From Auto Parts and Aerospace to Medical Devices, Precision Manufacturing Is Creating Opportunities Laser’S
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From auto parts and aerospace to medical devices, precision manufacturing is creating opportunities Laser’s
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002_MAJ0517 2 4/5/2017 11:50:24 AM 14767 / Mergers & Acquisitions / 7.875”w x 10.5”h / .125” bleed / 4C Contents May 2017 | Volume 52 | Number 05
Cover Story Laser’s Edge
Precision manufacturing drives deals for PE fi rms, including Watermill Group, founded by Steve Karol 20
Watercooler 15 Outlook 6 Cybesecurity Traditional banks off er stability providers add defense non-banks lack. M&T Managing Director Aji Fadahunsi discusses 7 Platinum raises fourth fund what borrowers need to look for in a 9 Golden Gate diversifi es portfolio partner, what pitfalls to avoid when 10 Conagra keeps snacking working with a non-bank lender and • 3i Group grows in U.S. how they diff er from working with a 12 PE fi rms like restaurants traditional bank. Sponsor Content From Columns M&T Bank 14 Private Equity Perspective Time is Right for Fintech 34 Mid-Market 16 e Buyside Conditions Index Chemical Producers Seek Global Growth 19 Mid-Market 18 Finance Finesse Pulse:Healthcare Hollywood Agencies Diversify Guest Article 30 How to win the deal sourcing game
Cover Photograph by Fabrizio Costantini 36 People Moves
May 2017 MERGERS & ACQUISITIONS 1
001_MAJ050117_001 1 4/5/2017 11:12:46 AM Inside Word
May 2017 Volume 52, Number 05
Editor-in-Chief Mary Kathleen Flynn [email protected] Assistant Managing Editor Demitri Diakantonis [email protected] Reporter Kamaron Leach [email protected] Contributing Editor Danielle Fugazy [email protected]
Group Editorial Director, Banking and Capital Markets Richard Melville [email protected] VP, Capital Markets Harry Nikpour [email protected] Senior Sales Manager Richard Grant Automation [email protected]
VP, Research Dana Jackson [email protected] &A in the manufacturing sector is soaring. Respondents to Mergers & Acquisitions’ VP, Content Operations and Creative Services Paul Vogel monthly survey in March gave the manufacturing sector the highest score of any [email protected] M Director of Creative Operations Michael Chu sector in our Mid-Market Pulse. And it’s not just dealmakers who are enthusiastic about the [email protected] Art Director Nikhil Mali sector. The industry has been expanding for nearly eight years, according to the Institute [email protected] Director of Content Operations Theresa Hambel for Supply Management’s monthly surveys, although growth slowed slightly in March [email protected] according to the group’s index. Marketing Manager Raquel Lucas “We are bullish on manufacturing in North America,” says Steve Karol, the managing [email protected] partner at Watermill Group, in our cover story. “Advanced manufacturing is creating a lot of new opportunities in many different sectors for many different companies. I believe this trend should continue.” A portfolio company of Watermill’s provides a good illustration of some of the trends driving manufacturing deals. In 2015, Watermill bought Quality Metalcraft Inc. (QMC), CHIEF EXECUTIVE OFFICER Douglas J. Manoni a Livonia, Michigan-based maker of engineered CHIEF FINANCIAL OFFICER Michael P. Caruso structural metal components and assemblies, CHIEF REVENUE OFFICER Marianne Collins EVP & CHIEF CONTENT OFFICER David Longobardi including advanced automobile prototypes. In CHIEF PRODUCT & AUDIENCE OFFICER Minna Rhee 2016, Watermill bought Experi-Metal Inc., which CHIEF MARKETING OFFICER Matthew Yorke now operates as a collaborative partner to QMC, SVP, CONFERENCES & EVENTS John DelMauro SVP, HUMAN RESOURCES Ying Wong offering prototype and niche production services to original equipment manufacturers, automakers and Reproduction or electronic forwarding of this product is a violation of federal
new entrants to the transportation market. Chevrolet copyright law! Site licenses are available -- please call Customer Service “When companies test cars, they are trying to Chevrolet Camaro ZL1 (212) 803-8500 or [email protected] see what works and what doesn’t,” says Karol. “These Mergers & Acquisitions (ISSN 0026-0010) Vol. 52 No.05, is published monthly with combined issues in July/August and November/December by prototypes require highly accurate information and precise engineering.” The Chevrolet SourceMedia, Inc. One State Street Plaza, 27th Floor, New York, NY 10004. Volt underbody, Chevrolet Camaro ZL1 hood (pictured) and Cadillac CTS coupe Telephone: (212) 803-8200. Customer Service: For subscriptions, renewals, address changes and delivery underbody all have been manufactured by QMC. service issues contact our Customer Service department at (212) 803-8500 or email: [email protected]; or send correspondence to Customer Service- “As the auto industry continues to advance toward new drive trains and autonomous Mergers & Acquisitions, SourceMedia, One State Street Plaza, 27th Floor, New cars, it will continue to require a very precise manufacturing process,” says Karol. York NY 10004. “There can’t be mistakes.” Periodicals postage paid at New York, NY, and additional mailing offices. Subscriptions: Yearly subscription is $1,995; $2035 for one year in all other Developments in the aerospace and medical device sectors are also heating up, countries. providing more opportunities for M&A in the middle market. Postmaster: Send address changes to: Mergers & Acquisitions / Source Media, Inc., One State Street Plaza, New York, NY 10004. For subscriptions, renewals, address changes and delivery service issues contact our Customer Service department at (212) 803-8500 or email: [email protected]. Advertising: For information, contact Harry Nikpour at (212) 803-8638 or harry. [email protected]. For more information about reprints and licensing content from Mergers & Acquisitions, please visit www.SourceMediaReprints.com or contact PARS Mary Kathleen Flynn International Corp. (212) 221-9595. This publication is designed to provide accurate and authoritative information Editor-in-Chief regarding the subject matter covered. It is sold with the understanding that the Mergers & Acquisitions | TheMiddleMarket.com publisher is not engaged in rendering financial, legal, accounting, tax, or other professional service. Mergers & Acquisitions is a registered trademark used Email me at [email protected] herein under license. Follow me on Twitter @MKFlynn © 2017 Mergers & Acquisitions and SourceMedia, Inc. All rights reserved.
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Undisclosed $125,000,000 Undisclosed Undisclosed $21,500,000 Senior Credit Facility Senior Credit Facility Unitranche Credit Facility Senior Credit Facility Senior Term Loan
was provided to support the investment in was provided to support the recapitalization of was provided to support the acquisition of was provided to support the acquisition of was provided to support the recapitalization of
Healthcare Services
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Undisclosed $100,000,000 Undisclosed Undisclosed $32,500,000 Senior Credit Facility Senior Credit Facility Senior Term Loan Senior Credit Facility Senior Credit Facility
was provided to support the recapitalization of was provided to support the growth strategy of was provided to support the continued growth of was provided to support the recapitalization of was provided to support the equity investment in and acquisition of
by
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services the Department of Defense, providers include: CA Technologies’ our growth, and we are jointly committed Cybersecurity providers Department of Homeland Security, the (Nasdaq: CA) acquisition of Veracode to developing our technically differentiated add defense intelligence community, and federal for $614 million; Coalfire’s, backed by portfolio of premium brands within law enforcement agencies from its two private equity firms, purchase of diverse and growing end markets,” states he KeyW Corp. (Nasdaq: KEYW) headquarters based in Herndon, Virginia. Veris Group; Tenable Network Security Power Products CEO David Scheer. The has reached a deal to buy Sotera KeyW CEO Bill Weber says, “the Inc.’s deal for IT security company target is headquartered in Menomonee Defense Solutions, a cybersecurity acquisition will provide new and FlawCheck Private Registry; ASRC Falls, Wisconsin with additional locations Tservice provider for the intelligence enhanced access to agencies within the IC; Federal’s acquisition of national security across North America, Europe and the community, for approximately $235 add significant scale, creating a unique, software contractor Vistronix Intelligence Asia Pacific region. million in cash. The transaction IC-focused solutions provider; add new & Technology Solutions; Thoma Bravo San Francisco-based Genstar invests announcement comes on the heels of the and complementary capabilities; provide LLC’s backing of healthcare IT security up to $300 million in equity towards FBI’s opening a criminal investigation into access to a larger portfolio of prime company Imprivata (NYSE: IMPR); and businesses that have at least $10 million the release of a large cache of potentially contracts and IDIQ vehicles; yield highly LLR Partners’ completed purchase of in Ebitda. The PE firm focuses on the classified information by Wikileaks, achievable cost synergies; and generate developer BluVector. industrial technology, health which claims to have published thousands an enhanced cash flow profile and be —By Kamaron Leach care, software and financial accretive to EPS.” The services sectors. Genstar transaction is expected to has been quite active lately. Looming data breaches close early in the second PE firms back The firm recently acquired Cyberattacks have risen significantly over the last five years quarter of 2017. Duckworth Wealth Advisors 1.093K manufacturing products 1K KeyW is also a national through portfolio company cybersecurity company iddle-market private equity Mercer Advisors Inc. and 800 783 780 serving U.S. federal firm Genstar Capital is also began raising capital in 600 614 agencies. The buyer’s investing in Power Products, January for its eighth private 471 400 421 products support the Ma supplier of aftermarket electrical equity fund.
