January 18th, 2019

People’s United buys tech finance firm

People’s United Financial in Bridgeport, Conn., has bought a Texas-based technology finance company as part of a broader effort to expand into new areas of lending.

The $48 billion-asset People’s said Thursday that it paid all cash for VAR Technology Finance, but did not disclose the financial terms of the deal otherwise.


Jack Barnes is People’s United’s chairman and CEO.

“VAR’s sole focus and knowledge of the technology sector for nearly 30 years is a critical component of this acquisition, allowing us to further expand our equipment leasing and finance offerings into the technology sector,” Chairman and CEO Jack Barnes said in a press release. “VAR will be a valuable addition to our equipment finance portfolio and enhance the client experience.”

People’s United is trying to grow its market share in the Boston area, and part of its strategy there involves building up its specialty banking businesses. The company hired a banker away from Silicon Valley Bank to lead a new business focused on tech firms, and it’s also hired bankers specializing in other areas such as not-for-profits and franchises.

VAR provides equipment financing for small, medium and large technology companies. Last year it originated about $180 million in loans, People’s United said. VAR will become a division of Leaf Commercial Capital, an equipment finance firm the bank bought in 2017. VAR has 90 employees.

Separately, People’s United said in November that it would buy the $3 billion-asset BSB Bancorp in Belmont, Mass. That deal would give People’s United six branches in the Boston market and should nudge the bank up to No. 7 by deposit market share there.

People’s United also released its fourth-quarter results Thursday, saying that net income increased 25% from the year-ago quarter to $132.9 million. Total revenues increased 9.4% to $428.2 million.

Earnings per share totaled 35 cents, coming in 10 cents lower than the mean estimate of analysts polled by FactSet Research Systems.

Net interest income rose 13.8% to $332.6 million, and the net interest margin widened 10 basis points to 3.17%. Average loans increased 8.4% to $35 billion. Commercial loans rose 6% to $25 billion, while residential mortgages lifted retail loans 14.6% to $10.2 billion.

Average deposits grew 9.4% to $36 billion.

Noninterest income increased 1.6% to $88.7 million. Noninterest expenses grew 9.6% to $262.7 million and included $12.3 million in compensation and benefits, primarily resulting from its recent acquisition of First Connecticut Bancorp.

The company said its efficiency ratio improved to 55.1% from 56.1% in the fourth quarter of 2017.

January 18th, 2019

PE fundraising scorecard: Atlantic Street, CVC, Peak Rock

Name of Issuer Date of First Sale Total Offering Amount AF Specialty Finance Partners, L.P. 1/2/2019 $100,000,000 QS Club Fund II SCA SICAV-RAIF First Sale Yet to Occur $30,000,000 QS Club Fund II Feeder B SLP First Sale Yet to Occur $30,000,000 Asterion Industrial Infra Fund I, FCR 11/21/2018 $968,671,900 Martis Partners III, LP First Sale Yet to Occur $450,000,000 PEAK ROCK CAPITAL EXECUTIVE FUND II LP First Sale Yet to Occur Indefinite PEAK ROCK CAPITAL EXECUTIVE CREDIT FUND II LP First Sale Yet to Occur Indefinite EquityZen Growth Technology Fund LLC – Series 352 1/11/2019 $88,533 EquityZen Growth Technology Fund LLC – Series 302 1/10/2019 $292,500 AIGGRE U.S. Real Estate Fund III AHNU Feeder, LLC 1/2/2019 $292,000,000 AIGGRE U.S. Real Estate Fund III, LP 1/2/2019 $2,000,000,000 MBK Capital LP – Series CT 12/21/2018 Indefinite ECP Opportunity II, LLC First Sale Yet to Occur $8,000,000 MVP LS FUND XCVII LLC First Sale Yet to Occur $2,000,000 CVC Capital Partners Asia V L.P. First Sale Yet to Occur Indefinite NCP-Encore Co-Invest I, L.P. 12/21/2018 $80,000,000 MVP ES FUND LII LLC First Sale Yet to Occur $2,000,000 MVP ES FUND LI LLC First Sale Yet to Occur $2,000,000 MVP ES FUND LIII LLC First Sale Yet to Occur $2,000,000 NP Railcar Investments III LP 12/22/2017 $500,000,000 Falcon Edge India I LP 1/7/2019 Indefinite Altera Boardwalk KSI PA LLC 12/11/2018 $2,200,000 Pemberton Debt Fund Delaware II LP 1/3/2019 $75,000,000 AIGGRE U.S. Real Estate Fund III Lexington Feeder, LLC 1/2/2019 $122,000,000 CL Orlando, LLC 6/16/2017 $9,850,000 CL Milwaukee, LLC 6/26/2018 $15,000,000 LAV Biosciences Fund V, L.P. First Sale Yet to Occur $750,000,000 LAV Biosciences Fund V Feeder, L.P. First Sale Yet to Occur Indefinite JBA-Supreme Investment Fund, LLC 1/2/2019 $6,900,000 SOLAMERE PORTFOLIO CO INVESTMENTS III, LLC 12/26/2018 Indefinite Black Dragon Capital L.P., Series Twelve First Sale Yet to Occur Indefinite MVP LS FUND C LLC First Sale Yet to Occur $2,000,000 Turning Rock SCF LLC 12/31/2018 Indefinite MRP Value Offshore Fund I, LP 1/1/2019 Indefinite MRP Value Fund I, LP 1/1/2019 Indefinite Granite Equity Associates LLC First Sale Yet to Occur $50,000,000 Granite Equity LLC 1/1/2019 $50,000,000 LARSON CAPITAL FUND V, LLC 6/15/2017 Indefinite Verdane Capital X (D) AB 10/9/2018 $640,126,666 Summa Equity Fund II (No. 3) AB 1/1/2019 Indefinite Summa Equity Fund II (No. 2) AB 1/1/2019 Indefinite Summa Equity Fund II (No. 1) AB 1/1/2019 Indefinite Monticello Structured Products, LLC 12/29/2018 Indefinite LKCM Headwater Investments III, L.P. 1/1/2019 Indefinite Carlyle Sabre Coinvestment, L.P. First Sale Yet to Occur Indefinite CWC Endeavor Fund, LP First Sale Yet to Occur Indefinite MVP LS FUND XCIX LLC 1/14/2019 $2,000,000 MVP LS FUND XCVIII LLC 1/14/2019 $2,000,000 Bowmark Capital Partners VI, L.P. 12/28/2018 $292,253,986 Churchill Middle Market Senior Loan Fund II – Master Fund, LP 9/6/2018 $1,500,000,000 Entrepreneurial Equity Partners Fund I SLFB Co-Invest, L.P. First Sale Yet to Occur Indefinite VPC PARTNERS XVI LLC 1/3/2019 Indefinite Oaktree European CLO Capital Fund Ltd 10/18/2018 $230,000,000 Carlyle Europe Technology Partners IV – EU, S.C.Sp. First Sale Yet to Occur Indefinite Carlyle Europe Technology Partners IV, S.C.Sp. First Sale Yet to Occur Indefinite Lion Capital Fund IV SBS L.P. 12/31/2018 $18,137,875 Lion Capital Fund IV SBS (USD), L.P. 12/31/2018 $23,399,055 Flashstarts Blockchain Fund, L.P. First Sale Yet to Occur $6,000,000 MVP ES FUND L LLC First Sale Yet to Occur $2,000,000 MVP LS FUND XCIV LLC 1/9/2019 $2,000,000 MVP LS FUND XCIII LLC First Sale Yet to Occur $2,000,000 MVP LS FUND XCV LLC 1/9/2019 $2,000,000 MVP LS FUND XCVI LLC 1/14/2019 $2,000,000 Atlantic Street Capital IV, LP 1/4/2019 $500,000,000 Summit Growth Equity X Access (U.S.), L.P. First Sale Yet to Occur Indefinite Summit Growth Equity X Access (International), L.P. First Sale Yet to Occur Indefinite HCPE II, LP First Sale Yet to Occur Indefinite ATP FUND 7 GIORGETTI 2017, LP 5/3/2018 $7,450,000 New York Co-Investment Pool Asia Investors III, LP 1/1/2019 Indefinite AIS LS Fund 1 TX, LLC First Sale Yet to Occur $5,000,000 ALBARON ACQUISITION II LP 1/7/2019 $2,120,000 PAGAC Galileo Holding I LP 12/28/2018 Indefinite QUAKE HIGH CONFIDENCE FUND II, L.P. 12/12/2018 $2,000,000 CIFC CLO Opportunity Fund III (UST) LP First Sale Yet to Occur Indefinite CIFC CLO Opportunity Fund III LP First Sale Yet to Occur Indefinite Private Equity Regulation D Filings (New Notices) January 11 to 17, 2019 Source: SEC Filings
January 18th, 2019

