M&A wrap: Xerox, HP, Coronavirus, Apollo, BrightHouse, Thoma Bravo,Command Alkon, HGGC, PCF, Council Capital
EDITOR'S NOTE: Tomorrow, Mergers & Acquisitions will announce the 2019 winners of our M&A Mid-Market Awards! (Please note: we will not publish an M&A wrap column tomorrow.)
Xerox Holdings Corp. (NYSE: XRX) ended its hostile takeover bid for HP Inc. (NYSE: HPQ) because of uncertainty stemming from the Covid-19 pandemic, marking a blow to the photocopier company’s efforts to stimulate future growth. “The current global health crisis and resulting macroeconomic and market turmoil caused by Covid-19 have created an environment that is not conducive to Xerox continuing to pursue an acquisition of HP Inc.,” Xerox said in a statement. Read the full story by Bloomberg News: Xerox drops HP bid due to coronavirus fears.
Apollo Global Management (NYSE: APO)-backed U.K.-based rent-to-own retail chain BrightHouse has gone into adminstration and recently closed all its stores as a result of the coronavirus outbreak, reports PitchBook. BrightHouse rents items such as sofas and televisions to customers who can't get traditional credit. A group led by Apollo acquired the target in 2017.
MORE ON CORONAVIRUS IMPACT
The coronavirus continues to impact the global economy. In the middle market, companies are proactively drawing down on revolving lines of credit and other sources of financing to put cash on the balance sheet to weather the storm. 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
Genuine economic deterioration is a primary risk to private capital markets – PE tends to behave as a GDP-linked business. As consumer spending and business investment is set to decline, we expect to see a slowdown in PE transaction volume that follows the expected economic contraction. Read the full story: Private equity deals will slow down, as global economy stalls amid coronavirus pandemic.
While the long-term economic impact on American companies remains uncertain, there are important lessons to learn on how to manage future pandemic risks. Read the full story: Coronavirus contingency planning checklist for the middle market.
The coronavirus threat is the type of risk that material adverse change, or MAC, clauses are designed to address in M&A. Why the coronavirus makes material adverse change (MAC) clauses more important than ever.
Thoma Bravo has acquired Command Alkon from Quilvest Capital Partners. The target offers technology to the construction sector that helps companies manage big orders and deliveries. Kirkland & Ellis advised Thoma Bravo. William Blair and Dechert advised the sellers.
HGGC has acquired a majority stake in insurance broker PCF Insurance. BHMS is keeping a minority stake in the target. “We believe the key to success in the insurance services space is strong leadership and smart M&A," says HGGC partner John Block. Waller Helms Advisors advised HGGC. Sica Fletcher and TAG Financial Institutions Group advised PCF.
Healthcare-focused private equity firm Council Capital has invested in Physician Housecalls. The latter offers home-based primary care services at private residences, assisted living centers and independent senior apartments.
Katherine Bellows was hired by investment bank Cascadia Capital as a managing director. She will concentrate on business development in the Northwest. Bellows was most recently with Bank of America.
Kevin Cooper was hired by law firm Cooley as a partner where he is concentrating on M&A. Cooper was most recently with Wachtell, Lipton, Rosen & Katz.
Mark Cooper has joined law firm Latham & Watkins where he is focusing on private equity and M&A. He was previously with Hogan Lovells.
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.
Axios co-founder and CEO Jim VandeHei is hosting an online conversation on April, 3 called: Trust in Crisis: Lessons from Leaders. The discussion will feature Dallas Mavericks owner Mark Cuban, Michigan governor Gretchen Whitmer and Edelman CEO Richard Edelman.