200 collection, processing, equipment for the construction and Deals involving maintenance analysis, and use of recreational marine sectors, to support the and construction product 0 2011 2012 2013 2014 2015 2016 intelligence data to solve target’s new product growth. Financial businesses have been robust recently. Source: Identity Theft Resource Center cyberspace challenges. terms of the deal were not disclosed. Related deals include: Tech Air’s, backed KeyW is headquartered in Power Products designs branded by CI Capital Partners, completed deal Hanover, Maryland with electrical consumables, wiring products, to buy two welding suppliers; Berkshire of documents revealing cyberespionage additional offices across the U.S. harsh-environment power conversion Hathaway Inc.’s purchase of Wilhelm capabilities of the CIA. RBC Capital Markets LLC and tools, transformers, inverters, switches Schulz GmbH; Graycliff Partners’ backing Sotera is a national security technology Guggenheim Securities are serving and other electrical sheet maker A-1 Machine Manufacturing company that provides cyber systems, as financial advisers to KeyW, while accessories. The Inc.; Liberty Hall Capital Partners’ IT applications, counter-terrorism, Morrison & Foerster LLP is serving as target distributes its acquisition of aerospace parts supplier intelligence analysis, and data analytics legal counsel. Holland & Knight products through ZTM Inc.; and LFM Capital’s investment services. Sotera, previously known as LLP is also serving as securities a variety of brands, in hydraulic clamps maker Vektek LLC. Global Defense Technology & Systems, counsel to KeyW. Macquarie including: Del City, —By Kamaron Leach went private in 2011 when it was bought Capital and Sagent Gardner Bender, by the Ares Management affiliate Ares Advisors are serving as Sperry Instruments,
Private Equity Group. Under the PE financial advisers to Ares Power Products Lenco Marine, Tom Gores-led Platinum firm’s ownership, the target endured Management and Sotera, Marinco, Mastervolt, ProMariner, Equity raises fourth fund struggles stemming from federal budget while Proskauer Rose LLP BEP, and Blue Sea Systems. Genstar is cuts impacting government contractors, serving as legal counsel to purchasing Power Products from Sentinel latinum Equity LLC has raised a eventually appointing Deborah Alderson Sotera. Capital Partners. fourth global buyout fund, called as the new CEO in 2013. The target Middle-market deals for cybersecurity “Technical innovation remains key to Pthe Platinum Equity Capital 6 MERGERS & ACQUISITIONS May 2017 May 2017 MERGERS & ACQUISITIONS 7
006_MAJ050117 6 4/4/2017 11:25:49 AM providers include: CA Technologies’ our growth, and we are jointly committed Partners IV, with approximately $6.5 (Nasdaq: CA) acquisition of Veracode to developing our technically differentiated billion in capital commitments. “We Gyms race to bulk up for $614 million; Coalfire’s, backed by portfolio of premium brands within have the capacity, the capability and the two private equity firms, purchase of diverse and growing end markets,” states capital necessary to handle transactions of tlantic Street Capital has made Veris Group; Tenable Network Security Power Products CEO David Scheer. The any size and complexity anywhere in the an undisclosed investment Inc.’s deal for IT security company target is headquartered in Menomonee world,” states Platinum Equity CEO Tom in Planet Fitness (NYSE: FlawCheck Private Registry; ASRC Falls, Wisconsin with additional locations Gores (pictured). PLNT)A franchise operator Planet Fit Federal’s acquisition of national security across North America, Europe and the Fund IV will follow the firm’s well- Indy 10 LLC. The target’s CEO, Mike software contractor Vistronix Intelligence Asia Pacific region. established M&A&O investment Campagnolo, will have a stake in the & Technology Solutions; Thoma Bravo San Francisco-based Genstar invests strategy, by acquiring and operating company and remain in his role. LLC’s backing of healthcare IT security up to $300 million in equity towards companies in a broad range of business Planet Fit operates Planet Fitness company Imprivata (NYSE: IMPR); and businesses that have at least $10 million markets including: manufacturing, franchises in Indianapolis. The LLR Partners’ completed purchase of in Ebitda. The PE firm focuses on the distribution, transportation and logistics, company, based in Indianpolis, developer BluVector. industrial technology, health will use the investment to expand —By Kamaron Leach care, software and financial geographically, particularly services sectors. Genstar throughout the Midwest. “Atlantic has been quite active lately. Street is the perfect partner for us as PE firms back The firm recently acquired they share the same vision for our manufacturing products Duckworth Wealth Advisors company,” Campagnolo said. through portfolio company Stamford, Connecticut -based iddle-market private equity Mercer Advisors Inc. and Atlantic Street Capital is a private firm Genstar Capital is also began raising capital in equity firm that invests in middle investing in Power Products, January for its eighth private market companies with between
Ma supplier of aftermarket electrical equity fund. Platinum Equity $4 million and $12 million in equipment for the construction and Deals involving maintenance Tom Gores (center) Ebitda. The PE firm focuses on recreational marine sectors, to support the and construction product the consumer, transportation and target’s new product growth. Financial businesses have been robust recently. equipment rental, metals services, logistics, business services, healthcare terms of the deal were not disclosed. Related deals include: Tech Air’s, backed media and entertainment, technology, and manufacturing sectors. Some of Power Products designs branded by CI Capital Partners, completed deal telecommunications. Simpson Thacher Atlantic Street’s current investments electrical consumables, wiring products, to buy two welding suppliers; Berkshire & Barlett LLP served as counsel and legal include: women’s clothing company harsh-environment power conversion Hathaway Inc.’s purchase of Wilhelm adviser to Platinum Equity for Fund IV. Alex Apparel Group; frozen spinach tools, transformers, inverters, switches Schulz GmbH; Graycliff Partners’ backing Founded in 1995 by Detroit Pistons dip producer Double D Foods; and and other electrical sheet maker A-1 Machine Manufacturing owner Tom Gores, Platinum Equity is Fast Sandwich LLC, an operator of accessories. The Inc.; Liberty Hall Capital Partners’ a Los Angeles-based private equity firm Jimmy John’s franchises. The Planet target distributes its acquisition of aerospace parts supplier with more than $6 billion in capital under Fit deal is Atlantic Street’s first since products through ZTM Inc.; and LFM Capital’s investment management. The firm has completed it raised a $210 million fund in 2016. a variety of brands, in hydraulic clamps maker Vektek LLC. more than 185 acquisitions since its Gym operators have been including: Del City, —By Kamaron Leach inception and some of the firm’s recent consilodating. In 2015, Pure Gym Gardner Bender, acquisitions involve: International Textile Ltd. purchased LA Fitness Corp.; Sperry Instruments, Group Inc., Broadway Industrial Group, In that same year, Leonard Green & Lenco Marine, Tom Gores-led Platinum and Electro Rent Corp. (Nasdaq: ELRC). Partners and TPG Capital bought Marinco, Mastervolt, ProMariner, Equity raises fourth fund Private equity firms have been actively Life Time Fitness Inc; In 2014, Silver BEP, and Blue Sea Systems. Genstar is raising funds recently. Recent capital raises Oak Services Partners invested in Vasa purchasing Power Products from Sentinel latinum Equity LLC has raised a include: Quad-C Management’s $1.1 Fitness LLC. Capital Partners. fourth global buyout fund, called billion private equity fund; The Carlyle —By Demitri Diakantonis “Technical innovation remains key to Pthe Platinum Equity Capital Group’s (Nasdaq: CG) fourth distressed 6 MERGERS & ACQUISITIONS May 2017 May 2017 MERGERS & ACQUISITIONS 7
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fund; Vector Capital’s fifth private equity in Basking Ridge, New Jersey, spun off systems and smart safes for the retail fund; Monroe Capital LLC’s $800 from Barnes & Noble Inc. (NYSE: BKS) industry, for an undisclosed amount. Golden Gate diversifies million credit fund; and Chicago-based in 2015 due to a slowdown in brick-and- Tidel makes storages machines for portfolio with Cole-Parmer NXT Capital LLC’s fourth debt fund at mortar retail. The spin off came as Barnes clients to manage their daily cash flow $900 million. & Noble Inc. decided to shed non-core operations, reduce the risk of theft, and olden Gate Capital has acquired —By Kamaron Leach assets, including the decision to stop increase profits. The Carrolton, Texas- Cole-Parmer, a distributor competing in the tablet making business. based target was founded in 1998 to help of medical lab and testing “We will increase our addressable quick-service businesses automate and Gequipment, from private equity firm Digital learning drives market to include the growing virtual streamline cash handling. Tidel’s products GTCR. Financial terms of the deal were education M&A bookstore market, and will now be able are used by convenience stores, grocers, not disclosed. to offer our campus partners physical, money service businesses, healthcare Cole-Parmer is a designer and arnes & Noble Education Inc. virtual and hybrid bookstore models,” providers, and general retailers. manufacturer of laboratory and industrial (NYSE: BNED) has bought states BNED CEO Max J. Roberts. “Smart safes offer compelling economics fluid handling products, testing and MBS Textbook Exchange LLC, a With MBS’ wholesale and e-commerce for all participants in the cash management measurement equipment. Founded in Bvirtual bookstore operator in the U.S., customers, BNED will have new sales ecosystem, including retailers, armored 1955, the Vernon Hills, Illinois-based for $174.2 million in cash. The MBS opportunities for its digital courses. carriers and financial institutions,” states company was founded in 1955 and services deal comes as BNED saw a 3.3 percent Guggenheim Securities and Evercore Littlejohn managing director Tony the healthcare, biotech, pharmaceutical, decrease in textbook sales, according provided financial advice to BNED, Miranda. “As such, the industry is poised environmental and food industries. to the buyer’s second quarter earnings while Gibson, Dunn & Crutcher LLP for rapid growth in adoption.” Cole-Parmer distributes its products to report for fiscal year 2017. served as legal counsel. Peter J. Solomon Littlejohn is an investment advisory an international network of laboratory MBS is a Columbia, Missouri-based Company served as financial adviser firm that backs middle-market companies managers and independent dealers using to MBS while Bryan Cave LLP seeking a change in capital structure, a variety of brands, including: Masterflex, served as legal counsel. strategy, operations or growth. Gibson, Ismatec, Oakton, and the Cole-Palmer The middle-market has seen Dunn & Crutcher, LLP provided legal private label brand. a fair share of deals involving counsel to Littlejohn on the Tidel deal. San Francisco-based Golden Gate holds textbooks, print publications and The Greenwich, Connecticut-based firm investments in more than 35 companies educational services. Related deals is currently investing from Littlejohn across six industry sectors that include: include: Japanese publisher Nikkei Fund V, the firm’s fifth fund with nearly industrials, financial services, software, Inc.’s acquisition of Pearson $2 billion in capital commitments. The semi-conductors and IT hardware, Plc’s FT Group for $1.3 billion, firm recently acquired patio furniture retail and restaurants, and information gaining control of the Financial manufacturer Brown Jordan International technology and business services. The Times newspaper; John Wiley in January 2017, and raised a $406 million San Francisco-based private equity firm
Barnes & Noble and Sons Inc.’s (NYSE: JWA, collateralized loan obligation fund (CLO), seeks out “change-intensive investments” JWB) purchase of test-prep service called Wellfleet CLO 2016-2 in November in order improve a company’s “earnings wholesaler of new and used textbooks AnalystSuccess.com; and HarperCollins 2016. In 2015, Littlejohn launched a credit by catalyzing strategic and operational to more than 3,700 physical college Canada’s completed deal for the purchase management business, called Wellfleet change,” according to the firm. In 2017, bookstores. The target also operates more of non-fiction book titles from Wiley Capital Partners, and now has more than Golden Gate purchased restaurant chain than 700 e-commerce bookstores with Canada. $4 billion in assets under management. Bob Evans and also bought aircraft cost-efficient digital course materials. —By Kamaron Leach The Tidel deal comes as many financial ground support equipment provider MBS currently sources BNED’s 770 technology commentators predict that Tronair Parent Inc. the year prior. In campus bookstores and operates new technologies will lead to the downfall 2015, the firm’s portfolio company textbooks.com, an e-commerce website Managing fintech deals of cash. The theory isn’t far fetched, even Nassau Reinsurance Group bought a life for new and refurbished books. for plastic cards, with the emergence of insurance business for $217.2 million. BNED and MBS will operate more nvestment advisory firm Littlejohn Apple Pay, Google Wallet, Samsung Pay GTCR, based in Chicago, is a private than 1,490 physical and virtual bookstores & Co. LLC has purchased Tidel, a and PayPal. equity firm focused on the financial as a result of the acquisition. BNED, based Imanufacturer of cash management —By Kamaron Leach services, healthcare, and technology, 8 MERGERS & ACQUISITIONS May 2017 May 2017 MERGERS & ACQUISITIONS 9
