M&A wrap: Woodward, Hexcel, ACI, Speedpay, Bain, Constitution Capital, TA, Raymond James
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. The pandemic is also taking a toll on aerospace part makers. Woodward Inc. (Nasdaq: WWD) and Hexcel Corp. (NYSE: HXL), systems providers for the aerospace and industrials sectors, have agreed to terminate their merger as a result of the coronavirus spreading. “The move was not entirely surprising, considering the dire outlook for Boeing aircraft production and deliveries has become increasingly amplified in the last few weeks as airlines face an unprecedented reduction in passenger travel and Boeing was forced to halt production at its Puget Sound facility “until further notice” due to the coronavirus,” CanaccordGenuity aviation analyst Ken Herbert wrote in a note to investors. “Both the supply and demand shocks to the commercial aircraft market have created much more distraction now, and require a focus on near-term cost actions and execution, as opposed to white-knuckling a merger on the scale of Woodward- Hexcel.” For more, read our full coverage: 5 derailed deals: HP, TGI Fridays among those losing buyers during coronavirus crisis.
MORE ON CORONAVIRUS IMPACT
When ACI Worldwide Inc. (Nasdaq: ACIW), which won Strategic Buyer of the Year for Speedpay Deal, acquired mobile and bill payment technology from Western Union last year, it couldn't have predicted an environment in which consumers would be handling nearly all of their finances from home. But the financial challenges brought on by the coronavirus pandemic are making that technology more crucial than ever. Read the full story from PaymentsSource: How ACI rapidly put Western Union's tech to work in the coronavirus pandemic.
Long before the coronavirus pandemic would bring business to a standstill all across America, Surgery Partners Inc., a sprawling network of outpatient clinics, already had its share of financial problems. This was no secret on Wall Street. Surgery Partners’s majority owner, buyout firm Bain Capital, had loaded so much debt onto the company’s books that when it went to the market last year to refinance maturing bonds, investors demanded a 10% interest rate to compensate them for the risk. The debt was rated CCC, or eight levels below investment grade. Read the fulll story by Bloomberg News: No junk debt is too risky: how fed’s bailout changed everything.
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.
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.
Constitution Capital Partners has raised its fifith fund at $1 billion. The fund will focus on investments in primary funds with $400 million to $2 billion in commitments and direct investments in businesses that have up to $1 billion in enterprise value. To date, the fund has made 27 direct investments and 11 fund investments.
TA Associates-backed Thinkproject, a provider of construction and engineering software, has acquired Ramm Software. The target offers asset, work, and field management cloud software to local governments, national authorities, consultants, and contractors throughout Australia, New Zealand and Fiji.
Raymond James (NYSE: RJF) has acquired Oak Trust Co., a Canadian trust provider. With the acquisition, Raymond James will be the first full service investment bank in Canada to offer integrated fiduciary trust services.
Karen Davies has been promoted from managing director to executive managing director of specialty banking at Huntington Bank. The group covers healthcare, trade finance, mezzanine, franchise and food and agribusiness. Davies joined the firm in 2011.
Mark Leenay has been named CEO at TA Associates-backed InHealth MD Alliance. Leanay was previously with WellCare Health Plans.
Suzzanne Uhland has joined law firm Latham & Watkins as a partner. Most recently with O’Melveny & Myers LLP, Uhland advises companies in Chapter 11 reorganizations and out-of-court restructurings.
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.
Once venture capital-backed startups themselves, today’s tech giants know a thing or two about VC seed money. It’s fitting that many of them have created corporate venture capital groups of their own. These CVCs help their owners experiment and nurture new technologies and ideas in the early stages, without requiring the commitment of an acquisition. The CVC strategy often augments a company’s research and development efforts as well as complementing its M&A strategy. Middle-market dealmakers would be wise to track the VC investments of the five companies we highlight: Amazon.com Inc. (Nasdaq: AMZN), Google (Nasdaq: GOOG), Intel (Nasdaq: INTC), Microsoft Corp. (Nasdaq: MSFT) and Salesforce.com Inc. (NYSE: CRM. Read our full coverage: Venture forth: How five of the biggest tech companies explore new territory through early-stage investments.
In a period of accelerating technology innovation and investment, it’s critical to stay aware of new technologies, offerings, data and analytics types and business models in your space, and adjacent spaces. Most companies are looking for ways to get better and earlier access to the startup space. While corporate venture capital (CVC) is only one method, it can be a fairly powerful one. Read full coverage: How corporations can benefit from VC investments in technology
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: the next edition of the M&A wrap will be published on Thursday, April 30.