5.6+ Billion $5.1 Billion 164

Twin Brook Capital Partners’ senior-level team has been serving the middle market for over 20 years. We’ve established long-term relationships with over 300 PE sponsors and closed transactions with over 220 middle market PE rms. For a complete list of transactions, visit twincp.com. An Angelo, Gordon Company

$392.2M $58M $44M $5.6+ Billion $5.1 Billion 164

of committed capital commitments issued to date closed transactions Joint Lead Arranger & Sole Lead Arranger & Sole Lead Arranger & Sole Lead Arranger & Documentation Agent Administrative Agent Administrative Agent Administrative Agent Add-On Acquisition Leveraged Buyout Leveraged Buyout Recapitalization & Since 4th Quarter 2014 inception Add-On Acquisition

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Sole Lead Arranger & Sole Lead Arranger & Administrative Agent Sole Lead Arranger & Sole Lead Arranger & Sole Lead Arranger & Administrative Agent Sole Lead Arranger & Administrative Agent Administrative Agent Recapitalization Administrative Agent Administrative Agent Administrative Agent Leveraged Buyout Administrative Agent Recapitalization Leveraged Buyout Leveraged Buyout Add-On Acquisition Leveraged Buyout Re nance & Add-On Acquisition

JANUARY 2018 DECEMBER 2017 DECEMBER 2017 NOVEMBER 2017 NOVEMBER 2017 NOVEMBER 2017 OCTOBER 2017 SEPTEMBER 2017

$52.2M $350M $77M $61M $124M $72M

Sole Lead Arranger & Joint Lead Arranger & Sole Lead Arranger & Sole Lead Arranger & Sole Lead Arranger & Administrative Agent Documentation Agent Sole Lead Arranger & Administrative Agent Co-Syndication Agent Administrative Agent Administrative Agent Administrative Agent Control Recapitalization Recapitalization Administrative Agent Add-On Acquisition Add-On Acquisition Growth Investment Leveraged Buyout Acquisition In Support of Investment by

NOVEMBER 2017 NOVEMBER 2017 NOVEMBER 2017 NOVEMBER 2017 SEPTEMBER 2017 SEPTEMBER 2017 SEPTEMBER 2017 SEPTEMBER 2017

002_MAJ000 2 7/30/2018 1:52:07 PM SEPTEMBER 2018

TED KOENIG Monroe Capital

BRIAN KERWIN JOHN CORVINO Duane Morris Chicago White Sox

HOLLEB & COFF ALUMNI WHERE ARE THEY NOW? The Chicago law ﬁ rm shut its doors nearly 20 years ago, but not before launching the careers of many M&A pros.

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0C2_MAJ0918 2 8/8/2018 9:50:17 AM Contents September 2018 | VOL. 53 | NO. 8

Cover Story 16 Holleb & Coff Alumni: Where are they now?, The Chicago law firm shut its doors nearly 20 years ago, but not before launching the careers of many M&A pros.

Private Equity Perspective 12 Inclusion investing In the middle market, a growing movement is nurturing women-led companies.

The Buyside 14 P&G’s new M&A course Two years after completing its restructuring plan, P&G is ready to make acquisitions.

M&A Scene 30 Athletes who invest in eateries From left to right: Duane Morris global corporate chair Brian Kerwin; Monroe Capital founder From LeBron James to Danica Patrick, Theodore Koenig; Chicago White Sox general counsel John Corvino. many celebrity athletes are also entrepreneurs. Watercooler Guest Article 36 6 34 Exponent Exchange Madison Capital, Houlihan Lokey, Investing in marijuana Banker-turned-entrepreneur Sallie True Food Kitchen With Canada legalizing cannabis in Krawcheck delivered the keynote, and Christopher Taylor becomes Madison the fall, now is the time to invest, says Mergers & Acquisitions’ Mary Kathleen Capital’s CEO. Oprah invests in Salveo’s Jeffrey Howard. Flynn moderated a panel. restaurant chain True Food Kitchen. Houlihan Lokey forms HL Finance.

Q&A Feature People Moves 32 28 38 Auto revolution Smart energy New hires and promotions Many car dealerships lack succession Companies throughout the energy AEI-backed Applied Composites plans and the resources to adapt industry are focused on improving names new CEO. Cowen hires vice to the changing industry, making operational efficiencies and analytical chairman of investment banking. PJ them ripe targets for M&A, says capabilities, generating a lot of Solomon hires two MDs. Holland & Knight’s Stephen Dietrich. middle-market M&A activity.

TheMiddleMarket.com September 2018 Mergers & Acquisitions 1

001_MAJ0918 1 8/8/2018 12:11:17 PM Inside Word September 2018 | VOL. 53 | NO. 8

What’s past is prologue TheMiddleMarket.com 1 STATE STREET PLAZA, 27TH FLOOR NEW YORK, NY 10004-1505 • (212) 803-8200 EDITOR-IN-CHIEF Firms that soared in the 1980s and 1990s and then shut Mary Kathleen Flynn ASSISTANT MANAGING EDITOR up shop paved the path to today’s middle market. Demitri Diakantonis CONTRIBUTING EDITORS Keith Button, Danielle Fugazy GROUP EDITORIAL DIRECTOR, BANKING AND CAPITAL MARKETS Our July/August issue, which featured 11 Rising Stars Richard Melville VP, RESEARCH of Private Equity, focused on the future of the middle Dana Jackson market. This issue takes something of a look back. EXECUTIVE DIRECTOR, CONTENT OPERATIONS Holleb & Coff, founded by Marshall Holleb and Mor- AND CREATIVE SERVICES Michael Chu ris Coff in 1951, was an influential law firm that enjoyed SR. ART DIRECTOR Nick Perkins its heyday in the 1980s and 1990s. It was the law firm to work for in the Midwest. Drawn to the supportive VICE PRESIDENT, CAPITAL MARKETS Harry Nikpour (212) 803-8638 culture, new associates and seasoned partners alike SENIOR SALES MANAGER enjoyed working at the venerated firm. At its peak, Hol- Richard Grant (212) 803-8634 ASSOCIATE MARKETING MANAGER leb & Coff employed 130-plus attorneys and advised prestigious clients, includ- Leatha Jones ing American National Bank, Hollinger International Inc. and LaSalle Bank. The

firm shut its doors in 2000, but not before helping to shape the careers of many successful M&A pros today, including: John Corvino is enjoying his dream job today as the general counsel to the CHIEF EXECUTIVE OFFICER �� Gemma Postlethwaite CHIEF FINANCIAL OFFICER ��Sean Kron Chicago White Sox. EVP & CHIEF CONTENT OFFICER ��David Longobardi Brian Kerwin chairs Duane Morris’ global corporate practice and serves on CHIEF MARKETING OFFICER �� Matthew Yorke CHIEF SUBSCRIPTION OFFICER ��Allison Adams the executive committee. SVP, CONFERENCES & EVENTS �� John DelMauro SVP, HUMAN RESOURCES ��Ying Wong Theodore (Ted) Koenig is the founder and CEO of Monroe Capital, the Chicago-based lending firm that works with many well-known private equity firms today. REPRINTS AND LICENSING CONTENT Kenneth Serota is president of Hu-Friedy Manufacturing Co., a global leader For more information about reprints and licensing content from Mergers & Acquisitions, please visit sourcemediareprints. in dental instrument manufacturing. com or contact pars international at (212) 221-9595.

Michelle Warner serves as senior vice president, general counsel and cor- CUSTOMER SERVICE porate secretary at USG Corp. (NYSE: USG), a publicly-traded Fortune 1000 [email protected] or (212) 803-8500

company that makes sheetrock and is currently being acquired by German Mergers & Acquisitions Vol. 53/No. 8 (ISSN 0026-0010) is published monthly with combined issues in July/August manufacturer Gebr. Knauf KG for $7 billion. Warren Buffet’s Berkshire Hathaway and November/December by SourceMedia, One State Street Plaza, 27th Floor, New York, NY 10004-1505. Yearly Inc. (NYSE: BRK.A) is USG’s largest shareholder. subscription is $1,995; $2035 for one year in all other Holleb & Coff “started off with a bunch of attorneys who co-invested in the countries. Periodical postage paid at New York, NY and U.S. additional mailing offices. POSTMASTER: Send address real estate deals they were putting together,” Serota recalls. “Our client base changes to Mergers & Acquisitions / SourceMedia, One State Street Plaza, New York, NY 10004. For subscriptions, was primarily entrepreneurial owner-operated companies, as opposed to the renewals, address changes and delivery service issues contact our Customer Service department at (212) 803- multi-national conglomerates. As a result, we were given access to the strate- 8500 or email: [email protected]. This publication is designed to provide accurate and authoritative information gists and decision makers, and we were able to learn a lot beyond legal.” regarding the subject matter covered. It is sold with Holleb & Coff is not the only firm to leave a legacy. A few years ago, we fea- the understanding that the publisher is not engaged in rendering financial, legal, accounting, tax, or other tured the alumni of Heller Financial. I can’t help wondering which firms today professional service. Mergers & Acquisitions is a registered trademark used herein under license. © 2018 Mergers & are training the leaders of tomorrow? M&A Acquisitions and SourceMedia, Inc. All rights reserved. – Mary Kathleen Flynn

2 Mergers & Acquisitions September 2018

002_MAJ0918 2 8/8/2018 12:12:55 PM $6.5B 90% 220 Commitments Deals Lead/ Closed Issued to Date Co-lead Arranger Transactions

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Strategic buyers M&A wrap Fundraising

Cisco buys cybersecurity firm Boyd and FanDuel team up Sycamore closes third fund Cisco, led by CEO Chuck Robbins, is Casino operator Boyd Gaming Corp. The PE firm, which counts Staples buying Duo Security for $2.35 billion. (NYSE: BYD) and fantasy sports com- among its investments, has raised its Duo’s cloud-based software verifies pany FanDuel Group are forming a third fund at $4.75 billion. The New the identity of users and the health strategic partnership in which the two York-based PE firm now has about $10 of their devices before granting them companies will leverage each other’s billion in assets. Sycamore has also in- access to applications, helping prevent brands and technology to pursue vested in department store chain Belk breaches and account takeover. online gaming across the U.S. and apparel retailer Hot Topic.

