Privcap/ 2 016 Data from: Preqin Thought leadership from top private equity investors Including: DEALMAKERAngelo Gordon Audax Bain Capital First Reserve COMPENDIUMJ.C. Flowers Lightyear Capital New Mountain Privcap/ noun / prihv • cap / Provides in-depth articles, videos, reports, and events for the private capital markets community. Whether you’re focused on dealmaking, fundraising, emerging markets, or human capital, Privcap will keep you well-informed of new trends. What We Offer Who We Reach We create video and digital Privcap has a loyal audience of thought leadership for our editorial institutional investors and their websites. Investment managers asset managers. and service providers can sponsor programs to reach our engaged With over 10,000 unique audience. Our editorial and visitors each month, our marketing teams create custom audience comprises: videos, digital reports, webinars, 36% GPs, and more for firm websites, 37% LPs, fundraising collateral, 14% Service Providers, and corporate marketing. and 23% Other. www.privcap.com 04 Meet the Dealmakers A note from Privcap’s editor. 05 How a Silver Lake Vet Launched Her Own Firm Hollie Moore Haynes on using her experience with large-cap tech software deals to start Luminate Capital. Inside 06 Navigating the Global Financial Services Industry An interview with J. Christopher Flowers 27 Mining the Opportunities about his firm’s history and the impact of Created by the ACA the 2008 financial crisis. Steve Klinsky of New Mountain Capital says the Affordable Care Act has opened 08 Trinity Hunt’s Theater Remake several opportunities for PE in the Pays Off With Big-Name Exit healthcare sector. The firm’s Dan Dross explains how a merger of two smaller theater chains 28 Bain Jump-Starts a Pharma Services resulted in an exit-via-sale to AMC. 19 Data: Energy Deals, Exits, Platform and Top Performers The firm’s acquisition of a manufacturing 09 Data: Overall Deals, Exits, An overview of PE energy deal and exit facility led to a portfolio company and Top Performers activity from 2010 through 2015. expansion, says principal Jeff Schwartz. An overview of PE deal and exit activity from 2010 through 2015. 20 Backing an E&P Team 29 Precision Medicine’s Revolution in a Challenging Environment Dr. Joshua Bilenker, a practicing 10 Dissecting the Distributions Boom A Pine Brook managing director explains physician who also happens to be an Experts from Cambridge Associates, what compelled the firm to back Red Bluff. operating partner, discusses his Coller Capital, and Guardian Life discuss investment in Loxo Oncology. the record level of distributions to LPs. 21 Case Study: SolarEdge NewWorld Capital Group’s Lou Schick 31 Even in a Financial Downturn, 12 Are You Making This explains the acquisition and ultimate exit a Luxury Soapmaker Gleams Huge Due Diligence Mistake? of solar tech company SolarEdge. Swander Pace’s Mo Stout discusses the Failing to conduct IT due diligence can acquisition and exit of Gilchrist & Soames. make or break your investment strategy, 22 Aethon Energy Sees a say experts from RSM. ‘Christmastime’ Environment 33 The 4 Big Reasons Private Equity A co-investment for assets of SM Energy Needs ‘Better’ Data 14 Bringing the Customer is just one of many opportunities seen by There are ways that the industry can Experience to the Forefront Aethon’s Albert Huddleston. streamline its dealmaking process, says Brentwood Associates’ Steve Moore Matthew Porzio of Intralinks. explains how the firm is looking to 23 Building Mexico’s Energy Infrastructure expand apparel retailer J. McLaughlin. First Reserve’s Mark Florian talks about 34 The Right Way to Do Buy and Builds the firm’s mutual investment agreement Experts from One Equity, RSM, 15 Examining the ‘Blocker’ with Pemex. and Audax discuss why rolling up Two experts from Goodwin Procter add-on acquisitions into a platform explain why a blocker corporation is 24 How Infra Expertise Led company may not be as cut-and-dried sometimes used by a PE fund to to the Neptune Power Deal as a PE firm envisions. invest in a company. The story of how a submarine power- transmission cable became the first 36 Why Brokerage Houses May 16 Viewing Consumer and investment for Ridgewood Private Equity. Be PE’s Dream Opportunity Retail Through the PE Lens It’s a tough time to be a broker-dealer, Experts from Angelo, Gordon & Co. 25 Data: Healthcare Deals, and private equity smells an opportunity. and Bain Capital discuss changing their Exits, and Top Performers investment and operational strategies in An overview of PE healthcare deal and 37 The Case for First-Time Funds the face of disrupters. exit activity from 2010 through 2015. A veteran placement agent from FocusPoint explains why the smartest LPs 18 Why It Pays to Think Through 26 Bringing Healthcare Services seek to back new “teams and themes.” Outsourcing Administration Functions Under One Umbrella Fund managers considering shifting func- With a series of add-on acquisitions, 38 Making a Local Brand a Regional Name tions to a third-party provider should Webster Capital expanded the platform AUA invested in the Tijuana