M&A wrap: SK Capital, PolyOne, Siris, Gryphon, Abry Partners
SK Capital is buying PolyOne Corp.'s (NYSE: POL) performance products and solutions business for $775 million. The target offers chemical and plastic compounding services to the automotive and construction sectors, and has about $700 million in sales. SK Capital is a chemicals and materials-focused private equity firm based in New York. PolyOne says the divestiture will allow the company to pay down debt while focusing on its core businesses. "We can further refine our focus on investing in and growing our three remaining segments: specialty engineered materials; color, additives, and inks; and distribution," says PolyOne CEO Robert Patterson. Strategic buyers are divesting assets to focus on their core business lines in order to boost profitability. In other deals, Genuine Parts Co. (NYSE: GPC) is selling its electrical specialties group of motion industries business to Audax Private Equity, and Verizon Communications Inc. (NYSE: VZ) agreed to sell the blogging platform Tumblr to Automattic Inc. Advisors to PolyOne include: HSBC (NYSE: HSBC) and Jones Day. The advisor to SK Capital is Latham Watkins. Financing is being provided by Cerberus Business Finance.
Siris is acquiring Tpx Communications from Investcorp and Clarity Partners. Tpx offers communications, contact center, IT and network connectivity services. Advisors to Siris include: Sidley Austin, Kirkland & Ellis and PJT Partners. Advisors to Tpx include: Evercore (NYSE: EVR), Q Advisors, Gibson Dunn & Crutcher and Morgan Lewis and Bockius.
Gryphon Investors has invested in Mechanix Wear, a designer of work gloves for the automotive, construction and industrials sectors. Advisors to Gryphon include, EC M&A, Houlihan Lokey (NYSE: HLI) and Kirkland & Ellis. Advisors to Mechanix include: Doug Hood and Stradling Yocca Carlson and Rauth.
Abry Partners is buying Portfolio Holding from Capital Z Partners. Portfolio is an independent provider of finance and insurance products and services to automotive dealers. Houlihan Lokey (NYSE: HLI) is advising the target.
For more deal news, see Weekly wrap: BC Partners, CBS, Crescent.
For more on fundraising, see PE fundraising scorecard: BC Partners, Castle Harlan, Veritas.
Looking for a glimpse of what’s to come in the private equity industry? Meet the 10 dealmakers named by Mergers & Acquisitions as the 2019 Rising Stars of Private Equity:
Austin Collier, Branford Castle Partners
Kevin Cunningham, LNC Partners
Shawn Domanic, Sterling Partners
Stephen Jeschke, GTCR
Danielle Lalli, Huron Capital
Jason Mironov, TA Associates
James Oh, Transom Capital Group
Sophia Popova, Summit Partners
Pavan Tripathi, Bregal Sagemount
Christine Wang, Francisco Partners
The Rising Stars share a common set of core values. They are passionate about building companies. They are naturally curious and interested in changing things for the better. They enjoy working with portfolio company managers, investment bankers and other deal team members. They appreciate the responsibility and autonomy their firms have given them. They are grateful for the leaders who have helped shape their careers, and they are generous with their own time when it comes to nurturing the next generation. As the PE industry goes through a generational shift and many firm founders retire, it's well worth getting to know these emerging leaders. They represent the future of private equity. 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.
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“We know that different people from different walks of life make us a better firm,” said Adam Miller, director of global talent management at the Riverside Co., which employs more than 200 people across four continents, including two female co-fund managers and a female chief operating officer. “We’re creating more opportunities for broader demographics.” Indeed, just about every private equity firm you talk to these days seems intent on becoming attractive to diverse candidates—whether it’s by hiring a chief diversity officer and loosening its dress code (KKR); giving employees flexible hours to spend more time with children (Riverside); offering up to 12 weeks of paid maternity leave and 16 weeks off altogether (ParkerGale); hosting weekly wine-and-cheese gatherings in the summer (Kinzie Capital); or providing on-site professional development and training (Riverside and ParkerGale). Check out: 5 hiring trends in private equity.
BC Partners has joined the growing group of private equity firms selling a minority stake to another PE firm to fuel expansion plans. Earlier in August, the firm, which is headquartered in London with additional offices in New York, Paris and Hamburg, announced it had sold an interest in the firm to New York’s Blackstone Alternative Asset Management for undisclosed terms. PE firms increasingly are selling minority stakes to fund expansion plans. For more see, Why private equity firms sell stakes to other firms.
Dealmaking in August began with a bang, as the London Stock Exchange Group Plc agreed to snap up Refinitiv in a $27 billion blockbuster deal. And M&A was hopping in July, with observers predicting the third quarter will be an active one. Meanwhile, here is a table of middle-market deals that closed in the first half of the year, including 3M Co.'s (NYSE: MMM) purchase of MModal's technology business; Apollo Global Management LLC's (NYSE: APO) acquisition of Smart & Final Stores; and KPS Capital Partners' purchase of Brunswick Corp.'s (NYSE: BC) fitness business. For more see, 3M's purchase of MModal's tech business a highlight of H1 dealmaking.
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. A mood of urgency prevails, as dealmakers seek to close deals quickly, while conditions remain favorable. The advisors interviewed for this story say they don’t see signs of a recession this year; however they are closely monitoring bellwethers, including corporate earnings, wage pressure, global supply chains and slowdowns abroad. They are recommending that clients be prepared for an economic slowdown in the next two years. Specialization is the name of the game, and investment bankers advise clients to seek targets with business-model stability, limited cyclical exposure and a recurring revenue business model. Technology, business services, healthcare, consumer and manufacturing are among the most promising sectors. Read the story: 8 M&A advisors urge closing deals now, while economy stays strong.
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.
The Association of Asian American Investment Managers (AAAIM) is holding its annual conference from Sept. 4-5 at Convene at 730 Third Avenue in New York.
The Great Lakes ACG Capital Connection is being held at the Westin Book Cadillac Detroit Hotel in Detroit from Sept. 4-6.
ACG Boston and ACG Connecticut are hosting the 5th Annual ACG New England Fall Conference at Gurney's Newport Resort & Marina in Newport, Rhode Island from Sept. 17-18.
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 from Oct. 22-23.
Third Annual Women in Alternative Investments Career Forum is taking place at the New York Hilton on Nov. 8.