4 Mergers & Acquisitions September 2018

004_MAJ0918 4 8/8/2018 12:11:54 PM WHAT’S THE DEAL WITH DUANE MORRIS? THAT NAME KEEPS POPPING UP MORE AND MORE AS DEAL COUNSEL

Representative M&A and Financing Deals

$350 MILLION $1 BILLION C$1 BILLION $75 MILLION $631 MILLION Sale of fiber optic Senior syndicated Sale of microinverter Sale to Scientific Disposition of licensing operations secured credit facility assets and patents Games Corporation, polypropylene business to Crown Castle for acquisition of to NASDAQ-listed a global leader in to Braskem for International Corp. for leading U.S. auto Enphase Energy for technology-based integrated power/energy/ dealerships on behalf of NASDAQ-listed solar gaming, for resource leader energy leader

Acted as administrative agent

$12 MILLION $175 MILLION $500 MILLION $233 MILLION Senior revolver and term Sale to generics leader Syndicated loan Representation in Acquisition of three credit facilities to finance Par Pharmaceuticals, facility led by sale of company Tenet Chicago-area private equity investment Inc. for injectable and JPMorgan Chase for to Curtiss-Wright hospitals by Pipeline and in Connecticut electric ophthalmic specialist NASDAQ-listed Corporation for TWG Partners for utility for

SPONSOR FINANCE GROUP

$150 MILLION PT KOMET INFRA NUSANTARA $300 MILLION $115 MILLION $27 MILLION Acquisition of Indonesian Sale to Madison Dearborn Acquisition of 350-unit Share repurchase cell tower company for Acquisition of Natural Knights Inn brand from from Warburg Pincus largest independent Partners for Toronto- Flavors, Inc., a producer Wyndham Hotel Group Private Equity VIII for owner/operator of based enterprise domain of natural and organic LLC for NYSE-listed NYSE-listed higher wireless infrastructure name system solutions flavor products, for education leader in Indonesia technology leader

$44 MILLION $24 MILLION C$563 MILLION $140 MILLION Representation Acquisition of leading Sale of majority Acquisition of NASDAQ- Sale of portfolio company listed drug delivery in merger with prosthetic device interest to PE leader HR Outsourcing Holdings, manufacturer BionX Apax for Canada-based specialist Juniper Inc. to integrated payroll/ Americas United Medical Technologies weight loss/wellness Pharmaceuticals by HR solutions leader Bank for Paychex for private for German prosthetics solutions innovator global advanced drug delivery leader equity leader innovator

For more information on how $115 MILLION seriously we take our deals, get Acquisition of engineered Sale of Donegal Financial in touch with BRIAN KERWIN, Acquisition by global Merger with Australia- carbon-fiber composite Services Corporation chair of our global Corporate white collar specialist based global leader in manufacturer Citadel and Union Community Practice, at 312.499.6737 or staffing leader NES for intimate apparel and for composite pipeline Bank to Northwest [email protected]. U.S.-based pharma/ swimwear for fashion/ and pipework repair Bancshares for biotech staffing lifestyle brand innovator solutions leader company

A n A m L aw 1 0 0 l aw fi r m | M o re t h a n 8 0 0 l aw ye rs | E sta b l i s h e d 1 9 0 4 Duane | Morris LLP – A Delaware limited liability partnership | w w w.d u a n e m o r r i s.co m

005_MAJ0918 5 8/8/2018 9:50:22 AM Watercooler Watercooler INSOMNIA COOKIES Investors crave cookie deals Insomnia Cookies is known for making late-night deliveries

Krispy Kreme Doughnut Corp., a subsidiary of JAB Holding Co. (owner MADISON CAPITAL FUNDING MADISON CAPITAL of beauty giant Coty and beverage producers Keurig Dr. Pepper and Peet’s Coffee & Tea), is buying a Taking over the reins majority stake in Insomnia Cookies, to expand delivery services. Insomnia Christopher Taylor succeeds Hugh Wade as CEO of Madison Capital Funding was founded in 2003 by Seth Berkowitz in his dorm room at the University of Christopher Taylor has stepped into ogy in 2016. He also led the strategy that Madison Capital Funding is known Pennsylvania. The company specializes the role of chief executive officer of in growing the firm’s third-party asset for,” said Taylor. “I am fortunate to be in delivering fresh, warm cookies to the Madison Capital Funding, a subsid- management business and focused on surrounded by one of the most talented customer’s door until 3:00 a.m. Popular iary of New York Life Insurance Co., expanding the investor base in Asia, team of professionals in our industry flavors include Sugar, Triple Chocolate effective July 1. The promotion from Europe and the Middle East. who will work collaboratively to con- Chunk and S’mores. managing director was announced in “As the firm moves into its next tinue to drive our business forward for With offices in New York and Phila- January, as part of the lender’s long- phase of growth, we are confident many years to come.” delphia, Insomnia operates 135 shops term succession plan. Taylor joined Chris brings the energy, knowledge Taylor succeeded Hugh Wade as and bakeries. “While our companies Madison Capital in 2005, holding vari- and experience needed to capitalize CEO. Wade, who co-founded the will continue to operate independently, ous positions in underwriting, portfolio on today’s strong industry fundamen- firm in 2001, is now serving as chair- these two great brands can learn a management and distressed credit. tals, and to continue to deliver strong man until his upcoming retirement in great deal from each other as we each In 2015, he ascended to the executive outcomes for our clients,” said Yie-Hsin December. Over the last five years, continue to expand and grow,” said level, running the business development Hung, chief executive officer of New Madison Capital’s portfolio of assets Mike Tatersfield, the CEO of Krispy team and joining the investment com- York Life Investment Management, in under management has grown about Kreme, which JAB bought for $1.35 bil- mittee and senior leadership team. a statement. “In a highly competitive 42 percent, standing at $9.5 billion at lion in 2016. Headquartered in Winston- Taylor has overseen growth in gen- environment, private equity sponsors the end of the first quarter. In 2017, the Salem, North Carolina, Krispy Kreme eral industries, healthcare, insurance will increasingly need access to the firm did business with 17 new sponsors, boasts 1,400 stores in 32 countries. and financial services and led the firm’s in-depth industry expertise, decades of bringing the total to 287. Headquartered in Luxembourg, JAB expansion into software and technol- experience and solid financial backing — Mary Kathleen Flynn is a privately-held group focused on

6 Mergers & Acquisitions September 2018 TheMiddleMarket.com

006_MAJ0918 6 8/8/2018 12:10:44 PM Watercooler Watercooler

long-term investments in companies Food Kitchen, a portfolio company of with premium brands, attractive growth Centerbridge Partners, and has joined and strong margin dynamics, accord- the restaurant chain’s board of direc- ing to the company website. Au Bon tors. “I love bringing people together Pain, Panera Bread and Pret A Manger over a good meal,” Winfrey said in a are among JAB’s holdings. The firm is statement. “When I first dined at True owned by Wolfgang Reimann (whose Food Kitchen, I was so impressed with real-time net worth is currently $4.1 bil- the team’s passion for healthy eating

INSOMNIA COOKIES lion) and three of his siblings, according and, of course, the delicious food, that Investors crave to Forbes. They are the grandchildren I knew I wanted to be part of the com- of chemist Ludwig Reimann, who, in pany’s future.” cookie deals 1828, joined with Johann Adam Benck- True Food’s menu “emphasizes iser and his namesake chemical com- wholesome, simple ingredients with Insomnia Cookies is known pany. Today, JAB holds a minority stake thoughtful preparations to highlight for making late-night in consumer products maker Reckitt the natural health benefits and flavors deliveries Benckiser. JAB’s investments are over- of each ingredient,” according to the seen by CEO Olivier Goudet (who also company. Offerings include edamame serves as the chairman for Anheuser- dumplings, ancient grains with miso- Krispy Kreme Doughnut Corp., a Busch InBev), chairman Bart Becht and glazed sweet potatoes and organic subsidiary of JAB Holding Co. (owner senior partner Peter Harf. Skadden Arps Tuscan kale salad. of beauty giant Coty and bever- is representing Krispy Kreme. “When Ms. Winfrey and I first sat age producers Keurig Dr. Pepper — Demitri Diakantonis and down to discuss her potential invest- and Peet’s Coffee & Tea), is buying a Mary Kathleen Flynn ment, I was impressed by her genuine Taking over the reins majority stake in Insomnia Cookies, passion for the intention behind True to expand delivery services. Insomnia Food,” says Christine Barone, CEO of Christopher Taylor succeeds Hugh Wade as CEO of Madison Capital Funding was founded in 2003 by Seth Berkowitz the restaurant chain. “My hope is that in his dorm room at the University of her passion and investment will con- that Madison Capital Funding is known Pennsylvania. The company specializes tinue to develop our growing brand to for,” said Taylor. “I am fortunate to be in delivering fresh, warm cookies to the allow even more guests to experience surrounded by one of the most talented customer’s door until 3:00 a.m. Popular a better way of eating.” Phoenix-based team of professionals in our industry flavors include Sugar, Triple Chocolate True Food operates 23 restaurants in who will work collaboratively to con- Chunk and S’mores. 10 states. The company expects to BLOOMBERG NEWS tinue to drive our business forward for With offices in New York and Phila- double its store count in the next three many years to come.” delphia, Insomnia operates 135 shops years by focusing on the New York, New Taylor succeeded Hugh Wade as and bakeries. “While our companies Buyers chew up Jersey and North Carolina markets. CEO. Wade, who co-founded the will continue to operate independently, healthy restaurant Centerbridge is keeping a majority firm in 2001, is now serving as chair- these two great brands can learn a stake in True Food. man until his upcoming retirement in great deal from each other as we each deals Restaurants are scrambling to meet December. Over the last five years, continue to expand and grow,” said demands from diners who want cuisine Madison Capital’s portfolio of assets Mike Tatersfield, the CEO of Krispy Oprah Winfrey is making they believe is healthy, responsibly- under management has grown about Kreme, which JAB bought for $1.35 bil- an investment in True Food sourced and budget-friendly. Res- 42 percent, standing at $9.5 billion at lion in 2016. Headquartered in Winston- Kitchen taurants that meet those needs are the end of the first quarter. In 2017, the Salem, North Carolina, Krispy Kreme attracting buyers. For example, Bain firm did business with 17 new sponsors, boasts 1,400 stores in 32 countries. Capital Double Impact recently invested bringing the total to 287. Headquartered in Luxembourg, JAB Media mogul Oprah Winfrey has in vegan restaurant chain By Chloe. — Mary Kathleen Flynn is a privately-held group focused on made an equity investment in True — Demitri Diakantonis

TheMiddleMarket.com September 2018 Mergers & Acquisitions 7

007_MAJ0918 7 8/8/2018 12:10:49 PM Watercooler

PPC invests on behalf of certain Pillsbury brand license agreement is a Pritzker family members and other royalty-free, perpetual agreement with long-term focused family and insti- General Mills Inc. (NYSE: GIS), encom- tutional investors, and leverages the passing all U.S. shelf-stable baking Pritzkers’ experience, reputation and products, including flour, dry baking network, an institutional-quality fran- mixes and ready-to-spread frosting, in chise and a differentiated, long-dura- the retail channel. tion capital base to build businesses, The transaction also includes the