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systems and smart safes for the retail media and telecommunications sectors. In (BPM) services. industry, for an undisclosed amount. Golden Gate diversifies January, the firm formed a new financial Founded in 1999, HealthHelp Tidel makes storages machines for portfolio with Cole-Parmer technology provider called Dash Financial provides benefits management across key clients to manage their daily cash flow Technologies. In 2016, GTCR agreed to healthcare areas, including: radiology, operations, reduce the risk of theft, and olden Gate Capital has acquired buy RevSpring Inc., a billing and customer cardiology, oncology, sleep-care, increase profits. The Carrolton, Texas- Cole-Parmer, a distributor communications service provider for orthopedics, and pain management. based target was founded in 1998 to help of medical lab and testing businesses. The PE firm has invested The target works closely with healthcare quick-service businesses automate and Gequipment, from private equity firm more than $10 billion in capital to over providers and its customers to help streamline cash handling. Tidel’s products GTCR. Financial terms of the deal were 200 businesses since its founding in 1980. improve patient outcomes and reduce are used by convenience stores, grocers, not disclosed. GTCR’s investments money service businesses, healthcare Cole-Parmer is a designer and is underlined by the Drag in U.S. health service deals M&A in U.S. healthcare services declined in 2016 during the providers, and general retailers. manufacturer of laboratory and industrial Leaders Strategy, a uncertainty of a presidential election “Smart safes offer compelling economics fluid handling products, testing and program that involves Total number of announced deals for all participants in the cash management measurement equipment. Founded in “finding and partnering 1K 800 ecosystem, including retailers, armored 1955, the Vernon Hills, Illinois-based with management 952 939 carriers and financial institutions,” states company was founded in 1955 and services leaders in core domains 600 Littlejohn managing director Tony the healthcare, biotech, pharmaceutical, to identify, acquire and Miranda. “As such, the industry is poised environmental and food industries. build market-leading 400 for rapid growth in adoption.” Cole-Parmer distributes its products to companies through 200
Littlejohn is an investment advisory an international network of laboratory transformational 0 firm that backs middle-market companies managers and independent dealers using acquisitions and organic 2015 2016 seeking a change in capital structure, a variety of brands, including: Masterflex, growth.” Source: PricewaterhouseCoopers strategy, operations or growth. Gibson, Ismatec, Oakton, and the Cole-Palmer J.P. Morgan Dunn & Crutcher, LLP provided legal private label brand. Securities LLC (NYSE: JPM) served as carrier costs. The Houston, Texas-based counsel to Littlejohn on the Tidel deal. San Francisco-based Golden Gate holds financial adviser to GTCR, while Morgan healthcare tech provider aims to speed The Greenwich, Connecticut-based firm investments in more than 35 companies Stanley (NYSE: MS) acted as financial up the procedure authorization request is currently investing from Littlejohn across six industry sectors that include: adviser to Golden Gate. Kirkland process and also provides predictive Fund V, the firm’s fifth fund with nearly industrials, financial services, software, & Ellis LLP served as legal counsel analytics for the healthcare management $2 billion in capital commitments. The semi-conductors and IT hardware, to Cole-Parmer and GTCR, while process. firm recently acquired patio furniture retail and restaurants, and information PriceWaterhouseCoopers LLP served as “HealthHelp’s deep industry expertise, manufacturer Brown Jordan International technology and business services. The accounting adviser. Goldman Sachs & differentiated market approach and in January 2017, and raised a $406 million San Francisco-based private equity firm Co. (NYSE: GS) and Jefferies LLC also extensive use of technology and analytics collateralized loan obligation fund (CLO), seeks out “change-intensive investments” advised Cole-Parmer on its sale to Golden make this asset an excellent fit for WNS,” called Wellfleet CLO 2016-2 in November in order improve a company’s “earnings Gate Capital. states WNS chief executive officer Keshav 2016. In 2015, Littlejohn launched a credit by catalyzing strategic and operational —By Kamaron Leach Murugesh. WNS expects to benefit from management business, called Wellfleet change,” according to the firm. In 2017, cross-sell opportunities. Capital Partners, and now has more than Golden Gate purchased restaurant chain WNS is a business process management $4 billion in assets under management. Bob Evans and also bought aircraft WNS grows benefits company providing a variety of services The Tidel deal comes as many financial ground support equipment provider management business such as finance and accounting, customer technology commentators predict that Tronair Parent Inc. the year prior. In care, technology capabilities, research and new technologies will lead to the downfall 2015, the firm’s portfolio company NS Holdings Ltd. (NYSE: analytics, and back office processes. The of cash. The theory isn’t far fetched, even Nassau Reinsurance Group bought a life WNS) has acquired healthcare HealthHelp acquisition is expected to for plastic cards, with the emergence of insurance business for $217.2 million. management company contribute nearly $2.3 billion in revenue Apple Pay, Google Wallet, Samsung Pay GTCR, based in Chicago, is a private HealthHelpW for $95 million. The for WNS in the fiscal year ending March and PayPal. equity firm focused on the financial acquisition expands WNS’ healthcare and 31, 2017. Cain Brothers & Co. served —By Kamaron Leach services, healthcare, and technology, insurance business process management as financial adviser to WNS, and Reed
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Smith LLP acted as legal counsel. Conagra has been busy shedding assets. At North America Infrastructure intends Some dealmakers say that M&A in the the end of 2016, the company completed to fund investments initially with 3i’s Demand for coating healthcare industry will continue to drag the spinoff of the Lamb Weston frozen fries balance sheet and foresees deploying suppliers remains healthy until there is more clarity about the move division; Also in 2016, Conagra sold the third-party capital at a later date. e to repeal and replace the Aff ordable Care Spicetec seasonings and fl avors business U.S. launch follows a successful period A Associates has invested in Act. e middle market, however, has to Givaudan; And in that same year, for 3i’s European Infrastructure business. coatings supplier Ideal Cures seen a fair share of healthcare deals lately, Conagra sold food ingredients distributor e infrastructure business, founded in Private Limited for undisclosed including: Riverside Partners’ purchase JM Swank to Platinum Equity. Strategic 1987, invests through four vehicles: 3i Tterms. e deal comes as demand for of Medical Reimbursement of America; buyers are reshuffl ing their businesses Infrastructure plc, Biff LP, Beif II LP, coating companies rises. private equity fi rm HGGC completing by shedding slow-growing brands and and 3i India Infrastructure Fund. e Ideal Cures, based in Mumbai, India, a majority investment in London- fi rm’s infrastructure segment advised 3i supplies coating products mostly to the based Davies Group; the Riverside Infrastructure plc on new investments of pharmaceutical industry. e target, Co.’s investment in Medical Payment approximately $593 million in its current founded in 1999, makes both fi lm and Exchange Inc., a Maryland-based claims fi nancial year. functional coatings. Film coatings allow management provider to the healthcare 3i is a U.K. investment company for better swallowing and taste, while industry; and Equian’s acquisition of targeting investment opportunities AfterMath Claim Science Inc., a company across Europe and North America. e that provides post-payment recovery PE fi rm, one of the oldest private equity services that aim to eliminate medical fi rms in Europe, is comprised of two WHAT’S
claim payment errors through data complementary businesses consisting of ® YOUR mining technology. Thanasi Foods private equity and infrastructure. 3i has DEAL? —By Kamaron Leach roots dating back to 1945. In October 2017 making acquisitions in their core divisions 2016, the fi rm agreed to sale its debt in an eff ort to boost profi tability. management business to Investcorp Conagra keeps snacking Houlihan Lokey Inc. (NYSE: HLI) to focus on building its private equity and Brownstein Hyatt Farber Schreck and infrastructure segments. 3i’s debt onagra Brands Inc. (NYSE: CAG) LLP are advising anasi. Jones Day is management business contributed a has agreed to buy meat snacks representing Conagra. signifi cant role in the fi rm’s operating cash maker anasi Foods LLC for —By Demitri Diakantonis profi t and investment returns. e deal th Cundisclosed terms. e deal is part of with Investcorp closed in March 2017. 7 ANNUAL CHAMPION’S AWARDS GALA Conagra’s strategy to revamp its portfolio In March, President Donald Trump to focus on consumer brands such as Slim 3i Group expands U.S. began mapping out a $1 trillion plan for June 15, 2017 Jim and Chef Boyardee. investments infrastructure spending. e plan would anasi, based in Boulder, Colorado, pressure state authorities to streamline produces meat snacks that includes ondon private equity fi rm 3i local permitting, favor renovations of Duke’s Smoked Shorty Sausages and Group plc is establishing a U.S.- existing roads over new construction, Duke’s Steak & Brisket Strips. e target’s based infrastructure business, called and prioritize projects that would quickly other brand, BIGS, makes sunfl ower and LNorth America Infrastructure, to access begin construction. Related deals within pumpkin seeds. North American investment opportunities the sector include: GI Partners‘ purchase “ is is another exciting step in our within the sector. e infrastructure sector of data facility Komo Plaza for $276 ongoing eff orts to reshape our portfolio covers the physical communications, million; Blue Wolf Capital Partners LLC’s to be more premium and modern,” says construction, and transportation acquisition of Tenon Holding’s North Conagra CEO Sean Connolly. Chicago- industries. 3i plans to “build a signifi cant American building products business Nacs based Conagra owns the Slim Jim meat business in this market” and has appointed USA Inc.; and Jaguar Growth Partners’ sticks and David Seeds Brands. Rob Collins to lead the initiative as fi rst real estate private equity fund. Before the acquisition was announced, managing partner of the new business. —By Kamaron Leach
10 MERGERS & ACQUISITIONS May 2017 May 2017 MERGERS & ACQUISITIONS 11
010_MAJ050117 10 4/4/2017 11:25:57 AM Watercooler
North America Infrastructure intends functional coatings provide certain Coating companies continue to attract to fund investments initially with 3i’s Demand for coating moisture, oxygen and light protection for buyer interest. Axalta Coating Systems balance sheet and foresees deploying suppliers remains healthy controlling drug delivery to a specifi c part Ltd. (NYSE: AXTA) has purchased third-party capital at a later date. e of the gastrointestinal tract Netherlands U.S. launch follows a successful period A Associates has invested in “We believe that the fi lm for 3i’s European Infrastructure business. coatings supplier Ideal Cures coating industry is a unique, e infrastructure business, founded in Private Limited for undisclosed yet evolving sector that 1987, invests through four vehicles: 3i Tterms. e deal comes as demand for has strong potential for Infrastructure plc, Biff LP, Beif II LP, coating companies rises. growth globally,” says and 3i India Infrastructure Fund. e Ideal Cures, based in Mumbai, India, TA Associates managing fi rm’s infrastructure segment advised 3i supplies coating products mostly to the director Naveen Wadhera. Ideal Cures Infrastructure plc on new investments of pharmaceutical industry. e target, TA Associates is a Boston approximately $593 million in its current founded in 1999, makes both fi lm and private equity fi rm that targets the distributor Geeraets fi nancial year. functional coatings. Film coatings allow technology, fi nancial services, business Autolak; Audax Private Equity-backed 3i is a U.K. investment company for better swallowing and taste, while services, healthcare, and consumer sectors. Innovative Chemical Products (ICP) targeting investment opportunities across Europe and North America. e PE fi rm, one of the oldest private equity fi rms in Europe, is comprised of two WHAT’S complementary businesses consisting of ® YOUR private equity and infrastructure. 3i has DEAL? roots dating back to 1945. In October 2017 2016, the fi rm agreed to sale its debt management business to Investcorp to focus on building its private equity and infrastructure segments. 3i’s debt management business contributed a signifi cant role in the fi rm’s operating cash profi t and investment returns. e deal th with Investcorp closed in March 2017. 7 ANNUAL CHAMPION’S AWARDS GALA In March, President Donald Trump began mapping out a $1 trillion plan for June 15, 2017 infrastructure spending. e plan would pressure state authorities to streamline local permitting, favor renovations of existing roads over new construction, and prioritize projects that would quickly begin construction. Related deals within the sector include: GI Partners‘ purchase of data facility Komo Plaza for $276 million; Blue Wolf Capital Partners LLC’s acquisition of Tenon Holding’s North American building products business Nacs USA Inc.; and Jaguar Growth Partners’ fi rst real estate private equity fund. —By Kamaron Leach
10 MERGERS & ACQUISITIONS May 2017 May 2017 MERGERS & ACQUISITIONS 11
011_MAJ050117 11 4/4/2017 11:26:02 AM Watercooler
bought adhesives maker Fomo Products Atlantic has taken a minority stake in Joe initiatives,” according to Winoa CEO Inc.; and PPG (NYSE: PPG) is acquiring & the Juice; and Roark Capital bought a Pierre Escolier. MetoKote Corp. majority stake in Jimmy John’s. Based in New York, KPS is a private K Law served as legal counsel to Ideal equity firm with approximately Cures and DSK Legal served as legal $5.5 billion in assets under counsel to TA Associates. TA Associates management and looks to make Advisory Private Limited provided control equity investments advisory services on the investment. in specialty manufacturing —By Demitri Diakantonis companies. The firm also collaborates with major industrial and service unions to sponsor PE firms still like transactions. In November restaurants 2016, KPS sold bottle packaging company Anchor Glass Container ak Hill Capital Partners has Corp. to CVC Capital. The PE
