EST.

DEAL NEWS
Three buyout funds offered to acquire Spanish phone company Masmovil Ibercom SA for 3 billion euros ($3.3 billion), in one of the largest private equity deals to emerge during the coronavirus pandemic. Its shares surged the most on record. KKR & Co., Cinven Ltd. and Providence Equity Partners LLC offered 22.5 euros a share for the company, according to a statement. The bid, which was accepted by Masmovil’s board. Read the full story by Bloomberg News: KKR, Cinven and Providence take Masmovil private for $3.3 billion.

Zynga Inc. (Nasdaq: ZNGA) agreed to buy Turkish mobile-game maker Peak for $1.8 billion, making its biggest acquisition ever during an industry boom fueled by consumers staying at home with few live-entertainment options. The Peak deal will bring Zynga a popular lineup of puzzle games called Toon Blast and Toy Blast. The company is making the acquisition at a time when video-game companies are thriving along with purveyors of video and audio streaming, as the pandemic drives a search for diversions. Read the full story by Bloomberg: Farmville maker Zynga buys Peak for $1.8 billion in its largest deal ever.

Avista Capital and VHC Investco have acquired Vision Healthcare NV in a deal that values the target at around $336 million. Belgium-based Vision is a direct-to-consumer seller of over-the-counter healthcare products. "The paradigm shift of preventive health solutions and direct-to-consumer experiences is happening fast in our consumer healthcare space and has only been accelerated by the changes, complexities and opportunities Covid-19 has brought along," says Vision CEO Yvan Vindevogel. Rothschild and Allen & Overy advised Vision. Ropes & Gray advised Avista.

LLR Partners has invested in TrueLearn, a provider of online test preparation and data analytics to healthcare education and training institutions. DC Advisory advised TrueLearn.

Shore Capital-backed EyeSouth Partners has completed an affiliation with Coastal Eye Associates. The affiliation represents EyeSouth’s first in Texas.

Cisco (Nasdaq: CSCO) is buying cloud computing company ThousandEyes Inc. The deal comes as more businesses are relying on third-party infrastructure providers during the coronavirus pandemic, Cisco says. Willkie Farr & Gallagher LLP is advising Cisco.

BC Partners-backed United Group has invested in Greek telecom provider Forthnet.

PEOPLE MOVES
Todd Rudsenske was hired by privte equity firm Webster Equity Partners as a partner where he is focusing on the healthcare sector. He was most recently with Cain Brothers.

Emily McNeal has joined industrial technology company Honeywell (NYSE: HON) as senior vice president, corporate development and global head of M&A. She was previously with Walmart.

Brian Gordon has joined law firm Squire Patton Boggs as a partner. He was previously with Holman Fenwick Willan, and focuses on M&A in the energy and mining sectors.

Adam Rogoff was hired by law firm O’Melveny as a partner. He concentrates on restructurings and bankruptcies.

CORONAVIRUS IMPACT
Since March 14, when the Centers for Disease Control and Prevention issued a no-sail order, cruise ships have been sitting idle with no passengers. The order is set to expire on July 24. The coronavirus has impacted the hospitality and tourism sectors, including cruises, greatly. Operators are raising capital so they can stay above water, and others even reportedly held talks with investors. Carnival Corp. (NYSE: CCL), which raised $6 billion through a combination of debt, stocks and convertible notes, was in talks with Blackstone for financing before settling on the public deal, according to Bloomberg News. See the full story: Why cruise lines are raising capital to stay afloat during pandemic.

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.

FEATURED CONTENT
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.

For reprint and licensing requests for this article, click here.