BLOOMBERG NEWS according to the firm. Kirkland & Ellis 650,000 square foot manufacturing Why PPC Partners represented PPC Partners on the fund facility in Toledo, Ohio, and is expect- raise and Credit Suisse served as the ed to close in the third quarter of 2018, likes the middle placement agent. subject to customary U.S. regulatory market — Demitri Diakantonis review. Smucker bought Pillsbury as part of its 2004 acquisition of Inter- PPC, led by Tony Pritzker, national Multifoods Corp. “The deal raises second fund added an array of so-called center- of-the-store brands, including muffin mixes and frostings, to its portfolio,” PPC Partners, led by Tony Pritzker, Bloomberg News points out. “More has raised its second fund at $1.8 recently, the drive toward healthy- billion. PPC Partners was launched in eating has drawn consumers to the 2018 by Pritzker Group Private Capital perimeter of grocery stores in search

as its exclusive acquirer of middle- BLOOMBERG NEWS of fresh produce and less processed market companies. Tony Pritzker is foods. This shift in taste and habits one of the heirs to the Hyatt Hotels Consumer has challenged U.S. consumer-pack- Corp. (NYSE: H) fortune. “Our differ- conglomerates aged food companies and cut into entiated, long-duration capital base growth for many large, well-known provides us with the flexibility to grow shed assets brands.” our companies and do what’s right Smucker’s flour, baking ingredients, for our businesses over the long term” J.M. Smucker is divesting baking mixes and frosting businesses says PPC Partners managing partner the Pillsbury brand have lagged, together accounting for Paul Carbone. “We have gathered a about 5 percent of revenue in fiscal select group of like-minded families Brynwood Partners has agreed to 2017, down from about 10 percent and institutions, and together we can acquire a portfolio of brands from in 2014, according to data compiled be even more effective in partnering the J.M. Smucker Co. (NYSE: SJM) for by Bloomberg. Brynwood, based in with family- and entrepreneur-owned $375 million. The portfolio includes the Greenwich, Connecticut, specializes companies.” exclusive U.S. rights to the well-known in corporate carve-outs. “This is a PPC Partners invests in middle- Pillsbury brand’s shelf-stable baking hallmark deal for Brynwood Partners market businesses that are valued up products, along with the Hungry Jack, and marks the 52nd brand acquisition to $750 million. PPC recently acquired White Lily, Jim Dandy and Martha from the 19th corporate seller across food products producer C.H. Guen- White brands. our long history,” says Brynwood presi- ther & Son Inc., which makes artisan The Pillsbury brand is a household dent Ian MacTaggart. Brynwood did breads, buns, rolls, biscuits, gravy name, in part due to the popularity not retain an investment bank but was mixes, frozen appetizers, spices and of its advertising mascot, the gig- advised by Holland & Knight LLP on desserts under the Pioneer, Morrison, gling Poppin’ Fresh character, also legal matters. Tribeca and Sun-bird brands. known as the Pillsbury Doughboy. The — Mary Kathleen Flynn

8 Mergers & Acquisitions September 2018

008_MAJ0918 8 8/8/2018 12:10:53 PM is consistent with our advisory business Investment banks Middle-market lenders Private debt has become an increasingly attractive asset class, model.” with lots of players expand lending Houlihan Lokey, through this platform, • Antares Capital will participate in both committed and services • Golub Capital best efforts transactions across a broad • Madison Capital Funding range of financings, including leveraged Houlihan Lokey forms HL • Monroe Capital Finance buyouts, acquisitions, dividend recapital- • Twin Brook izations, and refinancings, primarily for Source: Mergers & Acquisitions borrowers with Ebitda and capital needs Houlihan Lokey (NYSE: HLI) has leveraged finance platform leverages our in excess of $50 million and $250 million, formed HL Finance LLC to arrange core advisory capabilities and relation- respectively. HPS Investment Partners is senior secured leveraged loans for ships and combines them with the credit HL Finance’s initial strategic investor and financial sponsor-backed, privately-held, underwriting and portfolio manage- will provide underwriting commitments and public corporate entities. The move ment strengths of market-leading asset of up to $1 billion. expands the capabilities of the New York managers,” says Houlihan Lokey CEO HPS is an investment firm that invests investment bank’s growing capital mar- Scott Beiser. “Importantly, this initiative is in syndicated leveraged loans, secured kets group. “The creation of a syndicated driven by significant client demand and and mezzanine debt, asset-based

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TheMiddleMarket.com September 2018 Mergers & Acquisitions 9

009_MAJ0918 9 8/8/2018 12:10:56 PM Watercooler

leasing and private equity. As of June, basketball legend Michael Jordan; Ted HPS manages around $46 billion in Leonsis, owner of the National Hockey Buying into the assets. Syndicated leveraged finance League’s Washington Capitals; Mark future of adtech will operate as part of Houlihan Lokey’s Cuban, owner of the National Basket- capital markets group, led by global co- ball Association’s Dallas Mavericks; and AT&T purchases digital heads Chris Dunlop, Anthony Martino, venture capital firm Revolution Growth, advertising company and Gregg Newman. In anticipation founded by Leonsis and America Online AppNexus of launching the initiative, the group co-founder Steve Case. has added senior talent over the past — Mary Kathleen Flynn year, including Matthew Lyness and Ed AT&T Inc. (NYSE: T) has agreed to Ribaudo, who were formerly managing buy digital advertising technology directors with GE Antares in New York. company AppNexus. The target uses As an asset class, private debt has automated software to help advertis- performed consistently well over the ers buy ads on websites and apps. The last 15 years, attracting a wide range of company also serves as a market- investors. place, connecting buyers and sellers — Demitri Diakantonis of ads. AppNexus will become part of AT&T’s advertising and analytics BLOOMBERG NEWS Sportradar division, which was formed a year ago to help AT&T expand into digital TV attracts star How Tim Hortons advertising. investors will grow globally The AppNexus deal comes on the heels of AT&T completing its $85 CPPIB, TCV join Steve The donut chain and acquisition of Time Warner and the company is looking to AppNexus to Case, Mark Cuban, Cartesian Capital set up a JV to open stores in China help strengthen its services in ad- Michael Jordan and Ted vanced TV advertising. “Ad tech unites Leonsis real-time analytics and technology New York private equity firm Car- with our premium TV and video con- The Canada Pension Plan Investment tesian Capital Group is forming a joint tent,” says Brian Lesser, the CEO of Board (CPPIB), through its subsidiary, venture with coffee and donut chain AT&T advertising and analytics. CPP Investment Board Europe S.à Tim Hortons for Tim Hortons to open “The combination of AT&T adver- r.l., and Silicon Valley-based growth more than 1,500 stores in China over the tising & analytics and AppNexus will equity firm TCV together are acquiring next ten years. “China’s population and help deliver a world-class advertising a minority stake in sports data provider vibrant economy represent an excel- platform that provides brands and Sportradar from private equity firm EQT lent growth opportunity for Tim Hortons publishers a new and innovative way and minority shareholders. The deal in the coming years,” says Tim Hortons to reach consumers in the market- values the St. Gallen, Switzerland-based president Alex Macedo. place today.” AT&T bought DirecTV company at EUR 2.1 billion ($2.4 billion). Tim Hortons operates more than in 2015 for $48.5 billion and has since Carsten Koerl, founder and CEO, is re- 4,700 restaurants worldwide. The launched streaming subscription TV taining his entire majority stake and will company is owned by Oakville, Ontario- service DirecTV Now. In 2016, AT&T continue to drive its future development based Restaurants Brands International acquired video content streamer and growth. Inc. (NYSE: QSR) that also has the Burger Quickplay Media to support DirecTV EQT is also reinvesting a portion of King and Popeyes chains in its portfolio. Now. AppNexus’ investors include: its sale proceeds into Sportradar. Ad- — Demitri Diakantonis News Corp. (Nasdaq: NWSA), WPP, ditional existing shareholders include: Fidelity, TCV, Microsoft Corp. (Nasdaq:

10 Mergers & Acquisitions September 2018

010_MAJ0918 10 8/8/2018 12:10:58 PM MSFT), Deutsche Telekom, and Khosla. our strategy of building our auto Goldman Sachs & Co. (NYSE: GS) and care business, both organically and Goodwin are advising AppNexus. J.P. through acquisitions,” says Energizer Morgan Securities LLC (NYSE: JPM) is CEO Alan Hoskins. advising the company’s selling stock- In addition to its Energizer battery holders. brand, Energizer has an auto care — Demitri Diakantonis division that consists of car freshen- ers and polishes that includes the

Auto M&A shines BLOOMBERG NEWS brands: Refresh Your Car!, California the Nu Finish Car Polish and Nu Fin- Scents, Driven, Bahama & Co., Lexol ish Scratch Doctor auto care brands and Eagle One. Sawaya Partners LLC Energizer acquires the Nu from consumer products company is advising Energizer. M&A Finish brands to grow car Reed-Union. “Adding the strength — Demitri Diakantonis care business of the Nu Finish and Scratch Doc- tor brands to our existing Lexol and Battery maker Energizer Holdings Eagle One products expands our auto Inc. (NYSE: ENR) has agreed to buy appearance portfolio and continues

TheMiddleMarket.com September 2018 Mergers & Acquisitions 11

011_MAJ0918 11 8/8/2018 12:11:02 PM Private Equity Perspective

want to travel Africa and Inclusion investing skip the mediocre,” according to the company website. A growing movement is nurturing companies led by women. “Inclusion investing is Exponent Exchange brought together 200 women from private investing either in compa- equity firms, investment banks, startups and M&A advisory firms. nies that are led by diverse entrepreneurs, or have products and services that cater By Mary Kathleen Flynn to those markets.” Pendleton explained. “When I say diverse entrepreneurs, it could As Indra Nooyi ends her 12-year run in companies were also among the featured be entrepreneurs of color, the top job at PepsiCo Inc. (NASDAQ: PEP), speakers, including Natalia Oberti Noguera, it could be LGBT entrepre- the number of women CEOs in the S&P who founded Pipeline Angels. The group is neurs, it could be women, 500 drops to 24. But in the middle market, “changing the face of angel investing and it could be veterans, or dis- a growing movement is nurturing women- creating capital for women and non-binary abled entrepreneurs. People led companies. In July, a new group called femme social entrepreneurs.” Since Pipeline think that they are niche Exponent brought together 200 women from Angels launched in April 2011, more than 300 markets, but they’re actually private equity funds, investment banks, startups and M&A advisory firms for the Expo- nent Exchange, an event that featured Sallie Krawcheck as the keynote speaker. Kraw- check, who previously served as the CEO of Merrill Lynch Wealth Management and Citi Private Bank, today is the founder and CEO of Ellevest, an online investing platform for women. Exponent was founded in 2017 by a wide range of dealmakers, including Nanette Heide of Duane Morris LLP and Michelle Van Hellemont from Accordion. Mergers & Acqui- sitions participated in the event as an in-kind sponsor, and I moderated a panel. (See page 36 for more photos.) Many of the speakers at Exponent Ex- change were women who lead companies, including: Meghan Asha, founder and CEO of Seble Tareke-Williams, Lorine Pendleton FounderMade, which connects entrepreneurs with distributors, influencers and investors, members have graduated from the group’s growing in terms of spend- and helps people discover new wellness, angel investing boot camp. ing dollars and market size. beauty and food brands; Rica Elysee, founder Pipeline Angels members Seble Tareke- The demographics in the and CEO of BeautyLynk, which provides on- Williams and Lorine Pendleton spoke at the U.S. are changing, so white