agreed to purchase Checkers Checkers firm initially backed Anchor Glass Drive-In Restaurants Inc. in 2014, growing the target’s Ofrom Sentinel Capital Partners for $525 Piper Jaffray Cos. (NYSE: PJC), North business with a 50 percent profit increase. million. The target’s management team Point Advisors and Kirkland & Ellis are Raquel Palmer, a partner at KPS, was is also partnering with Oak Hill on the advising Checkers. Jefferies LLC and Paul recognized as one of The Most Influential deal. The acquisition comes during a time Weiss Rifkind Wharton & Garrison are Women in Mid-Market M&A. with a number of private equity firms are advising Oak Hill. Paul, Weiss, Rifkind, Wharton & investing in restaurant chains with national —By Demitri Diakantonis Garrison LLP is serving as legal counsel growth potential. to KPS, alongside Gide Loyrette Nouel. Checkers, based in Tampa, Florida, and DC Advisory is acting as financial adviser founded in 1986, operates around 840 Cross-border deals pick to KPS. GSO Capital Partners LP will restaurants, both company-owned and up, KPS purchases WHA provide financing for the transaction. franchised, under the Checkers and Rallys The cross-border Winoa acquisition brands. The target is known for serving PS Capital Partners LP is acquiring comes as investors are uncertain of the true mostly burgers through its drive-thru steel abrasive manufacturer WHA impact Britain’s vote to exit the European locations. Sentinel purchased the chain in Holding SAS (Winoa) from a Union will have on cross-border M&A. 2014. Kgroup of investors. Financial terms of the Despite the uncertainty, recent cross- “We believe Checkers is well-positioned transaction were not disclosed. border deals include: Crisis Prevention to continue its long history of consistent Winoa is a global manufacturer of Institute’s, backed by private equity growth,” says Oak Hill managing partner metal abrasives for the transportation, firm FFL Partners, acquisition of U.K.’s Tyler Wolfram. Checkers operates in 29 equipment, energy, and construction Pivotal Education Ltd.; Italy-based Ferrero states, mostly in the East, Southeast and sectors. The target’s products serve as International S.A.’s deal to buy chocolate Midwest. The company has aggressive cleaning, cutting, peening and preparation manufacturer Fannie May Confections plans to expand on the West coast by materials for on-site metal surface work on Brands from 1-800 Flowers.com Inc. looking add up to 40 restaurants in large structures like bridges and offshore (Nasdaq: FLWS); 21st Century Fox Inc.’s California and at least 60 in Arizona. rigs. Le Cheylas, France-based Winoa agreement to acquire Europe’s pay-TV Other PE firms have been investing has 11 manufacturing facilities located in company Sky Plc for $14.6 billion; and in restaurants with growth opportunities. France, Spain, Canada, South Korea, U.S., AMC Entertainment Holdings Inc.’s Golden Gate Capital has agreed to buy Japan, Slovenia, Brazil, Thailand, South (NYSE: AMC) acquisition to expand with Bob Evans Restaurants from Bob Evans Africa and Russia. The deal comes as the more movie theaters in Sweden. Farms Inc. (Nasdaq: BOBE); General target intends to “pursue a range of growth —By Kamaron Leach
12 MERGERS & ACQUISITIONS May 2017
012_MAJ050117 12 4/4/2017 11:26:03 AM LEADING FIGURES IN MERGERS & ACQUISITIONS
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013_MAJ0517d33699_M&A_HouseAd_Print_2017.indd 13 1 4/5/20173/13/17 11:50:41 10:07 AM AM Columns
Private Equity Perspective The Time is Right for Fintech
MARY KATHLEEN FLYNN
echnology, outsourced services and specialty finance are driving deals in the Tfinancial services sector, despite regulatory uncertainty. Private equity firm Lovell Minnick Partners has been especially active, announcing four financial services investments in the first quarter: Currency Capital, Engage People, Foreside Financial and Trea. The firm has been expanding its focus on financial technology, including closing its fourth fund with $750 million of commitments in 2015.
In 2016, Steve Pierson, an investment banking INVESTMENTS ANNOUNCED IN Q1 veteran focused on financial institutions and the THE FIRM’S RECENT TARGETS USE TECHNOLOGY TO financial technology sector, joined the firm as DELIVER DIFFERENTIATED PRODUCTS AND SERVICES president. Pierson had most recently served as Currency Capital Online equipment financing exchange The nancial the head of financial institutions group (FIG) “ investment banking Americas and global head of Engage People Payments processing for loylty programs services sector financial technology and services at UBS (NYSE: Foreside Financial Outsourced compliance services has been UBS). Previously, he served as vice chairman and co- head of FIG investment banking Americas at Credit Trea European asset management historically Suisse. Over the years, Pierson has worked on huge, Source: Lovell Minnick Partners slow to high-profile deals, such as State Street’s $4.5 billion innovate. acquisition of Investors Bank & Trust in 2007, and an industry that’s historically slow to innovate, says also well-known middle-market deals, including the Pierson. Subsectors likely to see significant activity $530 million sale of the Hull Group to Goldman include: insurance, regulatory compliance, asset and Sachs Group Inc. (NYSE: GS) in 1999. wealth management and capital markets. “We have been privileged to work closely with Outsourced services companies will continue Steve over many years and have been continually to provide options in response to the changing impressed by his superior investment acumen and competitive and regulatory pressures affecting all ” professional skills,” said firm co-chairs Jeffrey Lovell types of financial companies, resulting in continued and James Minnick in a joint statement when Pierson demand for these businesses. Specialty finance joined the firm. “He brings to Lovell Minnick an will continue to fill the void left in the many asset enviable record of success and a deep network.” classes where bank lending activity is still below Investors and strategic acquirers see opportunities pre-recession levels, thereby creating valuable, to leverage data, analytics and new applications to differentiated platforms that ultimately will be create efficiencies and better customer experiences in acquired, according to Pierson.
14 MERGERS & ACQUISITIONS May 2017
014_MAJ050117 14 4/4/2017 11:19:47 AM Outlook SPONSOR CONTENT FROM M&T BANK Traditional Banks Offer Stability Non-Banks Lack
Based in Baltimore, Maryland, Aji Fadahunsi is a Managing Director in the Investment Banking division of M&T Bank. Mr. Fadahunsi supports leverage finance transactions for sponsored and non-sponsored companies often in the context of M&A transactions. Over the last 12 years, Mr. Fadahunsi has executed transactions across a variety of industries in the middle market totaling more than $12 billion. M&T Bank is a regional bank with over $100 billion in assets and works to meet its clients’ immediate needs as well as help them scale for the future.
What role do non-bank finance companies providers and true partners in the process. should think about the temperament and play in private equity transactions today? That’s not how most non-bank finance character of the provider. Who is going to be There’s been an undeniable shift in recent companies are set up and that’s not their on the other end of the phone or responding years and non-bank finance companies strength — they’re transactional lenders to your emails? At M&T you get bulge now play an increasingly broader role in with no appetite to handle much else. bracket execution with a middle market feel. leveraged finance transactions. If you look You get a higher level of engagement from at market participation rates, less than How will the deregulation of banks impact senior staff that will take your call, face your 25 percent of the lending on mid-market non-finance companies? problems, work for your success and execute private equity sponsor recaps is absorbed by Non-bank finance companies have enjoyed on your strategy. You also have a team that traditional commercial banks. As a result plenty of runway as banks deal with heightened can ride through market cycles. Our portfolio of a number of factors, banks have been regulations. Interagency guidance on leveraged mandates that we think about cycles. Non- effectively dis-intermediated by non-bank lending is definitely a catalyst to the rise of bank finance companies may not be able to financials and their impact on liquidity, alternative lending sources and drives share ride out market cycles and give you those pricing, and structure is material. Variables away from banks. That said, traditional financial other advantages. that haven’t changed are risk management institutions understand and embrace sensible as well as tolerance for cycles and that’s where regulation as a necessary part of doing business; What can we expect from the lending the traditional banks excel. Banks still play a however, keep in mind, leveraged lending in industry going forward? vital role in leveraged finance transactions and and to the mid-market did not contribute Despite their differences, banks and M&T Bank specifically continues to support to the financial crisis yet traditional bank alternative lenders will work together more operating companies in its communities with providers were mandated to curb a very frequently. Non-bank finance companies scale, execution and experience. Continuity successful and well-managed component of have a great deal of flexibility while traditional in market as a trusted capital provider remains their relationship banking strategies. M&T banks have the established credibility. critical and our view is that non-bank lenders still thrives in the current environment Together these two approaches can come often struggle to match that value proposition. because we’re serious about doing the right up with attractive solutions to meet clients’ thing for our clients; however, no one likes to needs. The market is asking us to do this. If How do traditional banks differ from non- spend more on regulation than they think is you do not find the right solutions for your bank finance companies? wise. Deregulation will certainly affect non- clients you will not remain relevant. The Full-service financial institutions such banks as their competitive advantage will be market forces us to keep getting better at what as M&T offer a complete suite of products diluted. I think traditional banks will still we do. We are excited to see the opportunities and services to support our clients. The remain cautious and prudent in a deregulated out there and what we can bring to our clients relationship goes beyond funding a single world but they will also be more thoughtful to be as constructive as possible. I transaction — we can support our clients’ and creative as to how they serve their clients. multiple business objectives on an ongoing basis to achieve their growth objectives. This What should borrowers look for in non- full-service solution helps clients navigate bank finance companies? markets, cycles and events whereas the typical It boils down to the relationships in the non-bank provider isn’t as flexible. Banks have end. If a borrower is considering working ©2017 M&T Bank. Member FDIC. Equal Housing Lender. the infrastructure to be patient capital with a non-bank finance company, they All rights reserved.
May 2017 MERGERS & ACQUISITIONS 15
015_MAJ050117 15 4/4/2017 12:35:00 PM Columns
The Buyside Coating Abroad
DEMITRI DIAKANTONIS
trategic buyers are pursuing targets in the fairly fragmented chemicals sector that Swill expand both their geographic and product reach. Axalta, Maroon Group and Sherwin-Williams are buying companies that will help them grow in subsectors, such as food ingredients, while escalating their global presence. Century Industrial Coatings, Lincoln Fine Ingredients and Valspar are among recent targets.
Axalta Coating Systems Ltd. (NYSE: AXTA) coatings, sealants and sprays. The target is a is not done making deals after acquiring Century distributor of Axalta’s Cromax brand in the Industrial Coatings for undisclosed terms. Netherlands. Cromax makes basecoat color Jacksonville, Texas-based Century makes water- coatings and sealants that are mostly used in Filling out based primers and polyurethane coatings for automotive and industrial manufacturing. “ steel, rail cars and the oil and gas industries. Additives supplier Maroon Group LLC the industrial Axalta manufactures liquid of Avon, Ohio, bought Lincoln product line is and powder coatings for Fine Ingredients distribution for the transportation and undisclosed terms. LFI, founded important for industrials sectors. in 1976 and located in Lincoln, us, as well as Axalta CEO Charlie Rhode Island, distributes alcohol, to continue to Shaver says the company amino acids, oils and sweeteners. will seek targets that have The company works with the complement between $25 million and consumer, food and beverage and our global $100 million in revenue pharmaceutical sectors. In another market across those same industries. related deal announced in 2016,
“Filling out the industrial Bloomberg News Cleveland-based paint retailer presence in product line is important Sherwin-Williams Co. (NYSE: re nish. for us, as well as to continue SHW) agreed to buy rival Valspar to complement our global market presence in Corp, (NYSE: VAL) for about $9.3 billion to refinish,” Shaver told analysts. In an acquisition give the company additional global scale. Valspar that expanded its international growth, in 2016, of Minneapolis, makes coatings for the food and Philadelphia-based Axalta purchased Geeraets beverage and packaging sectors. Chemicals M&A Autolak for an undisclosed amount. Geeraets, is poised to remain robust as companies continue ” located in Druten, Netherlands, produces to seek new growth channels. 16 MERGERS & ACQUISITIONS May 2017
016_MAJ050117 16 4/4/2017 11:20:16 AM Subscribe Today by visiting www.TheMiddleMarket.com/subscribe
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017_MAJ0517 17 4/5/2017 11:50:48 AM Columns
Finance Finesse Hollywood’s New Bottom Line
KAMARON LEACH
alent agencies are diversifying how they generate capital beyond client Trepresentation, and the race to create value has begun. Firms, including United Talent Agency (UTA) and WME-IMG, have formed strategic partnerships with investment banks, hoping to forge a valuable bond going forward. The deals come as agencies seek to rely less on the traditional 10 percent cuts they receive.