Luxury online reseller The RealReal in talks with banks for IPO

U.S. online luxury reseller The RealReal is talking to investment banks about the possibility of an initial public offering (IPO) later this year, people familiar with the matter said on Friday.

The company — which specializes in online secondhand luxury apparel and goods — has sent out a request for proposals to prospective advisers and underwriters to manage the listing this year, said the sources, who asked not to be identified because they were not authorized to speak publicly.

The RealReal declined to comment.

In July last year, The RealReal raised $115 million of private funding in a deal led by Perella Weinberg Partners, with additional participation from new investor Sandbridge Capital and existing investor Great Hill Partners. The deal valued the company at $745 million, according to data provider PitchBook.

Since then, the company, which was founded in 2011, has focused on expanding its brick-and-mortar presence with outlets in new areas and more online fulfillment centers.

The RealReal’s success is built on a profitable mix of the boom in e-commerce, the millennial interest in the price and environmental benefits of recycled clothing, and the caution of established high-end brands about what selling their wares on the web can do to brand value.

Fellow e-commerce platform Farfetch went public in last September at the top of its target IPO price range, raising $885 million.

January 18th, 2019

Tesla to Cut 3,000 Jobs in Bid to Sell Model 3 to Mass Market

Tesla will reduce its full-time work force by 7 percent in an effort to lower the cost of producing its Model 3 sedan and make it a mass-market vehicle, Elon Musk, the electric-car maker’s chief executive, told employees on Friday.

The least-expensive version of the Model 3 now available costs $44,000. Mr. Musk said in a companywide email that he wanted the lowest-priced Model 3 to sell for $35,000.

To do so, Mr. Musk said in the email, Tesla must improve the car’s design, increase production and shed thousands of workers. “There isn’t any other way,” he wrote.

Tesla shares closed down 13 percent after the announcement.

The cuts, which could put more than 3,000 people out of work, follow a 9 percent reduction in Tesla’s staff in June. Another of Mr. Musk’s companies, the privately held rocket maker SpaceX, said this month that it would shrink its work force by about 10 percent.

Given the continuing uncertainty in global financial markets and signs that consumers are spending less, trimming costs to focus on affordability is “a prudent thing to do” for a company that started out selling cars with an average price close to $100,000, said Romit Shah, a research analyst at Nomura Instinet.

In October, Tesla reported that the third quarter of 2018 had yielded its first quarterly profit in two years, and its largest ever, thanks to cost-cutting moves, delayed payments to suppliers and a surge in production and sales.

Mr. Musk said in his email on Friday that, based on preliminary, unaudited results, the company expected to earn a smaller profit in the fourth quarter.

“This quarter will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit,” he wrote in his email on Friday.

In the third quarter, Mr. Shah said, Tesla “needed to get to profitability to survive, and they wouldn’t have gotten there if they were selling a $35,000 car.”

“They would have lost money on every car they sold,” he added, echoing a sentiment expressed by Mr. Musk last spring.

To meet its production and profit targets, Tesla focused on selling more upscale models of the Model 3 to a core group of Tesla enthusiasts willing to pay the higher prices.

“But there’s only a finite number of potential customers willing spend over $50,000 on a Model 3,” Mr. Shah said. “If Tesla wants to see a pathway to a million cars sold a year, they’re going to have to bring down that price point.”

To succeed, the company will need to extend its appeal to a wider audience. Mr. Musk said Friday that Tesla must begin to deliver its midrange Model 3 in all markets by around May while making progress toward producing the $35,000 version he envisions.

“Head count reduction is part of the process,” Philippe Houchois, an analyst at Jefferies, said in a note to clients.

Tesla has already lowered prices for all of its vehicles this month by $2,000 as a federal tax credit for buyers of electric cars that was worth $7,500 last year begins to be phased out.

“While we have made great progress, our products are still too expensive for most people,” Mr. Musk wrote. Last year “was the most challenging in Tesla’s history,” he added, and “the road ahead is very difficult.”

Mr. Musk traveled to Shanghai this month to break ground for Tesla’s Gigafactory assembly plant. It is expected to be producing Model 3s by the end of the year.

Having a base in China, which imposes a 15 percent tariff on imported cars, will give Tesla an advantage over automakers that produce vehicles outside the country. But economic activity is slowing in China, and many consumers there are cutting back on spending.

The car market in the United States is also showing signs of strain, with sales flattening last year.

Tesla is also contending with a challenge from traditional automakers like Ford, General Motors and Nissan, which are pushing harder into the electric-vehicle market. Audi, Jaguar, Mercedes-Benz and others have also introduced or plan to produce electric models that in many cases are less expensive than Tesla’s.

As Tesla struggled last year to cope with a Model 3 production and delivery process that Mr. Musk has described as “hell,” his behavior created distractions for the company.

In August, he wrote in a short, cryptic post on Twitter that he was considering taking Tesla private and had “funding secured,” surprising board members and driving up the stock price.

The Securities and Exchange Commission later sued Mr. Musk in federal court, saying he had misled investors. He settled with the agency, agreeing to pay a $20 million fine and to step aside as chairman for three years.

January 18th, 2019 January 18th, 2019

DealBook Briefing: Report on Trade Talks Lifts Global Markets

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A report from the WSJ on Thursday said that Treasury Secretary Steven Mnuchin had suggested ending some or all tariffs against China, lifting global stocks even after his agency stressed that trade talks were far from complete.

Mr. Mnuchin said that easing the penalties would encourage China to make longer-term concessions while calming jittery markets, according to the report, which cited anonymous sources.

The Treasury Department later said that officials had made no recommendations on tariffs.

China’s trade czar, Liu He, is scheduled to participate in negotiations in Washington on Jan. 30. After March 1, tariffs on $200 billion in Chinese goods are set to grow to 25 percent from 10 percent.

In other China news:

• China’s ambassador to Canada warned of “repercussions” if the Chinese telecommunications giant Huawei were blocked from Canada’s 5G network. Huawei’s chief financial officer, Meng Wanzhou, was arrested last month in Vancouver, British Columbia, and the company has also faced resistance and suspicion from Germany, the U.S. and other Western countries.