DIANA FABRICANTE demand beauty services; and Nancy McKay, conference. Pendleton focuses on “inclusion males will be a minority in a CEO of Nest Fragrances, a maker of home investing.” One of her investments is Taste- number of years.” Visit www. fragrances founded by entrepreneur Laura makers Africa, a startup founded by entre- themiddlemarket.com to Slatkin in 2005. preneur Cherae Robinson. Tastemakers Africa watch our video interview Investors interested in backing women-led provides “the definitive guide for people who with Pendleton. M&A

12 Mergers & Acquisitions September 2018

012_MAJ0918 12 8/8/2018 12:12:24 PM

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013_MAJ0918MAJ030118_Analysis.indd 13 10 6/29/20188/8/2018 11:30:35 9:50:23 AMPM The Buyside

Inc. (NYSE: BRK.A), along with more than 40 beauty P&G’s new M&A course brands to Coty Inc. (NYSE: COTY). P&G has also sold the Two years after completing its restructuring plan, the consumer Tag fragrance brand to My conglomerate is ready to make some acquisitions. Imports USA and the license of the Christina Aguilera fra- By Demitri Diakantonis grance to Elizabeth Arden. Now P&G owns 65 brands across 10 product catego- ries, including baby and “What you have tion, and/or supply chain, which often is what feminine products, house- to have is the brand enables you to turn these brands from small, hold, personal and skincare. consumers prefer, unprofitable brands to because then retail- mid-sized to bigger profit- ers want to carry it, able businesses. And that’s because it builds the exciting, because almost basket,” Procter & every category, there is Gamble Co. (NYSE: a meaningful consumer PG) CEO David segment, and it is growing Taylor said, outlining fast.” the company’s new strategy during its fiscal In 2018, P&G an- fourth quarter earnings call in July. P&G’s nounced plans to buy $16.5 billion in revenue for the period missed Merck KGaA’s consumer- expectations of $16.55 billion. health business for $4.2 P&G will focus on growing its top 25 billion. The deal includes brands including Bounty paper towels, Char- the Femibion and Neu- min toilet paper, Crest toothpaste, Pampers robion over-the-counter diapers, Nyquil cough cold medicine, and healthcare brands that Tide laundry detergent, while seeking acquis- help relieve muscle, joint tiions. and back pain, colds and “We will supplement when we see an headaches. opportunity that gives us either people P&G is also purchasing capabilities or a key brand that we think we skincare brand First Aid can turn from a small brand into a bigger Beauty. First Aid, founded P&G CEO David Taylor brand and grow over time,” Taylor said dur- in 2009 and based in New- ing the earnings call. “How I’d contrast this ton, Massachusetts, makes with potentially the past is we’re not look- products that are designed for sensitive skin, With P&G being smaller ing to proliferate a ton of brands and we redness, dry skin and eczema. and leaner again, it will look want a huge number of small brands. What to thrive for another 180 we want to do is grow our big brands, and Divestitures years. PROCTER & GAMBLE we believe it’s very important that we plant Over the last four years, P&G has exited “We need to strengthen seeds in high-growth areas, either organi- more than 100 brands in order to focus on the long-term health and cally or through acquisition, and make them faster-growing business lines. competitiveness of our bigger brands by bringing our capability be The process saw P&G sell Duracell bat- brands,” Taylor adds. M&A it product, package technology, communica- teries to Warren Buffett’s Berkshire Hathaway

14 Mergers & Acquisitions September 2018

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015_MAJ0918 15 8/8/2018 9:50:23 AM Holleb & Coff Alumni WHERE ARE THEY NOW?

016_MAJ0918 16 8/8/2018 12:13:46 PM By Danielle Fugazy | Photography by Jeff Sciortino

Holleb & Coff Alumni WHERE ARE THEY NOW?

While some of the firms that were instrumental in launching the middle market back in the 1980s and 1990s have long since been shuttered, their legacy lives on. They proved to be excellent training grounds for many successful dealmakers. Heller Financial certainly belongs in this category, and Mergers & Acquisitions featured its alumni a few years ago. Another firm with a far reach is Holleb & Coff, a Chicago law firm that closed in 2000, after a nearly 50-year run. Founded by Marshall Holleb and Morris Coff in 1951, the firm advised prestigious clients, such as American National Bank, Hollinger International Inc. and LaSalle Bank. Revenue topped $40 million in 1997. In its heyday, Holleb & Coff employed 130-plus attorneys; it was the law firm to work for in the Midwest. Drawn to the supportive culture, new associates and seasoned partners alike enjoyed working at the venerated firm. Many of the lawyers who worked at Holleb & Coff back in the day are making a significant impact on M&A today. Here’s a look at where some of them are now.

017_MAJ0918 17 8/8/2018 12:14:08 PM Cover Story: Holleb & Coff Alumni: Where are they now?

go to a startup, and the White Sox It was very exciting,” remembers Cor- John Corvino called me,” recalls Corvino. “I gave vino, who added that the firm had a Theodore Koenig up the speculative job. Major League nice environment. Baseball had a lot of allure.” Today, “They made an effort to make new the American League baseball team people feel welcome. Jerry Wexler, is home to veteran baseball player one of the firm’s partners, would have Jose Abreu and future stars Reynaldo an annual party at his farm where he Lopez and Carlos Rodon. gave all the kids hay rides. This was Corvino started his law career as a polished lawyer, and he would be a tax attorney at a smaller law firm, on his tractor. I had young children which was one of many smaller law at the time. It really was a family at- practices Holleb & Coff snatched mosphere, which I appreciated,” says up over the years. “When I came to Corvino. Holleb, the firm was hovering at just Although he loved his work at Hol- under 100 attorneys, and it was a very leb, opportunity knocked and Corvino entrepreneurial place. Even though answered. He left the law firm to go I was in the tax world, I would be in-house at CRL Industries and then brought in and expected to partici- at Holden Industries, which were both Mergers & Acquisitions readers know Landing the job as the general pate in more than just my tax opinion. Rust Belt manufacturing companies. Theodore (Ted) Koenig well as the counsel to the Chicago White Sox in If you had the desire to reach to other “I had an opportunity to go in-house founder and CEO of Monroe Capital, represented a dream come true for practice areas there were attorneys and get into management. I always the Chicago-based lending firm that John Corvino. “I knew the CFO at the happy to bring you in. You were able used Holleb for all my corporate work works with many well-known private White Sox for years. I had just left my to get involved in transactions very after I left. I really respected the team equity firms today. However, while at in-house job at Holden, was about to deeply because it was a smaller firm. there,” says Corvino. Holleb, Koenig worked his way up to one of three managing partners and had a thriving business. meeting that the firm was going to 172-lawyer corporate practice group Koenig had come to Holleb from Brian Kerwin target being a “Midwest power house” and on the five-partner firm executive Winston Strewn as a young associ- law firm, with one office focused pri- committee today,” says Kerwin, who marily on Midwest clients. Kerwin was works with many of the most recogniz- not on board with this strategy. able banking names in M&A includ- “I was representing clients all over ing CIBC, Huntington National Bank, Kenneth Serota the U.S. who more and more frequent- Wintrust, Fifth Third Bank, MB Finan- ly were doing transactions nationally,” cial, First Midwest Bank, Byline Bank, says Kerwin. “Staying at a regional CapX Partners, Monroe Capital and Midwest law firm didn’t bode well for Northern Trust Company, among oth- my clients and where I was headed ers. Today, Duane Morris is a national, in my career. Many of us told senior 800-lawyer firm. management we did not agree, but Kerwin, who was recruited to the they were not changing their minds. As firm from Skadden Arps by Theodore a result, I met with other law firms, but Koenig, still has fond memories of his Duane Morris was the right fit for me.” Holleb days. “It was a great place to Holleb’s loss was Duane Morris’ work until the end. I still keep in touch As a partner at Holleb, Brian Kerwin gain. Kerwin left Holleb and opened with many of my old colleagues from focused his practice on corporate M&A Duane Morris’ Chicago office in Holleb. Fast forward to today, and a and financing transactions and was July 1999 with a few other partners. number of the lawyers from Holleb with the firm nearly to the end. He lov- “Eventually 20-plus lawyers joined are doing impressive things with a na- ing life at Holleb until the firm’s lead- us. We are now just shy of 80 lawyers tional scope. We definitely had good ership announced at a partner off-site in Chicago, and I am chair of the training at Holleb,” says Kerwin.

18 Mergers & Acquisitions September 2018 TheMiddleMarket.com

018_MAJ0918 18 8/8/2018 12:14:28 PM Cover Story: Holleb & Coff Alumni: Where are they now?