Flats think hard before doing so, says an expert of Epic Health. The firm’s David Malm Tex-Mex restaurant chain with an from Cortland Capital Market Services. tells the story. expansion plan in mind. Privcap/ Report Privcap Meet the Dealmakers David Snow — Co-founder and CEO For all the industry chatter about management fees, Gill Torren alignment of interest, reporting standards, and the like, Co-founder and President the success and viability of private equity will always rest on a single skill: the ability to find and capitalize Marketing & Sales Michelle Diller on good deals. Director of Marketing & Events Matthew Malone Doug Weber SVP Content Yet that straightforward proposition—source, buy, Sponsored Content & Digital Strategy, improve, sell—has grown increasingly challenging as the Karolina Tarczynska Privcap industry matures. There’s simply more competition for Media & Marketing Coordinator the most attractive assets, and, at least for now, high valuations leave little room for error. Content Matthew Malone This Dealmaker Compendium report highlights the SVP Content & Digital Strategy firms and people who’ve managed to get it right. Some Andrea Heisinger succeeded through operational improvement, financial Editor Zoe Hughes engineering, or identifying a strong tailwind when others did not. Others have formed partnerships or established Editor, PrivcapRE new platform companies to tap big opportunities. Their Production & Design success in these deals highlights private equity’s enduring Gerson Lopez power to generate alpha. Production & Design Coordinator Nathan Pardee Take First Reserve’s recent $1B partnership with Video Production Manager Pemex, Mexico’s state oil company (p.23). A joint Jake Hard pipeline deal between the two entities was the first Production Assistant major investment since the country opened its vast energy market to foreign investment. Contacts Editorial Then there’s Lightyear Capital’s joint purchase of AIG David Snow / [email protected] Advisor Group (p.36), the insurance giant’s broker-dealer Matthew Malone / [email protected] Zoe Hughes / [email protected] arm. Lightyear’s Don Marron made an unsuccessful run at Andrea Heisinger / [email protected] the business in 2009, and persistence paid off. The firm is now poised to capitalize on proposed regulatory changes Sponsorships & Sales that could redefine the broker-dealer industry. Gill Torren / [email protected] Doug Weber / [email protected] These stories and others should provide insight and inspiration for those on the front lines of private equity For subscriptions, please call 855-PRIVCAP value creation. As this report makes clear, in private or email [email protected] equity it’s ultimately not the small details but the deals About Privcap that really matter. Privcap is a digital media company that produces events and thought-leadership content for the Enjoy the report, global private capital markets. Privcap offers communications services to market participants. www.privcap.com Privcap Report / 2016 Dealmaker Compendium / 4 Technology Hollie Moore Haynes had built a PE career at Silver How a Lake Capital but then decided to start her own firm. She’s using her Silver Lake experience gained in large-cap technology deals involving software to Vet Launched look for underappreciated established businesses outside of the normal Her Own Firm hunting grounds. Hollie Moore Haynes Founder, Managing Partner, Luminate Capital Partners hen it came time to launch her Luminate focuses on making control investments in own private equity firm, Hollie companies. The firm gets involved with a portfolio W Moore Haynes was confident company, providing liquidity for founders or share- she could use the experience she had holders and adding operating capabilities that are learned over 15 years at Silver Lake Partners not already present. They bring their expertise and to build a PE shop, and a brand, that spoke to an active engagement from running other businesses. what she wanted to do. The work can be about managing costs, says Haynes, Silver Lake’s focus is on private equity but also about helping them grow the revenue and buyout and recapitalization investments position those businesses well in the market. “The in technology businesses—it’s a leader in easy part of the private equity playbook is to cut costs, “The deep, dark secret large-cap tech deals—and Haynes focused but the tough part of the playbook—which matters in in enterprise software on software within that. Luminate is a software—is revenue and product,” she says. continuation of her efforts at that firm, is it takes a long time and her industry relationships and deal “The deep, dark secret in enterprise software is it takes to build a product. We flow have followed. a long time to build a product. We can get involved can get involved when when early investors might get tired and they want “Most of what we’re doing is what I’ve some liquidity.” early investors might been doing already—the deal flow sourc- get tired and they ing and working with companies,” says The firm’s first portfolio company, PDI, is a provider Haynes.