• Foreign investors such as Blackstone Group spent a record $9 billion on commercial real estate in China last year.

• Chinese tech companies, stressed by trade tensions, stricter policing of online content and a slowing domestic economy, cut hiring ads 20 percent in the last quarter of 2018.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin and Stephen Grocer in New York, and Tiffany Hsu and Gregory Schmidt in Paris.

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After decades of mismanagement, Paramount Pictures, the once-vaunted studio behind classic films like “The Godfather” and “Chinatown,” is fighting for its existence, write Amy Chozick and Brooks Barnes.

The challenge: The studio racked up nearly $900 million in losses in the last two years. It has placed last at the domestic box office for seven years running. It shed its lucrative TV business years ago. And the Paramount lot is long overdue for improvements.

The competition: The old-line film business is going to become tougher as streaming services proliferate. Netflix will pump out about 90 movies this year. Apple intends to roll out its multibillion-dollar TV and movie offering, and Facebook has become serious about its Watch video-on-demand platform.

The solution: Paramount restarted television production in 2013 and now has nine series running, including “Jack Ryan” on Amazon Prime. It hired one of Hollywood’s top producers, Wyck Godfrey, as president of the film division. And it hopes to make 17 movies in 2020, with a focus on big budgets and global audiences.

On the 28th day of the government shutdown, Washington feels like “an unruly sandbox,” where “septuagenarian politicians are squabbling like 7-year-olds,” writes Mark Landler.

Speaker Nancy Pelosi, who had pressed President Trump to postpone his State of the Union address, received his sarcasm-laced response on Thursday.

Without mentioning the speech, the president said he was canceling a secret trip for Ms. Pelosi and other members of Congress to meet with NATO officials in Brussels and visit American troops in Afghanistan. She was expected to depart Thursday on a military aircraft; Mr. Trump said she could fly commercial, “obviously.”

Senator Lindsey Graham, Republican of South Carolina, was not amused. He said in a statement:

“One sophomoric response does not deserve another.”

President Trump also canceled a U.S. delegation set to attend the World Economic Forum in Davos, Switzerland. But Melania Trump, the first lady, kept her plans to fly on a military jet to the family’s Mar-a-Lago compound in Florida.

The stalemate over Homeland Security spending has grown increasingly bitter. Democrats suggested they would introduce their own proposals for protecting the country’s borders.

Meanwhile, tens of thousands of federal employees have sought unemployment benefits, with more filing claims every week.

Pacific Gas and Electric promised that its customers’ lights would stay on if it followed through on plans to file for bankruptcy this month. But a filing could be wrenching for power producers, especially those in renewable resources, write Ivan Penn and Peter Eavis.

PG&E said that it would use bankruptcy protection to resolve huge liabilities arising from deadly wildfires in California. Such a move would allow it to walk away from older contracts with suppliers, particularly those with developers of renewable energy that were negotiated when solar panel prices were higher.

Credit Suisse analysts estimate that PG&E could save $2.2 billion a year by renegotiating renewable power contracts down to current market prices.

More news: The prospective bankruptcy has exposed the risks of green-power investments: If the utility can renegotiate high-cost contracts, other companies will do the same. Fitch Ratings said the planned bankruptcy would not damage California’s credit rating.

She was named fashion icon of the year by the Council of Fashion Designers of America in 2014. She became Dior’s first black brand ambassador in 2015. Her Fenty Beauty cosmetics line is intensely popular; her Fenty x Savage lingerie collection debuted to great acclaim at New York Fashion Week.

It looks like LVMH Moët Hennessy Louis Vuitton, the parent company of Dior, Givenchy and Fendi, could do worse than partnering with Robyn Rihanna Fenty.

The luxury conglomerate is working on a deal that would make Rihanna its first female designer of color. The partnership would build a brand from scratch in a way the company hasn’t tried since starting the Christian Lacroix label in 1987, according to anonymous sources.

The deal would be “a turning point in both fashion and fame,” writes Vanessa Friedman, who calls it:

“The clearest expression yet of how celebrity, social media and influencers have redefined the power balance between culture and consumption, changing the way brands of all kinds relate to their audience.”

Wall Street is nervous about luxury spending, however, as stock market declines in recent months could compel consumers to scale back purchases, according to an analysis from Goldman Sachs.

News Corporation said that Jesse Angelo was stepping down as publisher and chief executive at The New York Post. He is to be replaced by Sean Giancola, The Post’s chief revenue officer. (NYT)

Justin Dearborn, the chief executive of Tribune Publishing, will be succeeded by the newspaper company’s president, Tim Knight. (Bloomberg)

Adrian Croxson, head of European equities for the hedge fund Och-Ziff, is leaving the firm after a difficult period of performance. (FT)

Deals

• Sears’s creditors oppose the retailer’s proposed sale to Edward Lampert, and are seeking to sue him for the “excruciating, slow-motion destruction” of the company. (WSJ)

• Alstom warned that European regulators could block its planned merger with Siemens. (Bloomberg)

• Maoyan Entertainment, the biggest online movie ticketing platform in China, is seeking to raise as much as $345 million in an initial public offering. (Bloomberg)

Tech

• Tesla said it would cut its work force about 7 percent, citing difficulties in making affordable electric cars for the mass market. (NYT)

• Netflix said its first-quarter revenue would miss Wall Street estimates, sending its shares down in after-hours trading. (Reuters)

• Google is spending $40 million to acquire smartwatch technology from Fossil. (CNBC)

• Facebook removed nearly 500 pages and accounts targeted at Eastern Europe and Central Asia, saying they were disinformation campaigns originating from Russia. (NYT)

Politics and policy

• Michael Cohen hired a small tech firm try to rig online polls in Donald Trump’s favor before the presidential campaign, and then allegedly stiffed the owner. (WSJ)

• The law firm Skadden, Arps, Slate, Meagher & Flom will pay the government $4.6 million to settle an investigation into its work in Ukraine with Paul Manafort, President Trump’s former campaign chairman. (NYT)

• Senator Elizabeth Warren, Democrat of Massachusetts, wants Wells Fargo kicked off college campuses, saying the bank charged “struggling college students exorbitant fees.” (Bloomberg)

Best of the rest

• Leslie Moonves plans to fight for the $120 million severance payment that CBS denied him. T (NYT)

• “Humility,” “ethics” and “simplicity” are not words usually associated with investment titans, but they surfaced constantly in descriptions of Vanguard’s John Bogle. (NYT)

• A tower rises at Hudson Yards amid an epic test of wills between Stephen Ross, a powerful developer, and New York’s mightiest construction union. (FT)

• The Rhine, a crucial commercial artery in Europe for moving coal, food and thousands of other goods, is running dry because of climate change. (Bloomberg)

• A vestige of corporate culture in Asia, where men openly drink with colleagues or clients alongside paid female escorts, persists in the #MeToo movement. (Bloomberg)

• Americans, especially millennials, are scaling back their alcohol intake. (WSJ)

• Popular definitions for “bear markets” aren’t scientifically based, the economist Robert Shiller says, yet they can contribute to downward spirals. (NYT)

• Fine wine is targeted by fake wine-buying companies in a familiar investment fraud. (FT)

• As part of the U.S. government’s investigation into Volkswagen’s diesel emissions cheating scandal, a grand jury in Detroit indicted four managers at the company’s luxury Audi unit. (Reuters)

Thanks for reading! We’ll see you on Tuesday.

We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.