It was very exciting,” remembers Cor- ate and was the 19th lawyer hired fund. Koenig raised most of the lim- vino, who added that the firm had a Theodore Koenig at Holleb. “I made partner relatively ited partner capital from the banks nice environment. quickly and built a pretty good prac- he had represented as a lawyer at “They made an effort to make new tice. We grew the firm over the 10-year Holleb, including LaSalle Bank, Wells people feel welcome. Jerry Wexler, period I was there to about 145 lawyers, Fargo, GE Capital, Harris Bank, Cole one of the firm’s partners, would have I had about 35 people working with me Taylor Bank and Fifth Third. “These an annual party at his farm where he in the M&A and corporate finance de- people were willing to take a chance gave all the kids hay rides. This was partment. I worked with a lot of good on me and my vision for a new type a polished lawyer, and he would be lawyers there. The firm had ethos, of finance company. I also was on his tractor. I had young children culture and leadership,” says Koenig. able to build a team from some of at the time. It really was a family at- Still, Koenig, very much a business- the very best bankers I had met and mosphere, which I appreciated,” says man, made a decision to leave the worked with as an attorney from places Corvino. practice of law in 1998. He wanted like CIT, GE Capital, LaSalle Bank, Although he loved his work at Hol- to start a finance business. “It wasn’t Finova and JPMorgan Bank. We had leb, opportunity knocked and Corvino about the money. I wanted to fulfill a our ups and downs during the financial answered. He left the law firm to go dream. I wanted to build a business and crisis, but we stuck with it and perse- in-house at CRL Industries and then create something more permanent. My vered,” says Koenig. at Holden Industries, which were both Mergers & Acquisitions readers know law business was booming, but in the Today, Monroe has more than $6 bil- Rust Belt manufacturing companies. Theodore (Ted) Koenig well as the law, the alignments are all wrong—the lion of assets under management, over “I had an opportunity to go in-house founder and CEO of Monroe Capital, more successful you are as a lawyer, 100 employees, seven offices through- and get into management. I always the Chicago-based lending firm that the more hours that you are required out the U.S. and 400 borrower com- used Holleb for all my corporate work works with many well-known private to work and bill. My quality of life was panies in its portfolio. The most recent after I left. I really respected the team equity firms today. However, while at going in the wrong direction. At the 2018 private credit Monroe fund is over there,” says Corvino. Holleb, Koenig worked his way up to time, with four young children, leaving $1 billion. one of three managing partners and the practice of law and the firm was a While at Holleb, Koenig was respon- had a thriving business. very personal decision,” says Koenig. sible for hiring and managing some key 172-lawyer corporate practice group Koenig had come to Holleb from Koenig launched Monroe in 2000 people, including Brian Kerwin, Kenneth and on the five-partner firm executive Winston Strewn as a young associ- and raised $38 million for its inaugural Serota, and Michelle Warner. committee today,” says Kerwin, who works with many of the most recogniz- able banking names in M&A includ- Kenneth Serota is president of Hu- game that is M&A, and in my role, ing CIBC, Huntington National Bank, Kenneth Serota Friedy Manufacturing Co., a global I am at the forefront of identifying, Wintrust, Fifth Third Bank, MB Finan- leader in dental instrument manu- negotiating and onboarding acquisi- cial, First Midwest Bank, Byline Bank, facturing. The company has grown tions that will power our growth into CapX Partners, Monroe Capital and substantially with Serota on board. the future,” says Serota. “We do about Northern Trust Company, among oth- The company has a strong focus on one acquisition a year, and in the cur- ers. Today, Duane Morris is a national, strategic acquisitions. In 2017, Hu- rent climate, I spend a good portion 800-lawyer firm. Friedy purchased J. Palmero Sales Co., of my time traveling, researching and Kerwin, who was recruited to the a family-run dental products company developing relationships to gather the firm from Skadden Arps by Theodore located in Stratford, Connecticut. information we need to make the next Koenig, still has fond memories of his Over the past several years, the com- best move.” Holleb days. “It was a great place to pany has acquired multiple brands, During his days at Holleb, Serota work until the end. I still keep in touch including J & J Instruments, Julius wore two hats. He was both a corpo- with many of my old colleagues from Wirth and Karl Schumacher. Hu-Friedy rate and tax attorney. “Holleb was an Holleb. Fast forward to today, and a is pursuing acquisitions to grow. amazing learning environment. My number of the lawyers from Holleb “The dental industry has expe- in-the-trenches education there really are doing impressive things with a na- rienced a tremendous amount of helped to shape my approach, in ad- tional scope. We definitely had good consolidation in the last few years. I’ve dition to immersing me in the disci- training at Holleb,” says Kerwin. always been fascinated by the chess pline of M&A,” says Serota.

TheMiddleMarket.com September 2018 Mergers & Acquisitions 19

019_MAJ0918 19 8/8/2018 12:14:31 PM 20 Mergers & Acquisitions September 2018

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021_MAJ0918 21 8/8/2018 9:50:23 AM Cover Story: Holleb & Coff Alumni: Where are they now?

There were about 50 lawyers at decision makers, and we were able to publishing company, and a client of the firm when Serota joined. “It had learn a lot beyond legal,” says Serota. the firm’s. During his time at Hollinger, an entrepreneurial culture. The firm “The partners were really approach- the company actively bought and started off with a bunch of attorneys able and cared about the develop- sold companies until it was ultimately who co-invested in the real estate ment of the younger attorneys. We bought by Leonard Green & Partners, deals they were putting together. Our staffed lean, so I really got to go and Serota became CEO of the new client base was primarily entrepre- deeper into deals at a very young age, company, Liberty Publishing. The neurial owner-operated companies, not just drafting documents.” asset was sold to Fortress Investment as opposed to the multi-national After seven years at the firm, Serota Group seven years later in 2005 and conglomerates. As a result, we were was given the opportunity to work in became Gatehouse media. It was then given access to the strategists and house at Hollinger International, a that he moved on to Hu-Friedy.

ner was ready to leave, Holleb & Coff BRK.A) is USG’s largest shareholder. Michelle Warner was happy to have her. Like so many “I am now part of the management of her colleagues, Warner loved the team, and it has been a terrific experi- freedom to learn that came with prac- ence. About half of what I do is legal, ticing law at Holleb. “It was a great and half is management. Shortly after firm. I could work on a financing, then I started, we sold off a big division of a securities offering or an M&A deal. I the company to a distribution busi- had a lot of responsibility, and I loved ness, and I ran that transaction. I have it,” says Warner. “After working there, I spent the last six months working was able to move to my next job really on the impending sale of USG,” says knowing how to do things. Still, I went Warner. back to my colleagues at Holleb many “There was a nice culture at Holleb. times during my first year at Motorola, People got a long with each other, ac- and they helped me. They were a knowledged you had a life outside of great resource.” work, but you also took your work seri- Warner left Holleb to become in- ously. We made lots of connections as house counsel at Motorola and stayed young lawyers and they allowed me to at that company for 18 years. “It was do things that I may not have had the 1997, and Motorola was starting to go opportunity to do at larger firms. It through a lot of changes. They did a served me well,” says Warner. As senior vice president, general number of spinoffs and divestitures Other noteworthy people who counsel and corporate secretary at and, as the company got smaller, I worked at Holleb include: Susan Marr, USG Corp., Michelle Warner is busy, took on more and more responsibility. former co-president, Jet Support but it’s nothing she couldn’t handle After five years, I was running the M&A Services, Inc.; Alvin Marr, former senior after proving herself as a multitasker legal practice,” says Warner. vice president and general counsel of at Holleb. Warner actually sat across Two years ago, Warner left Mo- Midas, Inc.; Keith Shapiro, co-chair of the table from Marshall Holleb as a torola for a new opportunity at USG Greenberg Traurig’s Chicago office, young attorney at McDermott Will Corp. (NYSE: USG), a publicly-traded national chairman of the firm’s global and Emery. That was how she came Fortune 1000 company that makes restructuring and bankruptcy practice; to know the future firm co-founder. sheetrock and is currently being ac- and Benjamin Nortman, executive vice She wasn’t looking to leave when he quired by German manufacturer Gebr. president, Hilco Global. M&A approached her about joining the new Knauf KG for $7 billion. Warren Buf- firm. However, a year later when War- fet’s Berkshire Hathaway Inc. (NYSE:

22 Mergers & Acquisitions September 2018

022_MAJ0918 22 8/8/2018 12:15:06 PM Old SchoolOld School

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023_MAJ0918Untitled-1 1 23 7/31/20188/8/2018 9:50:237:53:31 AMPM Smart Energy

Companies throughout the energy industry are focused on improving operational efficiencies and analytical capabilities, generating a lot of middle-market M&A activity. These improvements are urgent for oil and gas companies, because depressed prices mean profits are hard to come by, says Caroline Blitzer Phillips, who advises clients on energy deals as a partner at law firm Vinson & Elkins. They are also essential for renewable energy, which “has been quite expensive in some cases, because the infrastructure is not in place.” From providers of “smart grids” to developers of energy management software, here are 13 recently acquired targets.

By Mike Schnitzel

24 Mergers & Acquisitions September 2018 TheMiddleMarket.com

024_MAJ0918 24 8/8/2018 12:13:09 PM Smart Energy

TheMiddleMarket.com September 2018 Mergers & Acquisitions 25

025_MAJ0918 25 8/8/2018 12:13:10 PM Feature

1. Aclara Technologies that help building owners measurably $20 million in a deal that closed in (bought by Hubbell) increase energy efficiency and address August. Insight retained a significant climate change,” said Donny Simmons, minority stake. Genstar invests in the Hubbell (NYSE: HUBB) purchased president of the commercial HVAC software, industrial technology, health Aclara Technologies for $1.1 billion business of Ingersoll Rand, in a release. care and financial industry sectors. in a deal that was completed in Drillinginfo provides information February. Hubbell, which manufactures 3. BHI Energy and analytics to more than 3,500 electrical and electronic products for (AE Industrial Partners) energy companies globally and construction and utility companies employs 675 staffers at its Austin, purchased Aclara to increase its own Private equity firm AE Industrial Texas, headquarters. In a recent smart infrastructure capabilities. Partners LP purchased BHI Energy report, Drillinginfo said that the U.S. Aclara’s smart technology includes for an undisclosed sum in a deal is expected to supplant Russia as the advanced metering infrastructure, completed in August 2017. BHI, a leading global producer of crude oil, meters, software and installation maintenance and staffing company, increasing the availability of funding services. Aclara provides data, increases AEI’s servicing and repair for M&A. “Our investment focus in the analytics and technology to water, gas capabilities and brings in a large client software sector is to identify companies and electric utilities. “Together with base from the power generation, oil with market-leading technologies Aclara, Hubbell will be even better and gas, electricity transmission and operating in dynamic growth markets,” positioned to serve customers through distribution sectors. The deal was said Eli Weiss, managing director a differentiated smart grid solution completed at a time when service and of Genstar, in a release. “As with our and expanded portfolio,” said Hubbell repair providers were receiving a lot of earlier successful partnerships, we CEO David Nord in a statement. Aclara attention from buyers. “We are excited will provide the additional investment had $500 million in revenue and an to work with the outstanding team at capital and resources to further adjusted Ebitda of $90 million for the AEI and benefit from their deep and broaden Drillinginfo’s customer fiscal year ended Sept. 30. unique experience partnering with relationships and execute their growth specialty service providers in our end strategy.” Jeff Hughes, CEO and 2. Agilis Energy markets,” said Bob Decensi, CEO of BHI president of Drillinginfo, said the deal (Ingersoll Rand) Energy, in a release. “BHI is well known would provide his company with the for its commitment to safety, quality, resources to expand. Global diversified industrial customers and employees. AEI brings manufacturing behemoth Ingersoll additional expertise, relationships 5. EnerNOC Rand (NYSE: IR) completed a deal and financial resources necessary to (Enel) for energy data analytics company continue to grow our suite of service Agilis Energy for an undisclosed sum offerings we can provide to our Multi-national power utility in April. Agilis uses patented, smart- customer base.” In July, AEI closed its company Enel Group (Borsa Italiana: meter energy analytics applications to second fund with $1.36 billion in equity ENEL) purchased EnerNOC (Nasdaq: quantify energy usage patterns with commitments. Fund II is making control ENOC) in August 2017 for $300 the aim of helping energy companies investments in technical manufacturing, million. EnerNOC provides energy with business in the commercial, distribution and supply chain management software to energy multi-family residential and industrial management, MRO (maintenance, companies. EnerNOC went public sectors achieve annual energy repair and overhaul), and industrial in 2007 and grew its geographic savings. Agilis is used in more than service-based businesses. footprint through a series of deals. “In 3,300 building worldwide. Its software combining forces with the Enel Group, focuses on energy use and patterns, 4. Drillinginfo we look forward to accelerating the providing information on where (Genstar Capital) growth of our core businesses and and how customers can reduce total to delivering ever more value to our building energy use. The deal bolsters PE firm Genstar Capital purchased customers, as we lead the transition to Ingersoll Rand’s analytical capabilities. a majority stake in Drillinginfo from a more sustainable, distributed energy “Demand is high for digital solutions Insight Venture Partners for a reported future,” said Tim Healy, who served as