2017 is shaping up to be a defining year for telecommunications giant led by billionaire some talent agencies, foreshadowing who could Masayoshi Son, invested $250 million in be at the top of the leaderboard over the next powerhouse talent agency WME-IMG, joining decade. In March, UTA agreed to buy a stake in private equity firm Silver Lake Partners as an PE rm New York investment bank AGM Partners. The investor. WME-IMG plans to use the Softbank “ strategic alliance between UTA and AGM allows funds to make investments, joint ventures and Rizvi Traverse the agency and its clients to acquisitions. invested in receive financial guidance from Ever since 2005, when AGM on deals. UTA will also private equity firm Rizvi ICM in 2015, use AGM for principal investing Traverse invested in ICM the beginning opportunities. Partners, the relationship of a beautiful Based in Los Angeles, UTA between talent agencies represents a full slate of clients, and private capital friendship including: Uzo Aduba, who providers has soared. In between portrays Suzanne ‘Crazy Eyes’ 2010, Creative Artists
Warren in Netflix’s Orange is Bloomberg News Agency (CAA) received a private capital the New Black; DJ Khaled, Sofia Vergara, with Jesse Tyler Ferguson $225 million investment and talent a disc jockey and social media from TPG Capital. CAA management. influencer; Phil McGraw, host of the Dr. Phil has single-handedly raised the bar by launching Show; Sofia Vergara, who plays Modern Family’s a venture capital fund, founding tech startups, Gloria; and Constance Wu, who plays Fresh Off creating a brand marketing company and starting the Boat’s Jessica Huang. In 2015, UTA acquired a private equity vehicle. The move to diversify The Agency Group to form a music touring and beyond talent representation is a potential gold representation practice, now called UTA Music. mine for agencies, who look forward to initial ” In 2016, Softbank Group Corp., the Japanese public offerings in the years ahead. 18 MERGERS & ACQUISITIONS May 2017
018_MAJ050117 18 4/4/2017 11:21:54 AM MAY 2017
MID-MARKET PULSE: Hopes for healthcare M&A were high The forecast for M&A in the healthcare sector Participants were surveyed March 10-14, prior The lowest score was the 3-month score of 66.2 was rosy in early March, according to Mergers to the March 24 withdrawal of House Speaker for the financial services, insurance and real & Acquisitions’ Mid-Market Pulse (MMP). Paul Ryan’s American Health Care Act, which estate sector. But even that number was well Survey participants gave the healthcare sector would have repealed the Affordable Care Act, above the 50-point mark, indicating expansion. a score of 71.5 for the 3-month outlook and also known as Obamacare. 75.1 for the 12-month outlook. The 3-month The numbers for overall M&A were strong, at score was about the same as back in August, The 3-month outlook score of 84.7 for the 74.5 for the three-month forecast and 71.4 for the last time we highlighted the sector. But the manufacturing sector was the highest score the 12-month outlook. 12-month score was 3 points higher in March received in March. As reported in our cover than in August. story, 2017 is expected to be a very strong year The MMP is a forward-looking sentiment for manufacturing deals. indicator, published in partnership with CT, When asked about the expected impact of a provider of business compliance and deal healthcare regulation on M&A in the sector The 3-month outlook score of 82.6 for the support services. ■ during 2017, more than three-quarters of technology, media and telecommunications survey respondents said it would result in the sector was the second highest score in March. same level of M&A or higher.
3-Month Forecast 12-Month Forecast
100 84.7 82.6 80 74.5 75.6 75.7 75.1 74.7 77.2 71.4 70.5 71.4 71.5 69.3 66.2
60
40
20
0 Macro Consumer goods Energy FIRE Healthcare Manufacturing Tech/Media/ and retail Telecom
ABOUT THE MERGERS AND ACQUISITONS MID-MARKET PULSE (MMP) IN PARTNERSHIP WITH The MMP is a monthly barometer for the outlook of M&A activity and conditions from the collective viewpoint of approximately 250 business executives in private equity firms, investment banks, lenders and advisor firms, such as accounting, law, and consulting firms, involved in M&A activity. Various sub-indicators that make up the overall MMP composite include projected deal volumes and pricing, staffing and resource utilization levels, and the expected impacts of economic conditions, taxes, and regulatory policy on respondents’ future M&A activity.
MMP results are presented as rolling aggregate indicators for both three- and 12-month outlook periods for macro M&A issues as well as for individual industry sector issues in healthcare, consumer/retail, manufacturing, energy, and technology/media/telecommunications on a monthly rolling basis. A diffusion index is produced by calculating the sum of percentages of those indicating on survey responses that describe a change in sentiment for three and 12 months (e.g., increase/positive, decrease/negative, or no change/ neutral) to arrive at three-month and 12-month aggregate index values that are then averaged to create a total composite for the month. A reading of over 50 indicates an expansion relative to the prior month, and a reading below 50 indicates a contraction.
May 2017 MERGERS & ACQUISITIONS 19
019_MAJ050117 19 4/4/2017 11:23:39 AM Cover Story
Laser’s Edge Precision manufacturing drives deals for PE fi rms, including Watermill Group, founded by Steve Karol By Danielle Fugazy
20 MERGERS & ACQUISITIONS May 2017 May 2017 MERGERS & ACQUISITIONS 21 Photograph by Fabrizio Costantini
020_MAJ050117 20 4/4/2017 11:20:56 AM 20 MERGERS & ACQUISITIONS May 2017 May 2017 MERGERS & ACQUISITIONS 21
021_MAJ050117 21 4/4/2017 11:20:59 AM Cover Story
anufacturing in its simplest form used to mean assembly lines comprised of humans creating and piecing together components that Mwould eventually become an end product. Today, manufacturing is so much more. While manual manufacturing can still be a part of the process, today manufacturing encompasses humans with automated processes and the increasing use of We are robotics to make the process more efficient. “ Manufacturing advancements have had an manufacturing today with more astoundingly positive impact on many different broad manufacturing processes that impact many efficiency and sectors. As a result of these advancements private less human equity firms and strategic acquirers have been snapping up manufacturing companies. “We are labor. bullish on manufacturing in North America,” says Steve Karol, the managing partner at Watermill Group. “Advanced manufacturing is creating a lot of new opportunities in many different sectors for many different companies. I believe this trend should continue.” Here is a look at five
” areas that are benefiting from breakthroughs in Harris Williams manufacturing, and their impact on M&A. Jay Hernandez
Process Automation “Think about how much faster that dvancements in process automation manufacturing process is without someone having Acompanies have changed the manufacturing to line up the bar codes on a product. The use of sector and many end markets. “Not long ago the robotics and end-of-arm tools are supplementing question was ‘if’ and ‘why,’ but now the question human labor and improving manufacturing is ‘how’ and ‘how quickly can we adopt this processes all the time now,” says Hernandez. technology?’” says Jay Hernandez, a managing Additionally, at the end of 2016, Harris director with Harris Williams & Co. “We are Williams advised Grohmann Engineering manufacturing today with more efficiency and GmbH on its sale to Tesla Motors (NASDAQ: less human labor.” TSLA). Grohmann is a manufacturer of highly Harris Williams has seen many process customized, high-yield engine equipment. automation manufacturing companies participate This manufacturing technology is so important in M&A recently. In March, Harris Williams that Elon Musk, founder and chief executive advised Incline Equity Partners on its sale of office of Tesla, says the deal is his company’s Dorner Manufacturing Corp. to EQT Mid “first acquisition of significance in our whole Market. Dorner, based in Harland, Wisconsin, is history. We expect this to help drive exponential a maker of smart technology conveyor solutions improvements in our production process, in for process automation applications. Most major terms of both speed and quality of output, while consumer companies use this technology to cutting the cost-per-vehicle at the same time.” ensure products face the right direction for bar The purchase is expected to help Tesla grow, code scans. with the company aiming to add more than
22 MERGERS & ACQUISITIONS May 2017
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Strike your next Deal at Alliance’s famous Deal Bash event! Wednesday, July 19, 2017, 2:30 PM - 5:30 PM
023_MAJ0517 23 4/5/2017 11:50:49 AM Cover Story
1,000 engineering and skilled manufacturing jobs trying to see what works and what doesn’t,” says Mobileye NV (NYSE: MBLY) for $15 billion. in its new advanced automation division. Karol, the Watermill managing partner. “These Mobileye makes chips for cameras and driver “Tesla felt they could have a more effective prototypes require highly accurate information assistance features, which is crucial technology in manufacturing process if they owned the and precise engineering.” self-driving cars. According to Bain & Co., self- company. Telsa wants to build 2,000 cars per While many automobile companies can driving and assistive safety features in automobiles week, and by bringing Grohmann in house they manufacture prototypes in-house, many well- will reach $22 billion to $26 billion by 2025. feel they can actually do that,” says Hernandez. known and new companies outsource the work. “The technology is very powerful.” “We found there are a lot of new transportation Aerospace companies being formed and that hasn’t ccording to Pricewaterhouse Coopers Every auto Automobiles happened for 100 years,” Karol says. “These A(PWC), aerospace and defense had a “ he automobile industry has been on the companies are using new technologies, and need disappointing 2016 when it comes to M&A. company from Ford Tforefront of the advanced manufacturing QMC’s capabilities. In addition to manufacturing However, while both deal volume and value trend. Every auto company from Ford Motor prototypes, the company can manufacture and declined overall compared to 2015, there was a to Tesla is Co. (NYSE: F) to Tesla is striving for innovation. assemble limited production runs to help the 73 percent increase in deal activity in the fourth striving for For example, Ford announced plans to become customers get to market.” says Karol. quarter of 2016. the first auto company to introduce 3-D The Chevrolet Volt underbody, Chevrolet The upswing was considered an indication innovation. printing on a mass scale while Tesla is testing the Camaro ZL1 hood and Cadillac CTS coupe of positive momentum in the industry after boundaries of solar energy. These disruptions are underbody all have been manufactured by QMC. significant political changes. Kirk Griswold, of interest to dealmakers as they look to purchase QMC can also provide factory-assist services. founder of Argosy Capital, a private equity fund manufacturing companies that will be of interest “When an auto factory goes down, it is very currently investing its $300 