January 18th, 2019

M&A wrap: Campbell Soup, Gryphon Investors, People’s United, M&A Mid-Market Awards


Photo credit: Bloomberg News

Mergers & Acquisitions seeks nominations for the 12th Annual M&A Mid-Market Awards, which will honor leading dealmakers and deals that set the standard for transactions in the middle market in 2018. The deadline for nominations is end of day Friday, February 8, 2019. Click here to submit nominations. To determine the winners, Mergers & Acquisitions considers a variety of factors. We look for companies and individuals who overcame the challenges the year brought, embodied the trends of the period and took their businesses to the next level. Market leadership and performance are important, but league tables aren’t everything. Growth counts for a lot, especially when the rate of growth outpaces peers and the overall industry. Innovation also counts. We value companies that businesses. Thought leadership in the industry is also relevant. Looking at past winners provides a good guide to what we’re seeking. Last year’s winners included Campbell Soup, Huron Capital, Idera, LLR Partners, McGuireWoods, Stryker, Twin Brook and William Blair. For more information, read the full story: Call for Nominations: 12th Annual M&A Mid-market Awards

Deal news
People’s United Financial in Bridgeport, Conn., has bought a Texas-based technology finance company as part of a broader effort to expand into new areas of lending. The $48 billion-asset People’s said that it paid all cash for VAR Technology Finance. Read the full story: People’s United buys tech finance firm.

Gryphon Investors-backed Hepaco has acquired PetroChem Recovery Services, a provider of environmental services for transportation, industrial and government companies, from Succession Capital Partners. Katten Muchin Rosenman LLP advised Hepaco. Queen Saenz + Schutz PLLC advised PetroChem.

Digital Air Strike has bought adtech company Target Media Partners Interactive and automotive software firm Libra Systems.

For more deal annoncements, see The Weekly wrap: Fiserv, Gannett, Wex.

For more PE fundraising news, see PE fundraising scorecard: Atlantic Street, CVC, Peak Rock.

People moves
Maggie Sahlman was hired by Charlesbank Capital Partners as head of investor relations. She was previously with Houlihan Lokey (NYSE: HLI).

Joe Barone has joined accounting firm Pine Hill Group as a managing director. He was most recently with PwC.

Featured content
Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital’s Sarah Bradley, Kayne Anderson Capital Advisors’ Nishita Cummings and Pelham S2K Managers’ Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women. “Actively lobby and ask from day one to work on deals, so you can gain dealmaking experience early in your career,” advises Bradley. “Too often, women are steered into functions like marketing, business development, and investor relations – the ‘softer side’ where it is easier to place a female. The excuse often used is that the females don’t have the deal experience of their male counterparts. That is why you must be an advocate for yourself and work on deals from the very beginning.”

Related: Meet the 2019 Most Influential Women in Mid-Market M&A.

Mergers & Acquisitions asked leading dealmakers about their outlook for the middle market in 2019. Watch the video conversations, shot at ACG Philadelphia’s M&A East: It is a seller’s market, and deal activity is expected to remain steady, says Ramsey Goodrich of Carter Morse & Goodrich: Outlook 2019: Great time to sell. Private equity firms and strategic buyers will use their excess cash and capital to look for deals, says Bharat Ramprasad of Stifel Nicolaus: Outlook 2019: Excess capital to fuel M&A. Rising interest rates and regulatory changes may increase volatility, cautions Mark Emrich of Murray Devine: Outlook 2019: Keep an eye on rising interest rates.

Private equity firms are giving back – organizing groceries at food pantries, mentoring students in schools, running races for cancer cures and pitching in at animal shelters. Mergers & Acquisitions highlights the philanthropic and volunteering initiatives of 5 PE firms: the Carlyle Group LP (Nasdaq: CG), Frontier Capital, Huron Capital, the Riverside Co. and Star Mountain Capital. Read the full story, The Big Give.

GTCR managing director Phil Canfield learned the fundamentals of private equity investing at the Business Honors Program at The University of Texas at Austin. Now he and his wife Mary Beth are giving back to UT’s McCombs School of Business. In recognition of the $20 million gift, the program has been renamed the Canfield Business Honors Program. “Private equity investors are wired to look for opportunities to get the very best returns for their investment,” Canfield tells Mergers & Acquisitions in a Q&A. Read the full story: GTCR’s Phil Canfield donates $20M to UT’s McCombs School of Business.

Dealmakers share their thoughts on Giving Back in video interviews conducted by Mergers & Acquisitions at ACG Philadelphia’s M&A East. Check out our video with Reed Smith’s Jonathan Moyer: For millennial dealmakers, giving back is part of who they are. And watch our conversation with Baker Tilly Capital’s Judit Nagy-Eichelber: Volunteer work brings teams together.

The construction data industry is fragmented, and there is a growing demand for technology that will help contractors, drawing deal activity particularly from strategic buyers. Autodesk Inc. (Nasdaq: ADSK) and Trimble (Nasdaq: TRMB) are among the buyers in the sector. “There is a huge opportunity to streamline all aspects of construction through digitization and automation,” says Autodesk CEO Andrew Anagnost. Read the full story: Strategic buyers look to capitalize on construction data demand.

The Kansas City Chiefs are hosting the New England Patriots and the New Orleans Saints are hosting the Los Angeles Rams. The winners will go on to compete in the Super Bowl. Off the field, Patriots quarterback Tom Brady recently teamed with former Giants defensive end Michael Strahan, who is the co-host of ABC’s Good Morning America, to launch a sports media startup called Religion of Sports Media. Muhsin Muhammad, who played wide receiver for the Carolina Panthers and the Chicago Bears, is a managing director of private equity firm Axum Capital Partners. Steve Young, former San Francisco 49ers quarterback, is a co-founder of private equity firm HGGC. Check out: NFL stars Tom Brady, Michael Strahan, Steve Young go PE.

Events
Exponent Women kicks off the new year with an evening of networking on Jan. 24 at The Campbell, at New York’s Grand Central Terminal. Jazz Age financier John W. Campbell converted the space to his private office and reception hall in 1923, and it has recently been restored by design firm Ingrao Inc.

ACG Boston, ACG Connecticut, ACG New Jersey, ACG New York & ACG Philadelphia host ACG Northeast Dealmaking at the Mountain at Stowe Mountain Resort in Stowe, Vermont Jan. 27-29. The event provides a chance for middle-market M&A professionals from across the northeast to come together for two days of close knit networking, shared conversations and valuable time spent to deepen your relationships within the deal community.


Mary Kathleen Flynn

Mary Kathleen Flynn

Mary Kathleen Flynn joined SourceMedia in 2011, serving as the Editor-in-Chief of Mergers & Acquisitions. MK oversees the brand’s content on all media platforms, including website, e-newsletters, video, slideshows, podcasts and print.


Demitri Diakantonis

Demitri Diakantonis

Demitri Diakantonis joined SourceMedia in 2015 and serves as Managing Editor of Mergers & Acquisitions. He covers all aspects of middle-market dealmaking, with a focus on strategic buyers and the consumer and retail sectors, and writes The Buyside column.

January 18th, 2019

Tesla Will Cut 7% of Work Force to Lower Model 3 Cost

Tesla is reducing its full-time work force by 7 percent as it tries to lower the cost of making its Model 3 sedan, the company’s chief executive, Elon Musk, told employees on Friday.

Tesla also plans to ramp up production and improve the design of the electric car, which currently costs $44,000 for its most affordable version, Mr. Musk said in an email. “There isn’t any other way” to “achieve the economies of scale” necessary to sell the Model 3 for $35,000 while remaining viable, he wrote.