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chairman and CEO of EnerNOC at the will make geothermal heating and time of the acquisition and has since cooling affordable for homeowners, 7. iLandMan left the company. said James Quazi, co-founder and (P2 Energy Solutions) chief technology officer at Dandelion. 6. Geo-Connections “At Dandelion, we are committed Oil and gas software company (Dandelion Energy) to growing the number of home P2 Energy Solutions announced in geothermal installations by making May it had signed a deal to acquire Geothermal heating and cooling geothermal affordable. Enabling our iLandMan for an undisclosed sum. system distributors Dandelion Energy in installation partners to design high- iLand Man is a cloud-based land March announced a deal to buy Geo- quality systems quickly is critical to and lease management software Connections, which provides software this mission, and Geo-Connections provider whose software aims to for geothermal energy companies, has developed the most advanced help energy companies eliminate for undisclosed terms. Dandelion is a tools for this.” Ryan Carda, co-founder waste by organizing information startup company that was conceived and president of Geo-Connections, is on all company projects, maps and in the research and development lab now principal engineer for Dandelion reports in one place. “P2 continuously of Google’s parent company Alphabet and is focused on standardization and strives to help our customers drive (Nasdaq: GOOGL). The goal of the automation of the system engineering down costs and improve overall acquisition is to build technology that process. performance by ensuring we have

Save the Date! 2018 Private Equity Showcase Monday, October 15, 2018 5:00-8:00pm

Lomas Santa Fe Country Club Solana Beach, CA 92075

SPONSORS WANTED

Contacts: ACG San Diego PE Advisory Council: Nick Lopez, [email protected] 858.259.7654 x106 David H. Crean, [email protected], 858.461.9490 www.acg.org/sandiego

TheMiddleMarket.com September 2018 Mergers & Acquisitions 27

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the solutions that meet the variety of information system (GIS) software to analyze, and monitor large amounts needs of the modern upstream oil and energy companies focused on oil and of operational data serves to greatly gas company,” said P2 CEO J. Scott gas, mining, pipelines, renewable wind improve the safety, profitability, Lockhart. “iLandMan expands our energy and utilities. The Landworks reliability and regulatory compliance ability to optimize lease acquisition acquisition brings Pandell three suites standards of oil and gas assets.” and land management processes for of software products and a client base companies of all sizes, and brings with of more than 100 companies. “With the 11. PowerAdvocate it excellent customers, software, and acquisition of LandWorks, Pandell can (Verisk) dedicated colleagues.” now offer a full suite of land solutions to companies operating in Canada, the Analytics company Verisk (Nasdaq: 8. Innotap USA, and globally,” said Greg Chudiak, VRSK) is looking to broaden its market (MCG Energy Solutions) president and CEO of Pandell. “Like intelligence capabilities with its $280 Pandell, LandWorks is well recognized million purchase of PowerAdvocate, MCG Energy Solutions completed for its innovation, reliability, and completed in November. Verisk a deal in March for analytics provider customer-focused services. We are provides analytics to companies Innotap for an undisclosed sum. MCG looking forward to seeing what will be in the financial services, insurance is a software company that specializes achieved when two industry leaders and natural resources sectors. “The in operating and financial systems for join forces to deliver land software tools acquisition will expand Verisk’s companies in the wholesale energy that are second to none.” existing offerings to the energy marketplace. The acquisition gives sector by adding PowerAdvocate’s the buyer access to Innotap’s data 10. NuGen Automation proprietary spend data and cost and analytics, which the firm will use (LineStar Integrity Services) models,” Scott Stephenson, CEO of to support trade execution within Verisk, told Mergers & Acquisitions. MCG’s operating systems. Innotap’s LineStar Integrity Services These enhanced offerings will provide data and analytics are used by energy purchased NuGen Automation, for our customers with unique insight to and commodities traders in real-time an undisclosed sum, in a deal that increase profitability.” PowerAdvocate to help them capture opportunities closed in February. LineStar, owned has a proprietary data set on $2.7 in the market. MCG plans to use the by private equity firm First Reserve, trillion of data spending. acquisition to continue its growth in the is looking to grow its business in the energy software space, said co-founder pipeline integrity, maintenance and 12. Specialized Desanders Inc. and CEO Mike Prickett, in a release. repair services, and the acquisition of (Morgan Stanley Energy “Innotap’s line of pre-trade analysis NuGen adds capabilities to the firm in Partners) and transaction monitoring products the areas of supervisory control, data extends MCG’s focus on the front office acquisition systems and information Private equity firm Morgan Stanley and reinforces our strong portfolio in technology. NuGen focuses on Energy Partners completed a deal to the front, middle and back offices. providing automation, compliance acquire Calgary-based Specialized We are very excited to add Innotap’s and technological solutions for the Desanders Inc. for an undisclosed products and people to MCG’s rapidly upstream and midstream markets of sum in March. The deal gives MSEP expanding footprint in the energy the oil and gas industries. The move is an interest in the oil sands business software space.” part of a larger drive for growth, both centered in the Canadian province of through acquisitions and organically, Alberta. SDI builds, sells and services 9. Landworks said LineStar CEO Daniel Cowan, the equipment that removes sand (Pandell Technologies) in a release. “NuGen represents an and other solids when crude oil is important building block to grow extracted from oilfields. The company Energy software company Pandell our energy, integrity, regulatory has long-term relationships with Technologies completed a deal for compliance, and control center Canadian energy companies and Landworks, for undisclosed terms, operation offerings. The company’s has been growing its business in the in January. Landworks provides proprietary business solutions and U.S. The move is in line with MSEP’s asset management and geographic in-depth knowledge of how to capture, strategy of investing strategically in

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established energy businesses primarily a deal to purchase U.S.-based Utopus Utopus Insights significantly improves based in North America. “The North Insights for $100 million. Vestas, a Vestas’ existing market-leading American energy industry continues to global wind power company based capabilities for advanced analytics and increase productivity, and innovative in Denmark, made the deal in an integrated energy software solutions. companies like SDI have proven critical effort to provide customers with We will now be able to provide our in supporting this success,” said John better predictability, increased energy customers improved forecasting, Moon, head of MSEP. “SDI will continue production and more operational output optimization and coordination to play an important and growing role efficiency through analytical between assets, and support the larger in enabling the next generation of technology and software. “Vestas’ energy ecosystem’s increased uptake completion techniques.” strategic objective is to accelerate the of renewable energy.” Utopus Insights transition towards a fully decarbonized spun out from International Business 13. Utopus Insights energy sector in the most efficient Machines’ (NYSE: IBM) Smart Energy (Vestas Wind Systems) and cost-effective way possible, Research Institute and has personnel both for our customers and for our with expertise in data science, energy, Vestas Wind Systems (CPH: VWS) planet,” said Anders Runevad, Vesta meteorology, software and utility announced in February it had reached group president and CEO. “Acquiring operations. M&A

TheMiddleMarket.com September 2018 Mergers & Acquisitions 29

029_MAJ0918 29 8/8/2018 12:13:14 PM M&A Scene

Star athletes invest in juice joints, steak houses, wineries and candy

From basketball’s LeBron James to IndyCar driver Danica Patrick, from golf’s Greg Norman to the WTA’s Williams sisters, many celebrity athletes are also entrepreneurs.

Greg Norman owns Greg Norman Australian Grille. Race Michael Jordan’s The Steak House. Don Shula has a chain of car driver Danica Patrick owns winery Somnium, which is 25 steakhouses and burger joints that carry his name. Maria Latin for “dream.” Dale Earnhardt Jr. owns Dale Jr.’s Whisky Sharapova owns candy maker Sugarpova. Venus Williams River, known for “beer & wings.” LeBron James invests in owns a handful of Jamba Juice smoothie makers. Serena pizza chain Blaze Pizza. Michael Jordan is the founder of Williams is a backer of Daily Harvest. M&A BLOOMBERG NEWS, NEWSCOM, SCHULA’S STEAK HOUSES BLOOMBERG NEWS, NEWSCOM, SCHULA’S

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combat cyclicality. A well-run dealership can provide high returns on invested capital and There is an aging dealer- free cash flow from operations. So, ship owner body and many there is a potential double benefit to of these owners either do the investment because the asset itself not have family to take over can appreciate, but while that is oc- the business or there is not curring, the business is also generating the talent available to pass annual cash flow that can either be re- the dealerships to the next invested or harvested. In addition, there generation. In addition, is a natural barrier to entry through there is tremendous innova- the original equipment manufacturer tion and change occurring (OEM) approval process, so deciding to in the industry and when get into the industry is not a decision as that occurs there are usually easily undertaken as with many other two camps, folks who see industries. change as obstacles and The process to obtain approval others who view change as is thorough and potentially requires a significant opportunity to thoughtful modification of typical enter markets and indus- investment models or operational tries. models, but the benefit of being in This dynamic is creating an industry that is not fully fluid and anxious sellers and aggres- profitable can be very attractive to the sive buyers. Finally, there correct investor. Many car dealerships lack succession plans and the resources to adapt to the rapidly changing automobile industry, is a reality in the industry making them ripe targets for M&A. that the traditional one- or What are the notable middle- two-dealership operation is market car dealership deals in struggling or will be strug- recent months? Why car dealerships sell gling soon in many markets. • Day Automotive Group in Pittsburgh Consolidation has always purchased by Lithia Motors Inc. AutoCanada and Lithia Motors are snatching up acquisitions, been a factor in auto retail, (NYSE: LAD) says Holland & Knight’s Stephen Dietrich. but there is a significant • Grossinger Auto Group in Chicago increase in the market view purchased by AutoCanada (TXS: By Keith Button that consolidation will be ACQ) necessary in many markets • Six Prestige Motors dealerships in to survive and thrive. New Jersey and New York purchased Consolidation has become a driving force thoughts on trends in the space and what by Lithia Motors for M&A in the U.S. car dealership space, middle-market private equity firms should Why are car dealerships • A majority stake in Prime Motor with autonomous vehicles, ride-sharing and consider when looking at potential deals for attractive to private Group, based in Westwood, Massa- other influences contributing as well. An car dealerships. equity firms? chusetts, acquired by Capstone Au- estimated 1,080 car dealerships were sold to There are several busi- tomotive Group, now Prime Automo- 612 buyers between 2014 and 2017, reports What is driving M&A in car nesses involved with the tive Group, a GPB Capital company Kerrigan Advisors, an Irvine, California, sell- dealerships? operation of a new vehicle side advisor to auto dealers. Several factors are pushing current activ- dealership--new vehicles, What advice do you have for PE