million fifth fund to the largest transportation companies or private expensive and every minute counts. QMC can that mainly focuses on manufacturing, agrees the equity firms in the future. help to defray those costs,” say Karol. sector is on an upswing in the U.S. ” Lower middle-market independent sponsor Because the need for QMC was so robust in “North America continues to be a huge Watermill Group is one such firm. Picking up the second half of 2016, Watermill bought Experi- manufacturing center. There’s a lot of on-shoring on the trend in 2015, the firm purchased Quality Metal Inc., which now operates as a collaborative taking place now because costs have gone up Metalcraft Inc. (QMC), a Livonia, Michigan- partner to QMC, offering prototype and niche in China and there are shipping costs and based manufacturer of engineered structural metal production services to original equipment transportation delays that are making China a less components and assemblies, including advanced manufacturers, automakers and new entrants to desirable place to manufacture,” says Griswold. automobile prototypes. The prototypes are most the transportation market. “The U.S. manufacturing market has a lot of often used in crash testing and to test other design “As the auto industry continues to advance tailwinds now. Although no one seems to know features. “When companies test cars, they are toward new drive trains and autonomous cars what President Trump will do, what he has said it will continue to seems to support the continued on-shoring trend require a very precise manufacturing process. There can’t be mistakes,” says Karol. “QMC is ready to meet the needs of the expanding market.” Indeed, look no further than Intel Corp.’s (NASDAQ: INTC) announcement that it will acquire Adobe Stock ACL Airshop
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trying to see what works and what doesn’t,” says Mobileye NV (NYSE: MBLY) for $15 billion. Karol, the Watermill managing partner. “These Mobileye makes chips for cameras and driver prototypes require highly accurate information assistance features, which is crucial technology in and precise engineering.” self-driving cars. According to Bain & Co., self- While many automobile companies can driving and assistive safety features in automobiles manufacture prototypes in-house, many well- will reach $22 billion to $26 billion by 2025. known and new companies outsource the work. “We found there are a lot of new transportation Aerospace companies being formed and that hasn’t ccording to Pricewaterhouse Coopers happened for 100 years,” Karol says. “These A(PWC), aerospace and defense had a The U.S. companies are using new technologies, and need disappointing 2016 when it comes to M&A. “ manufacturing QMC’s capabilities. In addition to manufacturing However, while both deal volume and value market has prototypes, the company can manufacture and declined overall compared to 2015, there was a assemble limited production runs to help the 73 percent increase in deal activity in the fourth a lot of customers get to market.” says Karol. quarter of 2016. tailwinds now. The Chevrolet Volt underbody, Chevrolet The upswing was considered an indication Camaro ZL1 hood and Cadillac CTS coupe of positive momentum in the industry after underbody all have been manufactured by QMC. significant political changes. Kirk Griswold, QMC can also provide factory-assist services. founder of Argosy Capital, a private equity fund “When an auto factory goes down, it is very currently investing its $300 million fifth fund expensive and every minute counts. QMC can that mainly focuses on manufacturing, agrees the help to defray those costs,” say Karol. sector is on an upswing in the U.S. ”
Because the need for QMC was so robust in “North America continues to be a huge Argosy Capital the second half of 2016, Watermill bought Experi- manufacturing center. There’s a lot of on-shoring Kirk Griswold Metal Inc., which now operates as a collaborative taking place now because costs have gone up that is already taking place.” partner to QMC, offering prototype and niche in China and there are shipping costs and In addition to on-shoring, there are other production services to original equipment transportation delays that are making China a less reasons M&A activity is increasing in the sector. manufacturers, automakers and new entrants to desirable place to manufacture,” says Griswold. With global demand for aircraft projected at the transportation market. “The U.S. manufacturing market has a lot of $4.8 trillion through 2032—per a 2013 PWC “As the auto industry continues to advance tailwinds now. Although no one seems to know estimate—the opportunities to make money toward new drive trains and autonomous cars what President Trump will do, what he has said appear to be abundant. Hoping to take advantage it will continue to seems to support the continued on-shoring trend of the trends, Argosy has invested in two require a very precise manufacturing process. There can’t be mistakes,” says Karol. “QMC is ready to meet the needs of the expanding market.” Indeed, look no further than Intel Corp.’s (NASDAQ: INTC) announcement that it will acquire ACL Airshop
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aerospace manufacturing companies recently. “There is rising demand for both passenger and air cargo aircraft parts from around the world. Projections tracking increasing aircraft miles flown make it a relatively stable place to invest,” says Griswold. In 2016, Argosy purchased ACL Airshop, the largest manufacturer of air cargo containment systems in the U.S. “Everything that gets shipped We make a by air goes on to pallets or in containers that “ are highly engineered and the shipments need customized device for to be strapped down or secured with a net. ACL manufacturers those Federal Aviation each Administration approved straps and nets, and sells patient. and leases other products as well,” says Griswold. The Easley, South Carolina, company manufactures, leases, sells, repairs and manages pallets, containers, nets and straps for air cargo and has more than 30 locations on six continents. Also in the aerospace sector, Argosy, along with Azalea Capital, bought InTech Aerospace, which ” is based in Houston, Texas, and manufactures and retrofits aircraft interior components, such as seats, Huron Capital floor panels, windows, wall panels and lavatories. Nick Barker The company has been adding customers since Argosy’s investment the end of 2015 and is Johnson (NYSE: JNJ) and Abbott Laboratories looking for acquisitions. “Commercial airlines (NYSE: ABT) were all involved in M&A in 2016. refurbish their aircraft interiors, including the Private equity firms such as Frazier Healthcare seats, every 18 to 36 months,” says Griswold. Partners, New Mountain Capital, Bain Capital “InTech is in growth mode and is continuously and Huron Capital Partners have been active open to considering add-on acquisitions in buyers as well. aircraft interiors, which would add value to the Advancements in manufacturing have made InTech product offering.” medical devices companies all the more valuable of late. At the end of 2016, Huron Capital Partners’ Medical Devices portfolio company Six Month Smiles’ process emand for more personalized treatment got even quicker thanks to advancement of 3-D Doptions, an increasing aging population and printing. The Dallas company manufactures and constantly changing technology has kept medical markets kits that put braces on adult patients-- device manufacturers busy. According to Today’s a quick, less expensive alternative to traditional Medical Developments, a medical device trade braces, which can take years, and linear systems, publication, the global market for medical devices like Invisalign, which have limitations. Six Month should reach about $40 billion by 2018. With Smiles’ process takes about six months—the this in mind, strategic acquirers and private equity dentist takes an impression of the patient’s mouth firms have been buying up medical devices for the and sends it to the company, which reviews the past few years. Strategic acquirers such as Canon impression, determines treatment and assembles Inc. (NYSE: CAJ), Toshiba Corp., Johnson & the wires and brackets that the dentist secures on
26 MERGERS & ACQUISITIONS May 2017
026_MAJ050117 26 4/4/2017 11:21:10 AM LEADING FIGURES IN MERGERS & ACQUISITIONS
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the patient’s teeth. “We make a customized device for each patient,” says Nick Barker, a partner with Huron Capital. With new technology, instead of taking an impression and sending it to Six Month Smiles to make a mold, dentists can now take digital images of patients’ mouths with a hand-held scanner and send the images immediately. Six Month Smiles has developed software that converts the digital Precision images into a CADD (computer-aided design “ and drafting) drawing and creates the molds with is critical in aerospace a 3-D printer. “The process is now faster and the 3-D model and medical is much more accurate, making it easier for dentist equipment. to see exactly where the brackets should be placed on patients and how things should progress,” says Barker. “3-D printing is really changing medical manufacturing. It’s not as effective if you have to stamp out millions of parts at a time, but it works especially well in a shorter-run manufacturing environment and it is able to add customization, ” which is so important today. 3D printing is
changing the manufacturing process.” The Riverside Co. Brad Roberts Precision Machining recision machining and manufacturing is Co. completed an add-on acquisition that Pexpected to exceed $120 billion by 2020 brought precision manufacturing into its suite of globally, according to Technavio, a trade capabilities. Of Helical Solutions, manufacturer publication. Precision manufacturing simply of highly engineered standard and custom end- means manufacturing products with extreme mills that enable customers to increase production accuracy. Precision machinists control, design and efficiencies, which can reduce machining time operate computer-controlled equipment that is per part and save money compared to other extremely precise. Precise machining is used in all competitive offerings. sectors that need highly engineered components “Helical maintains a highly fragmented made to meet customer’s specifications. end user base, selling its tools into diverse end According to data from the Institute for markets and to thousands of different job shops Supply Management, the fabricated metal and production facilities,” says Brad Roberts, products industry, of which precision machining a principal with Riverside. “Helical tools are is a sub sector, was one of 11 industries that grew particularly popular in end markets where in December 2016. Most of the deals in this precision is most critical, including aerospace space have been completed by larger strategic and medical equipment.” The Gorham, Maine, acquirers such as ESCO Technologies Inc. company counts the Boeing Co. (NYSE: BA) as (NYSE: ESE) and Precision Castparts Corp. But one of its customers. “With the current robust some middle market firms have found a way end market demand in aerospace and healthcare, to play in the sector. For example, through its Helical’s ability to improve manufacturing portfolio company Harvey Tool, the Riverside efficiency really resonates,” he says.