Tesla stock slumped more than 8 percent in premarket trading on the Nasdaq stock exchange.

The job cuts, which could affect more than 3,000 people, come after a 9 percent reduction in June. Last year “was the most challenging in Tesla’s history,” Mr. Musk wrote on Friday, adding that “the road ahead is very difficult.”

Another one of his companies, the private rocket maker SpaceX, also said this month that it was cutting about 10 percent of its work force.

Tesla recorded its first quarterly profit in two years, and its largest ever, in its third quarter, aided by cost-cutting, delayed payments to suppliers and a surge in production and sales. The company expects to earn a smaller profit in the fourth quarter, based on preliminary, unaudited results cited by Mr. Musk.

“This quarter will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit,” he wrote.

The electric-car maker lowered prices on all of its vehicles by $2,000 this month as a federal tax credit for its vehicles — worth $7,500 last year — began to phase out.

The company can keep only crucial contract workers as it faces the challenge of making its products competitive with vehicles that run on fossil fuels, Mr. Musk wrote.

“While we have made great progress, our products are still too expensive for most people,” he wrote.

Traditional automakers such as Ford, General Motors and Nissan are pushing harder into the electric-vehicle market, pressuring Tesla as it struggled through a Model 3 production and delivery process that Mr. Musk has often described as “hell.”

As the company’s struggled to meet its manufacturing and financial targets, Mr. Musk’s behavior caused distractions.

In August, he wrote in a short, cryptic post on Twitter that he was thinking about taking Tesla private and had secured funding, surprising board members and driving up the stock price.

The Securities and Exchange Commission later sued him in federal court, saying that he had misled investors. Mr. Musk settled with the agency, agreeing to pay a $20 million fine and step aside as chairman for three years.

In August, he said that the past year had been “excruciating.”

January 17th, 2019

M&A wrap: M&A Mid-Market Awards, Insight, CPPIB, Veeam


Photo credit: Adobe Stock

Mergers & Acquisitions seeks nominations for the 12th Annual M&A Mid-Market Awards, which will honor leading dealmakers and deals that set the standard for transactions in the middle market in 2018. The deadline for nominations is end of day Friday, February 8, 2019. Click here to submit nominations. To determine the winners, Mergers & Acquisitions considers a variety of factors. We look for companies and individuals who overcame the challenges the year brought, embodied the trends of the period and took their businesses to the next level. Market leadership and performance are important, but league tables aren’t everything. Growth counts for a lot, especially when the rate of growth outpaces peers and the overall industry. Innovation also counts. We value companies that businesses. Thought leadership in the industry is also relevant. Looking at past winners provides a good guide to what we’re seeking. Last year’s winners included Campbell Soup, Huron Capital, Idera, LLR Partners, McGuireWoods, Stryker,Twin Brook and William Blair. For more information, read the full story: Call for Nominations: 12th Annual M&A Mid-market Awards

Insight Venture Partners has invested $500 million in cloud data management company Veeam Software. Canada Pension Plan Investment Board has also invested alongside Insight Venture Partners. Veeam has about $1 billion in sales, and helps more than 325,000 customers with cloud data backup and protection. The target will use the investment for organic growth and pursue M&A. Insight Venture Partners previously acquired a minority stake in Veeam in 2013. The PE firm was founded in 1995 and manages more than $20 billion. Data management companies are appealing to PE investors as companies become more efficient. MidOcean Partners has acquired construction data providers Hanley Wood and Meyers Research, and in 2017, ClearPoint Investment Partners has acquired a stake in data management company Shore Group Associates. Willkie Farr & Gallagher LLP represented Insight and Veeam.

Deal news
Helios & Matheson Analytics Inc. has filed for a spinoff of its MoviePass unit, a discount-cinema service whose struggles to find a workable business model have left the parent company on the brink of delisting, Bloomberg News reports. Read the full story: Helios & Matheson files to spin off struggling MoviePass.

Arsenal Capital Partners has acquired Accumen from Accretive. Accumen offers end-to-end strategy and services to drive value and long-term sustainability for healthcare providers’ clinical laboratories, outreach services, patient blood management systems, and imaging services. MTS Health Partners and Ropes & Gray advised Arsenal. Nexus Health Capital and Greenberg Traurig advised Accumen. Separately, Aresnal completed its $1.25 sale of Elite Comfort Solutions to Legett & Platt (NYSE: LEG).

Wex Inc. (NYSEL Wex) is buying Discovery Benefits, an employee benefits administrator, for $425 million. “This combination strengthens our overall value proposition through new partnerships, integrated products, and the opportunity to offer a more comprehensive set of solutions,” says Wex CEO Melissa Smith.

KeyBank National Association is buying Laurel Road Bank‘s digital lending business. The deal does not include Laurel’s bank branches. Debevoise & Plimpton is advising KeyBank. RBC Capital Markets and Fried Frank are advising Laurel Road.

Dover (NYSE: DOV) is buying car wash equipment manufacturer Belanger.

Kissner Group Holdings has bought NSC Minerals, a producer of salt products, from Atlas Partners.

People Moves
Chrisitan Keller was hired by investment bank Houlihan Lokey (NYSE: HLI) as a managing director where is leading financial sponsors coverage in the DACH region. He was most recently with HSBC. Ann Sharkey is also joining the firm as a managing director, where she is focusing on hedge funds and alternative investors. She was previously with Castlelake and Carval Investors.

Featured content
Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital’s Sarah Bradley, Kayne Anderson Capital Advisors’ Nishita Cummings and Pelham S2K Managers’ Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women. “Actively lobby and ask from day one to work on deals, so you can gain dealmaking experience early in your career,” advises Bradley. “Too often, women are steered into functions like marketing, business development, and investor relations – the ‘softer side’ where it is easier to place a female. The excuse often used is that the females don’t have the deal experience of their male counterparts. That is why you must be an advocate for yourself and work on deals from the very beginning.”

Related: Meet the 2019 Most Influential Women in Mid-Market M&A.

Mergers & Acquisitions asked leading dealmakers about their outlook for the middle market in 2019. Watch the video conversations, shot at ACG Philadelphia’s M&A East: It is a seller’s market, and deal activity is expected to remain steady, says Ramsey Goodrich of Carter Morse & Goodrich: Outlook 2019: Great time to sell. Private equity firms and strategic buyers will use their excess cash and capital to look for deals, says Bharat Ramprasad of Stifel Nicolaus: Outlook 2019: Excess capital to fuel M&A. Rising interest rates and regulatory changes may increase volatility, cautions Mark Emrich of Murray Devine: Outlook 2019: Keep an eye on rising interest rates.

Private equity firms are giving back – organizing groceries at food pantries, mentoring students in schools, running races for cancer cures and pitching in at animal shelters. Mergers & Acquisitions highlights the philanthropic and volunteering initiatives of 5 PE firms: the Carlyle Group LP (Nasdaq: CG), Frontier Capital, Huron Capital, the Riverside Co. and Star Mountain Capital. Read the full story, The Big Give.

GTCR managing director Phil Canfield learned the fundamentals of private equity investing at the Business Honors Program at The University of Texas at Austin. Now he and his wife Mary Beth are giving back to UT’s McCombs School of Business. In recognition of the $20 million gift, the program has been renamed the Canfield Business Honors Program. “Private equity investors are wired to look for opportunities to get the very best returns for their investment,” Canfield tells Mergers & Acquisitions in a Q&A. Read the full story: GTCR’s Phil Canfield donates $20M to UT’s McCombs School of Business.