ADOBE STOCK The number of U.S. dealership groups with ity. There is a growing number of current used vehicles, service, firms considering investing in car more than 10 dealers rose to 141 in 2017, up dealers who are looking to exit the space financing and insurance, dealerships? from 90 in 2011. We asked Stephen Dietrich, either because of succession issues or from a at a minimum--so there is Take the time to learn the industry a Denver-based Holland & Knight attorney desire to not have to work through the com- a diversified revenue and and what makes a dealership profit- with an auto dealer M&A practice, for his ing changes in retail automotive. profit model, which helps to able. I realize this sounds like generic

32 Mergers & Acquisitions September 2018 TheMiddleMarket.com

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combat cyclicality. advice that anyone should take for The OEMs in this industry are highly A well-run dealership can provide any industry, but the dealership space focused on ensuring that an individual high returns on invested capital and is unique in both its operations and in person who understands the business There is an aging dealer- free cash flow from operations. So, how M&A deals get done. has day-to-day operational control. ship owner body and many there is a potential double benefit to The accounting methods and This aspect of the approval is some- of these owners either do the investment because the asset itself conventions are unique to the industry thing any private equity investor will not have family to take over can appreciate, but while that is oc- partly due to the different businesses want to understand and internalize. I the business or there is not curring, the business is also generating being run under the dealership and have seen this create significant stress the talent available to pass annual cash flow that can either be re- partly due to the manner in which rev- with some investors because the level the dealerships to the next invested or harvested. In addition, there enue is received and recognized from of control provided to the operator generation. In addition, is a natural barrier to entry through different sources. is significant. It is possible to have there is tremendous innova- the original equipment manufacturer All of this results in a need to under- investment protections, but they are tion and change occurring (OEM) approval process, so deciding to stand the operations in detail to fully more nuanced in this industry so the in the industry and when get into the industry is not a decision as comprehend the financial statements PE investor will want to understand the that occurs there are usually easily undertaken as with many other and operations. With respect to the requirements and how those will inter- two camps, folks who see industries. M&A process, there is a break with act with investment and operational change as obstacles and The process to obtain approval what we see in many other industries models. others who view change as is thorough and potentially requires relating to documentation, diligence a significant opportunity to thoughtful modification of typical and process. What other trends are affecting enter markets and indus- investment models or operational In many other industries full deals in the auto sector? tries. models, but the benefit of being in diligence is completed as the main Autonomous vehicles will affect This dynamic is creating an industry that is not fully fluid and transaction documents are drafted and what kinds of cars are purchased and anxious sellers and aggres- profitable can be very attractive to the negotiated, with final execution of the who actually owns the vehicles. We sive buyers. Finally, there correct investor. definitive agreements occurring after are starting to see subscription ser- is a reality in the industry all diligence is complete. In the auto vices from the OEMs and some dealer that the traditional one- or What are the notable middle- retail space there is often initial finan- groups, which will affect if a vehicle is two-dealership operation is market car dealership deals in cial diligence done, but then the main purchased, and related financing and struggling or will be strug- recent months? acquisition documents are often nego- warranty work that dealerships often gling soon in many markets. • Day Automotive Group in Pittsburgh tiated and executed with confirmatory rely upon. Consolidation has always purchased by Lithia Motors Inc. financial and operational diligence and Ride-sharing services such as Uber been a factor in auto retail, (NYSE: LAD) real estate diligence to follow. and Lyft will impact dealerships, from but there is a significant • Grossinger Auto Group in Chicago This is historically driven because the who may be purchasing the vehicles increase in the market view purchased by AutoCanada (TXS: OEM needs to approve the transaction, to opportunities for steady-stream that consolidation will be ACQ) and under most state laws that ap- service arrangements. Dealerships are necessary in many markets • Six Prestige Motors dealerships in proval process takes at least 60 days. needing to shift from a focus on the to survive and thrive. New Jersey and New York purchased So, the convention in this industry de- buying, selling, financing and servicing by Lithia Motors veloped to move to an executed docu- of cars to a focus on being a transpor- Why are car dealerships • A majority stake in Prime Motor ment so that the OEM would be able tation solution, which requires a much attractive to private Group, based in Westwood, Massa- to begin its process and the diligence broader world view and will necessitate equity firms? chusetts, acquired by Capstone Au- would proceed after execution so that significant change in the industry. There are several busi- tomotive Group, now Prime Automo- the deal time frame would be reduced The question is how long will the nesses involved with the tive Group, a GPB Capital company as much as possible. changes take, and in most markets, operation of a new vehicle The other significant aspect of an which changes will actually come to dealership--new vehicles, What advice do you have for PE M&A deal in this space is the OEM fruition. For example, it is more likely used vehicles, service, firms considering investing in car approval. This is not only an approval that a subscription or shared-ride financing and insurance, dealerships? based upon financial considerations, service develops in certain metro areas at a minimum--so there is Take the time to learn the industry but also a review of how the relation- more quickly than in rural areas of the a diversified revenue and and what makes a dealership profit- ship between the capital partners and United States. M&A profit model, which helps to able. I realize this sounds like generic operators works.

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level. Even John Boehner, the former Speaker of the House, made an about face when he joined the board of In many ways, 2018 cultivation and dispensary operator has already proven to be Acreage Holdings, saying on Twitter monumental year as the that his thinking around cannabis “has number of states that have evolved.” He went on to note that that approved and legalized at “de-scheduling” the drug would facili- least some form of can- tate further research and potentially nabis continues to reach provide an alternative to opioids for critical mass. In addition chronic pain. to the nine states and In many ways Boehner’s change of Washington, DC, that have heart reflects the evolving perception approved or introduced among the larger population, particu- recreational usage, 37 other larly as awareness around marijuana’s states allow for medicinal medical applications grows. In fact, or low-THC applications. seniors represent one of the fastest Not to be overlooked, growing consumer demographics. particularly among inves- According to the 2018 BDS Analytics tors, Canada on June 19th study of “Public Attitudes and Ac- passed Bill C-45, otherwise tions Toward Cannabis in the U.S.,” Investing in marijuana known as The Cannabis Act, more than half of adults over the age legalizing recreational mari- of 50 living in states with medical or With Canada legalizing cannabis in the fall, now is the time to juana for a go-live date set recreational pot have either consumed for October 17th. This marks cannabis over the past six months or invest, says Salveo’s Jeffrey Howard. the first G7 nation and the would consider doing so in the future. second country in the world And eight out of every 10 adults over By Jeffrey Howard to enact full legalization. the age of 50 believe there should Still, the ongoing political “some form of legal marijuana.” The conventional wisdom on Wall Street bankruptcy proceedings. Yet, ironically, it’s debate can invoke bouts of is that it’s impossible to time the market. these very same obstacles that make the agita. The Justice Depart- The growing investment case Venture capitalists, however, know all too opportunity so appealing to investors willing ment’s rescission of the Even as all the pieces are in place well that when investing in either startup to operate in an indefinite gray area to cre- Cole memo in the first week for the cannabis industry to take off companies or nascent industries, timing is ate an ecosystem for a market expected to of January, for instance, – save for one major “federal” compo- everything. Nowhere is this more true, today, reach $75 billion in size by 2030. floated the possibility that nent – timing will indeed matter for than in the emerging cannabis market. For most, the question isn’t whether the federal prosecutors could investors. In fact, it already has, par- To investors in the still developing canna- federal government legalizes cannabis, it’s target existing operators ticularly among smaller entrepreneurs bis industry, many believe the market is just how much longer investors will be able to in compliance with state and investors that “touch the plant,” now approaching its own inflection point, as capitalize on this undefined future to influ- laws. Since then, however, such as farms, dispensaries and other it transitions from a black to gray market, ence and profit from how the ecosystem President Trump pledged he suppliers. characterized by a more attractive risk pro- ultimately takes shape. If the M&A market would support a legislative Consider the early impact of state file and outsized growth potential. can serve as a leading indicator, the runway solution offering certainty legalization on the cost of recreational for investors is already becoming shorter as for jurisdictions that have cannabis. When marijuana was first Challenges strategic buyers represent both a threat and legalized recreational use. approved for recreational use in ADOBE STOCK The sticking point is that as a Schedule I opportunity. In fact, major players within Big Senate Minority Leader Washington in 2014, it sold for as much drug illegal under federal law, cannabis still Alcohol, Big Tobacco and Big Pharma have Chuck Schumer, in May, $35 a gram. Today, as larger-scale presents imposing obstacles for traditional each made inroads in the space, which also co-sponsored legisla- operators have moved into the market, investors, ranging from capital markets that proves out the investment thesis, but will tion that would decriminal- remain inaccessible to uncertainty over surely beckon added competition. ize cannabis at the federal Jeffrey Howard is a managing partner at Salveo Capital, an alternative investment firm specializing in the legalized cannabis sector.