28 MERGERS & ACQUISITIONS May 2017
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029_MAJ0517 29 4/5/2017 11:50:52 AM Guest Article
eal sourcing is a constant grind and critical to a fund’s long-term success, a credence regularly reverberated Dby PE professionals. Access to the appropriate tools, complemented by the right data, is a requirement for any effective sourcing strategy. Michael Lewis’ celebrated book, Moneyball: The Art of Winning an Unfair Game, illustrated baseballs’ success in utilizing statistics and analytics to their advantage. So, why not apply similar data concepts to the intensely competitive realm of deal sourcing? To do this, first, generate scorecards for each GO intermediary, and second promote awareness of current market trends, based on your sector and criteria, and adjust your approach accordingly. Just as Moneyball describes a baseball manager’s groundbreaking effort to engineer a competitive team using performance analytics, TO each intermediary should have a scorecard that relates to your firms’ target criteria. The following performance parameters should be analyzed for each card: 1. Process Index: What type of processes does the deal intermediary run (limited, moderate or broad)? 2. Success THE Rate: What percentage of deals closed that the intermediary brought to market? 3. Relevancy: What percentage of the intermediary’s closed deals were relevant to your firm’s target criteria? 4. Coverage: Of the relevant closed deals, what percentage did your firm see? Integrating this scorecard with your current SOURCE strategy will prioritize your time and resources. Leads for new deals can be found by analyzing the Furthermore, it shouldn’t be a time-consuming, manual task. Identifying and scoring each details of recently completed transactions. intermediary based on these four performance criteria should be programmatic and seamlessly Nadim Malik updated, thereby giving you a competitive edge by directing your relationship building more astutely. Complementing the scorecard, the second component involves dissecting current market trends and sector activity to evaluate their potential impact on your deal sourcing game plan. This involves a keen awareness of who the active intermediaries are, the location and
30 MERGERS & ACQUISITIONS May 2017 May 2017 MERGERS & ACQUISITIONS 31
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030_MAJ050117 30 4/4/2017 11:22:33 AM Guest Article
eal sourcing is a constant grind and critical to a fund’s long-term success, a credence regularly reverberated Dby PE professionals. Access to the appropriate tools, complemented by the right data, is a requirement for any effective sourcing strategy. Michael Lewis’ celebrated book, Moneyball: The Art of Winning an Unfair Game, illustrated baseballs’ success in utilizing Each statistics and analytics to their advantage. So, “ why not apply similar data concepts to the intermediary intensely competitive realm of deal sourcing? should have a To do this, first, generate scorecards for each intermediary, and second promote awareness of scorecard that current market trends, based on your sector and relates to your criteria, and adjust your approach accordingly. rm’s target Just as Moneyball describes a baseball manager’s groundbreaking effort to engineer a criteria. competitive team using performance analytics, each intermediary should have a scorecard that relates to your firms’ target criteria. The
following performance parameters should be Sutton Place Strategies analyzed for each card: 1. Process Index: What Nadim Malik type of processes does the deal intermediary ” run (limited, moderate or broad)? 2. Success the volume of deals that traded, and detecting Rate: What percentage of deals closed that the potential new deal sources. To demonstrate intermediary brought to market? 3. Relevancy: these points, let’s begin with a review of the What percentage of the intermediary’s closed Healthcare sector as an example. deals were relevant to your firm’s target criteria? Over the two-year period from January 4. Coverage: Of the relevant closed deals, what 1, 2015 to December 31, 2016, the top five percentage did your firm see? cities for Healthcare deals based on target Integrating this scorecard with your current company location include Atlanta, San Diego, strategy will prioritize your time and resources. Chicago, Toronto, and Nashville. Reviewing Furthermore, it shouldn’t be a time-consuming, the data from an intermediary perspective, the manual task. Identifying and scoring each top four locations based on the professionals intermediary based on these four performance that represented these Healthcare companies criteria should be programmatic and seamlessly include New York, Chicago, San Francisco, and updated, thereby giving you a competitive edge Boston. Richmond and Minneapolis are tied by directing your relationship building more for fifth. Below are two charts examining the astutely. Healthcare transactions that traded by location, Complementing the scorecard, the second as well as the location of the professionals that component involves dissecting current market closed those deals. trends and sector activity to evaluate their Based on this analysis, Chicago should be potential impact on your deal sourcing game a significant focus in terms of your strategy. plan. This involves a keen awareness of who There are a number of Healthcare transactions the active intermediaries are, the location and that have traded in the Chicago metropolitan
30 MERGERS & ACQUISITIONS May 2017 May 2017 MERGERS & ACQUISITIONS 31
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031_MAJ050117 31 4/4/2017 11:22:36 AM Guest Article
Where healthcare targets live area, as well as a significant number of professionals Companies headquartered in Atlanta closed the most deals in that are closing Healthcare deals located in the area. 2015 and 2016 Any successful deal sourcing strategy requires an understanding of both where the target companies are 20 located, as well as the relevant sources of deal flow. Now, to demonstrate the value in discovering 15 potential new deal sources, let’s review 2016 closed
10 transactions. According to SPS data, there were 151 new deal sources that were active in 2016. These new 5 sources closed in aggregate 191 transactions. The chart below breaks out the top five sectors that saw the highest 0 volume of deals closed by a new deal source in 2016. Nashville Toronto Chicago San Atlanta The most closed deal activity came from the Industrial Diego sector with 33 deals completed. This is followed by Healthcare and IT (tied for second) with 30, Services with 29, Financials with 21, and Energy with 15 new Where healthcare intermediaries live deal sources, respectively. Advisers headquartered in New York closed the most deals in For a strategy that concentrates its investments in 2015 and 2016 these top sectors (Industrials, Healthcare, IT, Services, Financials, Energy), there is a clear advantage to New York, 46% identifying and proactively reaching out to these new Chicago, 21% intermediaries before other deal professionals have the San Francisco, 11% opportunity. Moreover, having less competition can
Boston, 10% lead to lower entry multiples, which can ultimately lead to better fund returns. Finally, it is important to Richmond, VA, 6% remain top of mind with these new sources as part of a Minneapolis, 6% long term strategy, as they bring more relevant deals to market per your criteria. If you’re still not convinced of the importance of integrating data and analytics to current sourcing methods, perhaps LP due diligence is more persuading. As other sponsors take this message to heart and use data Most active sectors with new sources and metrics as a reporting tool, you could potentially The industrial sector generated the most deals closed by a new be at a disadvantage. Furthermore, your firm could source in 2016 seem out of touch or dated in its sourcing approach. Energy Combining similar data concepts from Moneyball with current marketing practices will help to prioritize your Financial deal sourcing approach for your specific strategy, and Services put you on the path to win the World Series of deal sourcing. IT
Healthcare Nadim Malik is the founder and CEO of Sutton Place Strategies, a provider of data and analytics for PE and M&A Industrial professionals to optimize their business development efforts. 0 5 10 15 20 25 30 35 40 45 50 Catherine Daly, director of marketing communications, Source: Sutton Place Strategies contributed to this article.
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ealmaking activity rose in March, March composite at 57.5 reaching the highest level since DJune 2015, according to Mergers Middle-market dealmaking flourished in early March, as leads for new deals soared to & Acquisitions’ M&A Conditions Index the highest level since October 2014. Survey respondents expressed optimism about the (MACI). The MACI composite score economy before the withdrawal of the healthcare bill. increased 4 points to 57.5, up from the previous month’s score of 53.5. M&A CONDITIONS COMPOSITE: MARCH 2017 Most dealmakers who responded to the 70 survey expressed optimism about the 57.5 overall economy, reporting confidence 65 that Republican control of all three 60 branches of the federal government would yield fewer regulations and more 55 mergers and acquisitions. 50 Participants were surveyed March 10 through March 14, prior to the March 45 24 withdrawal of House Speaker Paul 2013 2014 2015 2016 2017 Ryan’s healthcare bill, which would 40 have repealed the Affordable Care Act, also known as Obamacare. The failure R to bring the Republican party together on the healthcare bill may portend Month to Month Trends challenges in passing legislation in other R areas, such as dismantling the Dodd- March February % Point Rate of Trend Index Direction Frank Wall Street Reform and Consumer Index Index Change Change (months) R Protection Act. ■ Composite 57.5 53.5 4.0 Expansion Faster 10
Leads 70.4 64.4 6.0 Expansion Faster 14
ABOUT THE MID-MARKET MERGERS AND ACQUISITIONS CONDITIONS INDEX (MACI) Signed Letters 61.1 58.6 2.5 Expansion Faster 2 The MACI is a composite index of mergers and acquisitions activity and conditions in the U.S. It is the result of the Mergers & Acquisitions’ survey Completed Deals 50.0 50.0 0 Even Flat 2 of executives in private equity firms, investment banks, lenders and advisor firms to track activity such as deals announced and deals completed, as From Divestitures 58.6 45.8 12.8 Expansion 1 well as acquisitions and divestitures. Contraction Each sub-indicator is based on survey responses that describe a change from the previous Financing Availability 56.1 55.9 0.2 Expansion Faster 4 month (e.g., increase, decrease, or no change). Respondents are also asked to elaborate on any of the changes and provide their opinions about other internal or external conditions that affect M&A Business Activity 59.8 52.6 7.2 Expansion Faster 10 their firm’s operations or business outlook. A diffusion index is produced for each sub-indicator by calculating the sum of percentages of those M&A Business Staffing 55.8 51.3 4.5 Expansion Faster 2 indicating “higher” (for positive sub-indicators) and “lower” (for negative sub-indicators) and half of those indicating the “same.” A reading of over 50 indicates an expansion relative to the prior month, Bidders 38.4 43.4 -5.0 Contraction Faster 14 and a reading below 50 indicates a contraction.
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034_MAJ050117 34 4/4/2017 11:23:21 AM 035_MAJ0517 35 4/5/2017 11:51:01 AM People
New Hires and Promotions By Kamaron Leach
Goodarz Agahi has joined BakerHostetler as a managing director. Based in Chicago, Cassidy will focus partner in Costa Mesa, California. Agahi focuses on on middle-market M&A opportunities for automotive M&A, leveraged buyouts, restructurings, recapitalizations parts, aftermarket providers and services companies. and financings. Glynna Christian has joined Orrick’s San Francisco David Azema has joined Perella Weinberg office as a partner co-heading the firm’s global technology Partners as a partner in the firm’s advisory business. transactions practice. Most recently with Arnold & Porter Based in London, Azema is responsible for leading the Kaye Scholer LLP, Christian concentrates on M&A, firm’s investment banking practice in France. financings and public offerings.
Derria Banta has been promoted to managing director Paul Ciolino has joined Chicago-based Derria Banta at Denver, Colorado-based Platte River Equity, in Wynnchurch Capital LLC as an operating addition to her chief financial officer duties. Banta first partner focused on investments in the heavy joined the firm in 2012 and will oversee both firm and industrials, metals, flow technology, and building fund administration for Platte River. products sectors. Ciolino previously served as the CEO of U.S. Pipe (Nasdaq: FRTA), a manufacturer James Barnes has joined Blank Rome LLP’s of water distribution products that was acquired by Pittsburgh office as a partner. Most recently with Pepper Wynnchurch Capital in April 2012. Hamilton LLP, Barnes has experience in M&A, capital markets, corporate and securities law, and corporate Daniel Clare was hired by Constitutional Capital governance. Partners as a partner heading the firm’s new office in New York. Clare joins most recently from Ascribe Capital, David Brown was hired by Nixon Peabody LLP’s which invests in the debt and equity securities of middle- Chicago office as a managing partner. Brown concentrates market companies. on M&A, private equity, securities and venture capital. Megan Condon was hired by Chicago-based Twin Mark Brown was promoted from principal to managing Bridge Capital Partners as an associate. Condon director at Denver, Colorado-based Platte River was previously a credit research associate at Logan Circle John Calcagnini Equity. Brown joined Platte River in 2011 and focuses Partners. on the firm’s investments in industrials, energy products and services companies. Dan Costello was promoted to managing director at San Francisco-based TSG Consumer John Calcagnini has joined Stout Risius Ross Partners LLC. Prior to joining TSG in 2007, Inc. as a managing director in the investment banking Costello worked at Wachovia Securities group’s healthcare industry practice. Calcagnini’s advising clients on M&A and debt and equity financings. experience extends to M&A, divestitures, joint ventures, restructurings, and equity and debt financings. Sean Coyle was promoted associate to partner at Akerman LLP. Coyle concentrates on M&A, private Jeremy Cape has joined Squire Patton Boggs as placements and asset purchases. He is based in Fort a partner in the firm’s tax strategy and benefits practice Lauderdale, Florida. group. Based in London, Cape advises on tax-related issues covering cross-border transactions including Daniel Csefalvay has joined London-based Latham M&A, finance, restructuring and insolvency, funds and & Watkins LLP as a partner in the firm’s corporate outsourcing. department and financial institutions group. Csefalvay’s previous experience includes advising domestic and cross- Jeremy Cape Todd Cassidy was hired by Raymond James as a border transactions and financial regulatory matters.
36 MERGERS & ACQUISITIONS May 2017
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Chris Dardaman has joined Atlanta-based Heritage Seth Harward was promoted from principal to partner James Kirk was promoted from principal to managing Growth Partners LLC, a private family investment office, at Charlotte-based Frontier Capital. Harward joined director at New York-based Corsair Capital LLC. Kirk’s as a partner. Former CEO of Brightworth, Dardaman focuses Frontier Capital in 2008 and leads the firm’s business focuses on M&A and capital raising. He joined the firm on minority recapitalization opportunities. development and sourcing strategy. in 2004.
Matteo Daste has joined Orrick’s San Francisco office Kevin Hawkins was hired by Altantra’s Boston office as Michael Layman has been promoted to managing as a partner in the law firm’s technology group. Daste a vice president. Hawkins concentrates on technology M&A, director at TSG Consumer Partners LLC in San advises public and private clients on M&A, capital-raising, including software, Internet of Things and communications. Francisco. Layman joined TSG in 2009 and concentrates and reorganizations. He was previously with Bowen Advisors. on M&A, debt and equity financings, and due diligence.