Dealmakers share their thoughts on Giving Back in video interviews conducted by Mergers & Acquisitions at ACG Philadelphia’s M&A East. Check out our video with Reed Smith’s Jonathan Moyer: For millennial dealmakers, giving back is part of who they are. And watch our conversation with Baker Tilly Capital’s Judit Nagy-Eichelber: Volunteer work brings teams together.

The construction data industry is fragmented, and there is a growing demand for technology that will help contractors, drawing deal activity particularly from strategic buyers. Autodesk Inc. (Nasdaq: ADSK) and Trimble (Nasdaq: TRMB) are among the buyers in the sector. “There is a huge opportunity to streamline all aspects of construction through digitization and automation,” says Autodesk CEO Andrew Anagnost. Read the full story: Strategic buyers look to capitalize on construction data demand.

The Kansas City Chiefs, Los Angeles Rams, New England Patriots and New Orleans Saintsall won their games and will move on to the championship title round. Off the field, Patriots quarterback Tom Brady recently teamed with former Giants defensive end Michael Strahan, who is the co-host of ABC’s Good Morning America, to launch a sports media startup called Religion of Sports Media. Muhsin Muhammad, who played wide receiver for the Carolina Panthers and the Chicago Bears, is a managing director of private equity firm Axum Capital Partners. Steve Young, former San Francisco 49ers quarterback, is a co-founder of private equity firm HGGC. Check out: NFL stars Tom Brady, Michael Strahan, Steve Young go PE.

Video Healthcare Investing Remains CompetitiveHealthcare companies are trading at an all time high. Healthcare tourists that don’t focus on healthcare investing are driving the prices up, says Jonathan Lewis, a Managing Partner with Sheridan Capital Partners.SPONSOR CONTENTM&ASeptember 28, 2017Events
ACG New York Women of Leadership Summit brings together women in the middle-market dealmaking community for a day focused on networking and knowledge sharing on Jan. 17 at the Intercontinental Barclay Hotel. Alexa Von Tobel, chief innovation officer of Northwestern Mutual, keynotes.

Exponent Women kicks off the new year with an evening of networking on Jan. 24 at The Campbell, at New York’s Grand Central Terminal. Jazz Age financier John W. Campbell converted the space to his private office and reception hall in 1923, and it has recently been restored by design firm Ingrao Inc.

ACG Boston, ACG Connecticut, ACG New Jersey, ACG New York & ACG Philadelphia host ACG Northeast Dealmaking at the Mountain at Stowe Mountain Resort in Stowe, Vermont Jan. 27-29. The event provides a chance for middle-market M&A professionals from across the northeast to come together for two days of close knit networking, shared conversations and valuable time spent to deepen your relationships within the deal community.


Demitri Diakantonis

Demitri Diakantonis

Demitri Diakantonis joined SourceMedia in 2015 and serves as Managing Editor of Mergers & Acquisitions. He covers all aspects of middle-market dealmaking, with a focus on strategic buyers and the consumer and retail sectors, and writes The Buyside column.


Mary Kathleen Flynn

Mary Kathleen Flynn

Mary Kathleen Flynn joined SourceMedia in 2011, serving as the Editor-in-Chief of Mergers & Acquisitions. MK oversees the brand’s content on all media platforms, including website, e-newsletters, video, slideshows, podcasts and print.

January 17th, 2019

Call for Nominations: 12th Annual M&A Mid-Market Awards


Photo credit: Adobe Stock

Mergers & Acquisitions seeks nominations for the 12th Annual M&A Mid-Market Awards, which will honor leading dealmakers and deals that set the standard for transactions in the middle market in 2018. The deadline for nominations is end of day Friday, February 8, 2019.

What we look for:
To determine the winners, Mergers & Acquisitions considers a variety of factors. We look for companies and individuals who overcame the challenges the year brought, embodied the trends of the period and took their businesses to the next level. Market leadership and performance are important, but league tables aren’t everything. Growth counts for a lot, especially when the rate of growth outpaces peers and the overall industry. Innovation also counts. We value companies that businesses. Thought leadership in the industry is also relevant. Looking at past winners provides a good guide to what we’re seeking. Last year’s winners included Campbell Soup, Huron Capital, Idera, LLR Partners, McGuireWoods, Stryker,Twin Brook and William Blair. Click here for full coverage of last year’s winners.

Eligibility:
To be eligible for our awards, deals must meet the following criteria: be valued at or below $1 billion and have been completed (not just announced) by Dec. 31 of 2018.

The nomination process:
Nominations are helpful but not required. The deadline for nominations is end of day Friday, February 8, 2019. There is no fee, and there is no limit on the number of nominations, or award categories, submitted by a firm. Please provide only information that we may publish. We do not accept anonymous nominations or confidential information for this project. All decisions are made by the editorial team, led by editor-in-chief Mary Kathleen Flynn. She can be reached at marykathleen.flynn@sourcemedia.com .

Awards:
We bestow M&A Mid-Market Awards in the following eight categories:

Deal of the Year recognizes a transformative transaction that made a significant impact on the buyer’s strategy, or sector, or overall M&A. Note: The award goes only to the buyer. Corporations and private equity firms are eligible.

Dealmaker of the Year honors an individual who made a significant impact on M&A, or who led a transformative transaction. Note: The award goes to an individual dealmaker. All dealmakers are eligible.

Private Equity Firm of the Year recognizes a PE firm that stood out in a competitive landscape. We take into account the acquisitions, exits, fundraising and other activities made by the firm throughout the year, including growth. Thought leadership also plays a role. Note: The award goes to the firm, and only private equity firms are eligible.

Investment Bank of the Year honors a bank that outshone the competition. We take into account the volume and total value of deals advised on, as well as their significance. We also consider the firm’s growth, thought leadership and influence on the M&A industry. Note: The award goes to the bank, and only full-service investment banks are eligible.

Private Equity Seller of the Year recognizes a private equity firm that produced stellar exits throughout the year. Note: The award goes to the firm, and only private equity firms are eligible for this award.

Strategic Buyer of the Year honors a corporation that wielded M&A to transform or significantly expand its business, or sector or overall M&A. Acquisitions and divestitures emblematic of the company’s M&A strategy are considered. Note: The award goes to the company, and only corporations are eligible.

Law Firm of the Year recognizes a law firm that excelled. We take into account the volume of deals advised on, as well as their significance. We also consider the firm’s growth, thought leadership and influence on the M&A industry. Note: The award goes to the firm, and only law firms are eligible.

Lender of the Year honors a lender that ran ahead of the pack. We take into account the volume of loans made, as well as their significance. We also consider the firm’s growth, thought leadership and influence on the M&A industry. Note: The award goes to the lender, and only lenders are eligible.


Mary Kathleen Flynn

Mary Kathleen Flynn

Mary Kathleen Flynn joined SourceMedia in 2011, serving as the Editor-in-Chief of Mergers & Acquisitions. MK oversees the brand’s content on all media platforms, including website, e-newsletters, video, slideshows, podcasts and print.

January 17th, 2019

How we choose Mid-Market Award winners


Mergers & Acquisitions seeks nominations for the 12th Annual M&A Mid-Market Awards, which will honor leading dealmakers and deals that set the standard for transactions in the middle market in 2018. The deadline for nominations is end of day Friday, February 8, 2019. Click here to submit a nomination.