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level. Even John Boehner, the former the price has fallen by nearly 70%. helping more traditional operators Speaker of the House, made an about This has tipped the scales in favor scale their operations. In fact, Salveo face when he joined the board of of the largest growers with the most Capital, in July, took part in a Series A In many ways, 2018 cultivation and dispensary operator resources. round, backing Flow Kana, a sustain- has already proven to be Acreage Holdings, saying on Twitter This market bifurcation was a topic able sungrown cannabis provider monumental year as the that his thinking around cannabis “has of discussion during the May earn- that produces small-batch, boutique number of states that have evolved.” He went on to note that that ings call of Scotts MiracleGro, whose strains of cannabis out of California’s approved and legalized at “de-scheduling” the drug would facili- Hawthorne Gardening subsidiary has Mendocino County and Southern least some form of can- tate further research and potentially been actively building out its hydro- Humboldt regions. nabis continues to reach provide an alternative to opioids for ponics business. After a disappoint- The rush to build out the ecosystem critical mass. In addition chronic pain. ing quarter, in which the company has been accelerated as large corpo- to the nine states and In many ways Boehner’s change of announced restructuring charges, rate investors move into the market. Washington, DC, that have heart reflects the evolving perception CEO Jim Hagedorn cited California’s Beer and spirits giant Constellation approved or introduced among the larger population, particu- struggle to transition from a loosely Brands acquired a nearly 10% stake recreational usage, 37 other larly as awareness around marijuana’s regulated market for medical marijua- in Canopy Growth Corp., a TSX-listed states allow for medicinal medical applications grows. In fact, na to a larger, “but strictly regulated,” producer of medicinal and recreation- or low-THC applications. seniors represent one of the fastest recreational market. “The combination al pot, while Novartis’ Sandoz Interna- Not to be overlooked, growing consumer demographics. of the slow approval process and the tional unit, in March, inked a col- particularly among inves- According to the 2018 BDS Analytics excess inventory is likely to result in laboration deal with Tilray, a federally tors, Canada on June 19th study of “Public Attitudes and Ac- fewer players once everything shakes licensed producer of medical cannabis passed Bill C-45, otherwise tions Toward Cannabis in the U.S.,” out,” Hagedorn told analysts. He in Canada. Even ScottsMiracleGro, known as The Cannabis Act, more than half of adults over the age added, “The survivors are likely to be which has encountered some early legalizing recreational mari- of 50 living in states with medical or only those with deep enough pockets turbulence, remains unswayed. The juana for a go-live date set recreational pot have either consumed to get through this tough but tempo- company acquired Sunlight Supply in for October 17th. This marks cannabis over the past six months or rary disruption.” April for $450 million. Market watch- the first G7 nation and the would consider doing so in the future. This, of course, brings to mind the ers also took note of Alliance One second country in the world And eight out of every 10 adults over maxim among VCs that “too early is International’s string of recent deals to enact full legalization. the age of 50 believe there should often indistinguishable from being for Island Garden Inc., Goldleaf Pharm Still, the ongoing political “some form of legal marijuana.” wrong.” But it also speaks to where the Inc. and a minority stake in Criticality, debate can invoke bouts of opportunity often resides. For most giving the tobacco company instant agita. The Justice Depart- The growing investment case VCs, the point of entry is typically in exposure to the medical cannabis pro- ment’s rescission of the Even as all the pieces are in place backing the ancillary services that will duction market in Canada (Island and Cole memo in the first week for the cannabis industry to take off help build out the ecosystem. This was Goldleaf) and hemp cultivation in the of January, for instance, – save for one major “federal” compo- the approach of Tiger Global, the New U.S (Criticality). The corporate interest floated the possibility that nent – timing will indeed matter for York-based firm that previously scored only underscores the opportunity for federal prosecutors could investors. In fact, it already has, par- homeruns investing in Facebook and venture capital investors to develop target existing operators ticularly among smaller entrepreneurs LinkedIn. In April, it invested in a Series and scale innovative businesses to in compliance with state and investors that “touch the plant,” A round to back Green Bits, a devel- serve this growing market. It also laws. Since then, however, such as farms, dispensaries and other oper of compliance software. speaks to why timing is so important. President Trump pledged he suppliers. Other VC investments, however, If venture capital can absorb some of would support a legislative Consider the early impact of state have targeted everything from biotech risks of operating in a gray market, solution offering certainty legalization on the cost of recreational companies specializing in tissue- investors can position themselves for for jurisdictions that have cannabis. When marijuana was first culture propagation to “pot tech” a tailwind that could drive the space legalized recreational use. approved for recreational use in startups that offer technology-enabled for years to come, whether the market Senate Minority Leader Washington in 2014, it sold for as much applications around business ser- opportunity resides in Canada and Chuck Schumer, in May, $35 a gram. Today, as larger-scale vices unique to cannabis operators. select U.S. states or, eventually, all of also co-sponsored legisla- operators have moved into the market, Of course, opportunities also exist in North America. M&A tion that would decriminal- ize cannabis at the federal Jeffrey Howard is a managing partner at Salveo Capital, an alternative investment firm specializing in the legalized cannabis sector.

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035_MAJ0918 35 8/8/2018 12:13:05 PM M&A Scene

Exponent Exchange drew 200 women dealmakers

Banker-turned-entrepreneur Sallie Krawcheck delivered the keynote, and Mergers & Acquisitions’ Mary Kathleen Flynn moderated a panel.

Exponent brought together 200 female entrepreneurs, ed Communication; Marilyn Adler, Medley Management; investors and M&A advisors for Exponent Exchange, featur- Michelle Van Hellemont, Accordion; Justine Mannering, ing Sallie Krawcheck, former banker and current CEO of Alantra Partners; Amy Ludwig Weisman, Sterling Investment Ellevest, an online investing platform for women. Mergers & Partners; Astrid Soto, Agro Imports U.S.; Sarah Robson, Acquisitions’ Mary Kathleen Flynn moderated a panel. Ex- Comvest Partners; Nanette Heide, Duane Morris; and Lou ponent’s founders include: Cortney Stapleton, Bliss Integrat- Halstead, Exponent Women LLC. M&A DIANA FABRICANTE

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represents private equity firms and their portfolio New hires and promotions companies on M&A. By Demitri Diakantonis DJ Gribbin has joined Stonepeak Partners as a senior operating partner. Asif Ahmad has been named recently the CEO engine Gribbin previously served in CEO at Ward Capital Partners- parts manufacturer Dayco. the White House as special backed Dimensional Dental. assistant to President Trump Ahmad was most recently the Bruno Deschamps was hired for infrastructure policy. CEO of healthcare technology by Clayton, Dubilier & Rice company Anthelio Healthcare. as an operating advisor. Jordan Hamburger has Deschamps is the chairman joined Sheppard Mullin’s Duncan Ainscough has joined of hygiene and sanitation Century City, California Gordon Brothers’ London office products company Diversey office as a partner. He was as a managing director where Asif Ahmad and he previously served most recently the national will be focusing on expanding as an operating partner for co-head of M&A at Manatt the firm’s industrials services CD&R from 2002 to 2007. Phelps & Phillips. throughout Europe. Ainscough was previously with supply Michael Fabiano has joined David Horner has been chain services company Liquid- Platinum Equity as a man- named CEO at AE Industrial ity Services. aging director, where he is Partners-backed Applied leading the formation of Composites Holdings, a Mike Anderson has been named the firm’s credit investing parts maker for the aero- head of investor relations at division. Fabiano was most space and defense and CVC Credit Partners, the credit recently with GSO Capital automobile sectors. Horner management business of CVC. Jane Greyf Partners, the global credit was most recently the presi- Anderson was most recently the investment platform of Blackt- dent of Meggitt’s polymers & head of investor relations at Pem- sone Group LP (NYSE: BX). composites division. berton Asset Management. Robert Fleishman has joined Kirkland & Ellis’ Peter Jaffe was hired as a Kojo Appenteng has joined Edgemont Washington, D.C. office as a partner. Most managing director at middle Capital Partners as head of healthcare recently with Morrison & Foerster, Fleishman market lender Gordon investment technology investment banking. advises on energy regulatory and compli- Brothers Finance Co., where Appenteng most recently led HCIT invest- ance aspects of transactions. he will be leading the firm’s ment banking at Credit Suisse. financing services across Michael Gottschalk has joined investment Europe. Jaffe previously held Chris Blake has joined Perella Weinberg bank PJ Solomon as a partner and manag- roles at Grovepoint Credit Partners as a partner. Most recently with ing director. Most recently with Rothschild, and JPMorgan (NYSE: JPM). Citigroup (NYSE: C), Blake focuses on the Gottschalk focuses on M&A in the food and . automotive sector. beverage, personal care and household prod- Christine Kaniak has joined ucts sectors. Orrick as a partner. Previ- John Bohenick has been named CEO at ously with Kirkland & Ellis, Hidden Harbor-backed auto parts maker Jane Greyf has joined Latham & Watkins as Kaniak focuses on financing Cloyes Gear & Products. Bohenick was most a partner. Most recently with Goodwin, Greyf in private equity and M&A.

38 Mergers & Acquisitions September 2018

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Sophie Kornowski is joining healthcare- the Boston PE firm in 2014. Pacini is one in the software and information tech- focused investment firm Gurnet Point of Mergers Acquisitions’ Rising Stars of nology, life sciences, telecommunica- Capital as a senior partner. Kornowski Private Equity. tions and renewable energy sectors. was formerly an executive vice president at Roche. Elizabeth Philipp was hired by global Scott Shotter has been named CEO at asset manager Capital Dynamics as a Axum Capital Partners-backed burger Minoru Koshibe has joined the Carlyle managing director and head of North chain Back Yard Burgers. Shotter was Group LP (Nasdaq: CG) in Japan as a American business development. previously the vice president of opera- senior advisor, where he is advising the Previously with Angelo, Gordon & Co., tions at Moe’s Southwest Grill. firm on trends in the chemicals sectors. Philipp will be leading the expansion Koshibe is the former executive vice of Capital Dynamics’ relationships with Paul Tropp was hired by Ropes & Gray’s president of Mitsui Chemicals.-Request- institutional investors. New York office as a partner. Previously ed Photo with Freshfields Bruckhaus Deringer Edward Poletti has joined private equity LLP, Tropp represents representing Benoit Lavigne has joined Morrison & fund administrator Gen II Fund Services issuers and underwriters in initial and Foerster’s London office as a partner. as a senior advisor. Poletti was most re- follow-on public offerings and selling Previously with Ropes & cently with Credit Suisse, shareholder deals. He also represents Gray, Lavigne focues on where helped build the independent boards of directors and financing and lending firm’s global alternative financial advisors in M&A. in cross-border M&A. fund operations business. Christopher Utz was hired by invest- Karen Lee was hired by Larry Prior has joined the ment bank Ziegler as a director. Kirkland & Ellis’ Palo Carlyle Group LP (Nas- Previously with Pinta Capital Partners, Alto office as a partner. daq: CG) as an operating Utz concentrates on M&A in the senior Most recently with executive consultant for housing industry. Skadden Arps Slate the aerospace, defense Meagher & Flom, Lee Karen Lee and government services Parker Weil has joined Cowen Inc. concentrates on tax mat- team. Prior is the former (Nasdaq: COWN) as vice chairman of ters related to private equity and M&A. CEO of information technology services investment banking. Weil was most company CSRA Inc. recently the head of industrials and James McGinnnis has been hired by PJ natural resources investment banking Solomon as a managing director to the Eric Roth has joined MidOcean Partners at Stifel Financial Group. lead the firm’s renewables coverage. as a managing director. Roth was most McGinnis was most recently the CEO of recently the head of the consumer Sean Wheeler was hired by Kirkland Mainstream Renewable Capital Inc. retail group at Lazard Middle Market. & Ellis’ as a partner. Previously with Latham & Watkins, Joseph Morales was promoted from Rajib Sarkar was hired Wheeler advises on M&A associate to partner at law firm With- by Keefe, Bruyette & in the energy sector. ers. Based in Greenwich, Connecticut, Woods as a managing Morales advises on M&A, commercial director in the invest- Zade Zalatimo has joined real estate and corporate finance ment bank’s insurance Houlihan Lokey Inc. (NYSE: transactions. His clients include private group. Based in New HLI) as a managing direc- clients, family offices, privately held York, Sarkar was previ- tor. Zalatimo is helping companies, emerging companies and ously with Evercore Houlihan expand its advi- entrepreneurs. Inc. (NYSE: EVR). sory services in Dubai. He Rajib Sarkar most recently led Carlyle Jennifer Roach Pacini was promoted Nathan Seiler has been named manag- Group LP’s (Nasdaq: CG) business ac- from senior associate to vice president ing partner at Ballard Spahr’s Boulder, tivities in the Middle East, North Africa at Yellow Wood Partners. She joined Colorado, office. Seiler focuses on M&A and central Asia. M&A

40 Mergers & Acquisitions September 2018

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