Melissa Dickerson has been promoted to chief Renata Hesse has joined Sullivan & Cromwell LLP as Ray LaSoya has joined Los Angeles-based Cooley Melissa Dickerson financial officer and managing director of operations at San a partner in the firm’s Washington, D.C. office. Most recently LLP as a partner in the firm’s M&A practice. Most Francisco-based Genstar Capital. Before joining the firm serving as the acting assistant attorney general in charge of recently with Stroock Stroock Lavan LLP, LaSoya’s in 2004, Dickerson worked as the controller at American the U.S. Department of Justice’s antitrust division, Hesse previous experience covers corporate transactions, Industrial Partners. focuses on antitrust counseling and merger clearance. acquisitions and divestitures, and private and public equity investments. John Emery has joined Alantra’s Boston office as a Gregory Hill has joined Hogan Lovells’ Houston office managing director. Most recently with Bowen Advisors, as a partner. Hill will represent clients on M&A, capital Alexander Lee was hired by McDermott Will & Emery concentrates on technology M&A, including SaaS, investment and fund formation. Emery as a tax partner in the firm’s Los Angeles office. security and communications. Lee joins most recently from Paul Hastings LLP and Scott Hoch was promoted from principal to partner at focuses on M&A, capital markets, lending and finance Craig Farr was hired by New York-based Carlyle Charlotte-based Frontier Capital. Hoch joined the firm in with an emphasis on the healthcare industry. Group (Nasdaq: CG) as a senior adviser in the firm’s 2007 and is responsible for executing new investments with global credit group. In his new role, Farr will help a focus on healthcare information and human resources Jeff Legault was hired by DLA Piper in New York as develop new strategic initiatives across Carlyle’s technology. a partner in the firm’s corporate practice. Legault focuses credit platform, which includes loans and structured on M&A and private equity across the life sciences, credit, private credit, energy credit and distressed Justin Jacobi was promoted CEO to executive chairman manufacturing and financial services industries. credit. of Addison, Illinois-based SunSource, a fluid power Renata Hesse distribution company backed by Littlejohn & Co. Sacher Joe Manning was promoted to partner at The Patrick Flanagan was hired by New York-based Cooley joined SunSource in 2002 and focuses on strategic Riverside Co.’s Cleveland office. Currently the lead on LLP as a partner in the firm’s private equity practice. growth initiatives, including acquisition planning and new three platform investments, Manning first joined the firm Flanagan focuses on both domestic and international technology initiatives. in 2006 and rejoined in 2011. leveraged finance transactions, including: acquisitions and debt financing. Rainey Janke has joined Post Oak Energy Capital Niall McComiskey has been promoted from as vice president of investor relations where she will serve director to a managing director at New York-based Roger Fradin has joined the Carlyle Group as an as the primary liaison with institutional investors. Janke Greenbriar Equity Group LLC. Since joining the operating executive for the firm’s industrial and transportation was most recently the vice president of investor relations firm in 2006, McComiskey has led the structuring team. Fradin was most recently with Honeywell International at EnerVest. Post Oak is a Houston-based energy-focused and sourcing of numerous investments across the (NYSE: HON) where he was responsible for advancing the private equity firm. transportation sector. company’s M&A strategy. Thomas Kelso has been promoted to president at middle- Michele McHale was promoted to national private equity Jay Galluzzo was promoted from an operating adviser market investment bank Matrix Capital Markets Group industry leader at Southfield, Michigan-based Plante to managing director at Greenwich, Connecticut-based Inc. Based in Richmond, Virginia, Kelso’s new role will be Moran. McHale is also a partner in the firm’s transaction North Castle Partners. In his new role, Galluzzo will in addition to his current responsibilities as managing advisory services practice and focuses on private equity be responsible for pursuing new investments in general director and principal of Matrix’s downstream energy and and M&A across the manufacturing, distribution, Alexander Lee consumer businesses. convenience retail group. construction and healthcare sectors.
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Seth Harward was promoted from principal to partner James Kirk was promoted from principal to managing Shawn McMenimen has joined New York- at Charlotte-based Frontier Capital. Harward joined director at New York-based Corsair Capital LLC. Kirk’s based Gen II Fund Services LLC as a senior Frontier Capital in 2008 and leads the firm’s business focuses on M&A and capital raising. He joined the firm managing director. McMenimen joins the development and sourcing strategy. in 2004. firm from State Street, and will now be responsible for managing the firm’s client relationships Kevin Hawkins was hired by Altantra’s Boston office as Michael Layman has been promoted to managing and oversight of Gen II’s compliance department. a vice president. Hawkins concentrates on technology M&A, director at TSG Consumer Partners LLC in San including software, Internet of Things and communications. Francisco. Layman joined TSG in 2009 and concentrates Winston Meade has joined investment bank He was previously with Bowen Advisors. on M&A, debt and equity financings, and due diligence. Stephens Inc. as a managing director and head of the firm’s telecommunications banking division. Based in Renata Hesse has joined Sullivan & Cromwell LLP as Ray LaSoya has joined Los Angeles-based Cooley New York, Meade joins the firm from UBS Investment Ben Marshall a partner in the firm’s Washington, D.C. office. Most recently LLP as a partner in the firm’s M&A practice. Most Bank. serving as the acting assistant attorney general in charge of recently with Stroock Stroock Lavan LLP, LaSoya’s the U.S. Department of Justice’s antitrust division, Hesse previous experience covers corporate transactions, Gregory Metz has joined McDermott Will & Emery focuses on antitrust counseling and merger clearance. acquisitions and divestitures, and private and public in Chicago as a partner in the firm’s corporate and equity investments. transactional practice group. Previously at Ropes & Gray Gregory Hill has joined Hogan Lovells’ Houston office LLP advising clients on M&A, Metz will focus on middle- as a partner. Hill will represent clients on M&A, capital Alexander Lee was hired by McDermott Will & market private equity. investment and fund formation. Emery as a tax partner in the firm’s Los Angeles office. Lee joins most recently from Paul Hastings LLP and Steve Mills has joined New York private equity firm Scott Hoch was promoted from principal to partner at focuses on M&A, capital markets, lending and finance Bridge Growth Partners LLC as a senior adviser. Charlotte-based Frontier Capital. Hoch joined the firm in with an emphasis on the healthcare industry. Mills previously served as executive vice president of 2007 and is responsible for executing new investments with International Business Machines Corp. (NYSE: IBM), a focus on healthcare information and human resources Jeff Legault was hired by DLA Piper in New York as where he oversaw the company’s M&A strategy which technology. a partner in the firm’s corporate practice. Legault focuses included more than 150 transactions. on M&A and private equity across the life sciences, Justin Jacobi was promoted CEO to executive chairman manufacturing and financial services industries. Guy Phillips was hired by Stout Risius Ross Inc. as of Addison, Illinois-based SunSource, a fluid power a senior adviser in the firm’s investment banking group. distribution company backed by Littlejohn & Co. Sacher Joe Manning was promoted to partner at The Phillips advises companies in the consumer products Shawn McMenimen joined SunSource in 2002 and focuses on strategic Riverside Co.’s Cleveland office. Currently the lead on and retail sectors. growth initiatives, including acquisition planning and new three platform investments, Manning first joined the firm technology initiatives. in 2006 and rejoined in 2011. Matt Pennino has joined Bryant Park Capital LLC as a managing director in New York. Most recently with Rainey Janke has joined Post Oak Energy Capital Niall McComiskey has been promoted from Brean Capital, Pennino focuses on capital raising and as vice president of investor relations where she will serve director to a managing director at New York-based advisory transactions. as the primary liaison with institutional investors. Janke Greenbriar Equity Group LLC. Since joining the was most recently the vice president of investor relations firm in 2006, McComiskey has led the structuring Matt Petrucci was promoted to national transaction at EnerVest. Post Oak is a Houston-based energy-focused and sourcing of numerous investments across the advisory services leader at Plante Moran. Petrucci private equity firm. transportation sector. previously led the firm’s transaction advisory services team in Chicago where he focused on middle-market Thomas Kelso has been promoted to president at middle- Michele McHale was promoted to national private equity buy-side and sell-side transactions. market investment bank Matrix Capital Markets Group industry leader at Southfield, Michigan-based Plante Inc. Based in Richmond, Virginia, Kelso’s new role will be Moran. McHale is also a partner in the firm’s transaction David Quon was hired by White Oak Global Advisors in addition to his current responsibilities as managing advisory services practice and focuses on private equity LLC as a managing director. Quon will responsible for director and principal of Matrix’s downstream energy and and M&A across the manufacturing, distribution, originating and structuring new investment opportunities convenience retail group. construction and healthcare sectors. in the greater Chicago, Midwest and Canadian regions. Matt Pennino
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Andrew Rueff has been appointed as an operating transactions, and will now head Matrix’s consumer partner at middle-market private equity firm Waud and industrial products group. Capital Partners. Based in Chicago, Rueff will focus on pursuing new platform investments in the Katie Solomon has been promoted to managing payments and financial technology sectors. director at San Francisco-based Genstar Capital, focusing on talent management. Solomon joined the Garrett Ryan was hired by middle-market lender firm in 2011 and works to help drive growth through Twin Brook Capital Partners asa a partner and the identification and acquisition of talent. head of capital markets. Based in Chicago, Ryan was most recently a managing director at Fifth Third Bank. Steven Spiteri has been promoted to partner in the Twin Brook is a subsidiary of Angelp Gordon & Co. Melbourne, Australia office of The Riverside Co. Guy Phillips Prior to joining the PE firm in 2010, Spiteri worked Alejandro Ruiz has joined McDermott Will & at Hastings Private Equity and KPMG Corporate Emery as a partner in San Francisco. Ruiz joins most Finance. recently from Greenberg Taurig where he advised on tax issues of domestic and cross-border transactions Craigh Stoehr was hired by Michael Best’s including: M&A, buyouts, debt and equity financing, Milwaukee office as a partner. Previously with Latham and fund formations. & Watkins, Stoehr concentrates on private equity and M&A and restructuring. He also served as head of Joseph Salley was hired by New York-based M&A at travel company Thomas Cook Group plc. Arsenal Capital Partners as an operating partner within the firm’s specialty industrials group. Salley was Adam Tope has joined New York-based Hogan most recently with Milliken & Co. as CEO, handling Lovells LLP as a partner in the firm’s corporate acquisitions, integrations, and business exits. practice. Tope joins the law firm most recently from Greenberg Traurig LLP and will advise clients on all Ben Schryber has joined the New York office of aspects of fund information. Carlyle Group LP as a managing director leading credit sales and global business development efforts. Michael Vossen has been promoted from principal David Quon Schryber previously held positions at First Avenue to managing director at Minneapolis-based GMB Partners, Albourne Partners, and Blue Ridge Partners. Mezzanine Capital. Before joining the firm as an analyst in 2005, Vossen worked at Piper Jaffray & Co. Ian Schwartz has joined McDermott Will & (NYSE: PJC) and Deloitte & Touche LLP. Emery as a partner in New York. Schwartz, a former partner at Fried Frank Harris Shriver & Jacobson LLP, Fred Wang was hired by Menlo Park, California- will head the firm’s investment funds practice. based Adams Street Partners as a partner and a member of the firm’s ASP Capital investment team. Paul Scrivano has joined New York-based Ropes Wang will focus on directly investing in enterprise & Gray LLP as a partner in San Francisco. Scrivano and security software opportunities. serves as global head of the firm’s mergers & acquisitions practice. Brian Wornow has joined New York-based investment bank Keefe, Bruyette & Woods Inc. David Shoulders was promoted from director as a managing director in the financial services sector. to managing director at Richmond, Virginia- Wornow will be responsible for advising clients on based Matrix Capital Markets Group M&A, divestitures, private equity, and debt offerings for Inc. Shoulders has been with the investment bank for the real estate sector. He joins most recently from Clayton Katie Solomon more than ten years sourcing M&A and capital raising Holdings.
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040_MAJ050117 40 4/4/2017 12:01:12 PM 003_MAJ0517 3 4/5/2017 11:50:30 AM Figure 1: Figure 2: Typical Paying Agent Process Wilmington Trust FASTTRACK
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Services are provided by Wilmington Trust, N.A. Wilmington Trust FASTTRACK uses secure authentication methods to provide a safe and simple way to submit all materials. Wilmington Trust is a registered service mark. Wilmington Trust Corporation is a wholly owned subsidiary of M&T Bank Corporation. Wilmington Trust Company, operating in Delaware only, Wilmington Trust, N.A., M&T Bank, and certain other affi liates provide various fi duciary and non-fi duciary services, including trustee, custodial, agency, investment management, and other services. International corporate and institutional services are offered through Wilmington Trust Corporation’s international affi liates. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank, member FDIC. ©2017 Wilmington Trust Corporation and its affi liates. All rights reserved.
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