What we look for: To determine the winners, Mergers & Acquisitions considers a variety of factors. We look for companies and individuals who overcame the challenges the year brought, embodied the trends of the period and took their businesses to the next level. Market leadership and performance are important, but league tables aren’t everything. Growth counts for a lot, especially when the rate of growth outpaces peers and the overall industry. Innovation also counts. We value companies that changed the M&A landscape, expanded into new territories and transformed their businesses. Thought leadership in the industry is also relevant. Looking at past winners provides a good guide to what we’re seeking (see chart). Read full coverage of the 2017 award winners here.

Eligibility: To be eligible for our awards, deals must meet the following criteria: be valued at or below $1 billion, have been completed by Dec. 31 of the award year.

The nomination process: Nominations are helpful but not required. The nomination process is online, and details are available on our website, and through our daily newsletters, beginning in mid-January. (We do not accept nominations at other times.) The deadline for nominations is end of day February 9, 2019. There is no fee, and there is no limit on the number of nominations, or award categories, submitted by a firm. We encourage firms to submit nominations in all categories for which they are eligible.

Awards: We bestow M&A Mid-Market Awards in the following eight categories:

Deal of the Year recognizes a transformative transaction that made a significant impact on the buyer’s strategy, or sector, or overall M&A. Note: The award goes only to the buyer. Corporations and private equity firms are eligible.

Dealmaker of the Year honors an individual who made a significant impact on M&A, or who led a transformative transaction. Note: The award goes to an individual dealmaker. All dealmakers are eligible.

Private Equity Firm of the Year recognizes a PE firm that stood out in a competitive landscape. We take into account the acquisitions, exits, fundraising and other activities made by the firm throughout the year, including growth. Thought leadership also plays a role. Note: The award goes to the firm, and only private equity firms are eligible.

Investment Bank of the Year honors a bank that outshone the competition. We take into account the volume and total value of deals advised on, as well as their significance. We also consider the firm’s growth, thought leadership and influence on the M&A industry. Note: The award goes to the bank, and only full-service investment banks are eligible.

Private Equity Seller of the Year recognizes a private equity firm that produced stellar exits throughout the year. Note: The award goes to the firm, and only private equity firms are eligible for this award.

Strategic Buyer of the Year honors a corporation that wielded M&A to transform or significantly expand its business, or sector or overall M&A. Acquisitions and divestitures emblematic of the company’s M&A strategy are considered. Note: The award goes to the company, and only corporations are eligible.

Law Firm of the Year recognizes a law firm that excelled. We take into account the volume of deals advised on, as well as their significance. We also consider the firm’s growth, thought leadership and influence on the M&A industry. Note: The award goes to the firm, and only law firms are eligible.

Lender of the Year honors a lender that ran ahead of the pack. We take into account the volume of loans made, as well as their significance. We also consider the firm’s growth, thought leadership and influence on the M&A industry. Note: The award goes to the lender, and only lenders are eligible.

5 years of M&A Mid-Market Award winners          
2017 2016 2015 2014 2013
Deal Stryker (Novadaq) Resmed (Brightree) Amazon (Elemental Technologies) Thoma Bravo (TravelClick) Hormel (Skippy)
Dealmaker Randy Jacops, Idera Gregory Sandfort, Tractor Supply David Brackett, John Martin, Antares Capital Gretchen Perkins, Huron Capital Stewart Kohl, Bela Szigethy, The Riverside Co.
Private Equity Firm LLR Partners Francisco Partners Audax HGGC GTCR
Seller Huron Capital The Halifax Group The Riverside Co. The Riverside Co. Vector Capital
Strategic Buyer Campbell Soup Newell Rubbermaid PPG Industries Yahoo Coviden
Investment Bank William Blair Harris Williams KeyBanc Piper Jaffray Lincoln International
Lender Twin Brook Golub Capital NewStar GE Capital Fifth Street
Law Firm McGuireWoods Kirkland & Ellis Milbank Jones Day K&L Gates
Source: Mergers & Acquisitions


Mary Kathleen Flynn

Mary Kathleen Flynn

Mary Kathleen Flynn joined SourceMedia in 2011, serving as the Editor-in-Chief of Mergers & Acquisitions. MK oversees the brand’s content on all media platforms, including website, e-newsletters, video, slideshows, podcasts and print.

January 17th, 2019

Leslie Moonves to Take CBS to Arbitration Over $120 Million Severance

Leslie Moonves, the former chief executive of CBS, plans to fight a decision by the company’s board that denied him a $120 million severance payment after he was fired for cause following numerous allegations of sexual misconduct.

Mr. Moonves, 69, told CBS that he was demanding an arbitration hearing, according to a securities filing on Wednesday. His termination agreement gives him that right, and he had up to 30 days after his Dec. 17 firing to challenge the board’s decision to not pay him the severance.

Under the terms of his termination agreement, CBS has been paying Mr. Moonves’s legal fees, making it easier for him to challenge the board through an arbitration hearing. The process could end up costing CBS as much as $50 million in lawyers’ fees. But should CBS prevail, Mr. Moonves would have to foot the bill himself.

The details of the arbitration hearing will remain confidential, and any decision will be binding, according to the terms of Mr. Moonves’s separation agreement.

CBS directors determined in December that Mr. Moonves had misled the company about multiple allegations of sexual misconduct and that he had tried to hide evidence in a frenzied attempt to save his legacy.

“His willful and material misfeasance, violation of company policies and breach of his employment contract” led to his dismissal, the board said at the time.

After discussing Mr. Moonves’s case over several days, the board reached its conclusion based on an investigation conducted by two outside law firms. Mr. Moonves “engaged in multiple acts of serious nonconsensual sexual misconduct in and outside of the workplace, both before and after he came to CBS in 1995,” according to a late November draft of the investigators’ report reviewed by The New York Times.

The board was unequivocal in firing Mr. Moonves. He has denied the allegations and said any sexual contact with the women was consensual.

CBS could settle with Mr. Moonves, but that could create a public-relations nightmare for a network that has undergone a companywide reckoning in the wake of the #MeToo movement. In addition to Mr. Moonves, Charlie Rose was fired from his roles at “CBS This Morning” and “60 Minutes” in 2017 after allegations of sexual misconduct. Days after Mr. Moonves left the network, Jeff Fager, the longtime executive producer of “60 Minutes,” was fired after he threatened a colleague who was asking about allegations of harassment against him. The network also paid a $9.5 million settlement to the actress Eliza Dushku after she claimed she had been written off the series “Bull” because she confronted Michael Weatherly, the show’s star, about harassing her on the set.

Mr. Moonves reigned as one of Hollywood’s most successful and celebrated executives for decades before being forced to step down in September after the allegations were made.

Because of his run of success, Mr. Moonves became one of the industry’s highest-paid executives. He has drawn an annual pay package worth $69.3 million. From 2006 to 2017, Mr. Moonves’s total compensation, including salary and stock awards, exceeded $1 billion, according to Equilar, a research firm that gathers data on executive pay.

January 17th, 2019

Hadi Partovi Was Raised in a Revolution. Today He Teaches Kids to Code.

Part of the challenge for me living in Iran was that my entire family, other than my mom and dad and brother, basically had left and fled the country, and we stayed behind. The reason we stayed behind was that my father had started the technology university there, and he said, “The country’s going through all this challenge, but if the education system falls apart, who knows what’s going to happen?”

When did you get interested in technology?

My dad started teaching us on a programmable calculator when my brother and I were 8 years old. And then the next year, he brought a Commodore 64 home. In Iran at the time, there was nothing fun to do. There was no Xbox, no PlayStation, no internet. We had one TV channel; it was all propaganda. There were no sports in school. So for us, this computer was an escape from just a horrid life situation. It was really the only good thing we had in our life.

How did you get out of Iran?

To get the permission to leave, my dad had to promise the minister of education that he was coming back — that he wasn’t taking his family to leave forever. He was like, “I give you my word. I’m coming back.” And when we came to America, pretty much the first thing he did was to say, “All right. I’m going back. You guys can stay here.”

My mom was like, “What are you talking about? We’re done with that country.” And he said, “I just want to go for one or two years because I gave my word, and then I’ll join you guys.” So we spent a year or two in America with our dad living in Iran, only because he wanted to stay true to his word.



Tell me about arriving in the United States.

We were not well-off at all. Our family couldn’t afford a home. So all four of us lived in one bedroom in my grandma’s house in one bed, which is an awkward thing to do when you’re 12 years old. My parents worked three jobs, but they put all of the money toward our education. That left an imprint of how important education is. Education is the No. 1 thing you should invest in.

You have many relatives who’ve also been successful in the technology industry. How do you explain that?

Entrepreneurship is in my family’s blood. My grandfather and all of his brothers started a great company together almost 100 years ago. It was called Alborz Corporation, and it was one of the largest industrial companies in Iran. They started by being a trading company and importing goods, but then all the most popular goods they’d import they’d start manufacturing locally, in partnership with whoever was the original producer. Then the entire company was taken away by the government as part of the revolution. So growing up in America, there was this desire for us to effectively make back the money that our family had lost.

January 17th, 2019

World’s Biggest Investor Tells C.E.O.s Purpose Is the ‘Animating Force’ for Profits

Larry Fink, the investment manager who oversees nearly $6 trillion at BlackRock, set off a yearlong conversation among business leaders and policymakers last January when he wrote a letter to chief executives declaring that companies needed to do more than make profits.

Mr. Fink wrote that it was crucial that businesses also made “a positive contribution to society” — and that he planned to hold them to account.

Coming from the world’s largest investor, the letter was seen as an inflection point in the long-simmering argument over the state of global capitalism. Chief executives began explicitly talking about their companies’ “purpose” — not just in high-minded mission statements but in government filings and investor reports. Others bristled at Mr. Fink’s challenge.

Late Wednesday, chief executives received a new missive from Mr. Fink that will almost certainly stir up an even louder debate. Businesses, he wrote, cannot merely have a purpose. They must be leaders in a divided world.

“Stakeholders are pushing companies to wade into sensitive social and political issues — especially as they see governments failing to do so effectively,” he wrote in his new letter, which was obtained from a recipient.

As this column has chronicled, the business world has been tested over the past year, feeling pressure to take sides on everything from climate change to gun control to whether do business with the Pentagon.

Executives faced moral questions over working with foreign governments, like the seminal moment when executives had to choose whether they would stand shoulder to shoulder with the crown prince of Saudi Arabia, Mohammed bin Salman, at a conference after the murder of the journalist Jamal Khashoggi. Much of the business community backed out of the event at the risk of upsetting relationships and business with the House of Saud.

“As a C.E.O. myself, I feel firsthand the pressures companies face in today’s polarized environment and the challenges of effectively navigating them,” Mr. Fink wrote.

His letter is a continued explanation of his evolving view of the role of business, one that last year prompted Barron’s to call him “the new conscience of Wall Street.”

BlackRock has used its heft to promote policy change in the past year, including voting for a shareholder resolution that required the gun maker Sturm, Ruger & Company to be more transparent about the safety of its products.

In some respects, Mr. Fink is limited in what he can do. Much of BlackRock’s holdings are through 401(k) plans in index funds, and the company isn’t able to sell specific companies whose policies it might disagree with. But it recently introduced a series of socially responsible investment funds that exclude entire industries, such as tobacco, firearms or coal.

The letter is also a defense against those who criticized him over last year’s letter.

“I didn’t know Larry Fink had been made God,” the real estate billionaire Sam Zell said the day after Mr. Fink’s letter was sent last year. And Warren Buffett, the chairman of Berkshire Hathaway, said he did not believe it was the role of investors to push their views in the way Mr. Fink suggested.

“I don’t believe in imposing my political opinions on the activities of our businesses,” Mr. Buffett said last year.

In Mr. Fink’s latest letter, he wrote that he had “no intention” of telling companies what their purpose should be. “Rather, we seek to understand how a company’s purpose informs its strategy and culture to underpin sustainable financial performance,” he wrote.

He also pushed against the notion, long espoused by the economist Milton Friedman, that a company’s only social responsibility is its profits.

“Profits are in no way inconsistent with purpose,” Mr. Fink wrote. He added, “Purpose is not the sole pursuit of profits but the animating force for achieving them.”

Executives, according to Mr. Fink, must be prepared to think about social considerations as they encounter a new generation of workers, managers and investors.

“With unemployment improving across the globe, workers, not just shareholders, can and will have a greater say in defining a company’s purpose, priorities and even the specifics of its business,” he wrote.

Although Mr. Fink did not offer examples, the past year did provide them. Employees at Google held walkouts over the company’s handling of sexual misconduct allegations against top executives and staged a separate protest that ended its role in the Pentagon’s Project Maven, which uses artificial intelligence to interpret video images and could be used to improve the targeting of drone strikes.

“This phenomenon will only grow as millennials and even younger generations occupy increasingly senior positions in business,” Mr. Fink wrote. He pointed to a survey by Deloitte that asked millennials what businesses should try to achieve. “Improve society” was chosen by 63 percent more respondents than “generate profit.”

Mr. Fink also suggested that the millennial generation’s priorities would change the very metrics that were used for investing.

“This generation will drive not only their decisions as employees but also as investors, with the world undergoing the largest transfer of wealth in history: $24 trillion from baby boomers to millennials,” he wrote. “As this wealth shifts and investing preferences change, environmental, social and governance issues will increasingly material to corporate valuations.”

While companies must look forward, Mr. Fink suggested they also look back to a time when they were leaders in preparing workers for retirement. Surprisingly, he said the move toward defined contribution plans — like the 401(k) plans that BlackRock oversees — along with longer life expectancy meant more workers would not be financially ready to retire.

“This lack of preparedness for retirement is fueling enormous anxiety and fear, undermining productivity in the workplace and amplifying populism in the political sphere,” he wrote, although he did not call for a return to traditional pension plans.

For all his talk about purpose, Mr. Fink has also been criticized in some quarters for not using his influence enough. Various advocacy groups have called for BlackRock to sell its shares in certain industries, like oil companies.

That was the subject of a fake version of Mr. Fink’s letter that was sent out Wednesday morning and was convincing enough to prompt The Financial Times to quote it in a since-retracted story. The letter, which pointed to a website that mimicked BlackRock’s, said BlackRock planned to sell its shares in fossil fuel companies and would screen out businesses that were not in compliance with the Paris climate agreement.

While Mr. Fink can take some comfort in knowing that his letter has become enough of an annual event in corporate America to inspire a spoof, the bogus letter’s position on climate change is one that some of his critics would happily endorse.

Those critics, and their counterparts who criticize Mr. Fink for thinking beyond his investments’ immediate bottom line, will never be satisfied with the positions he takes.

But whether you view his letter as empty virtue signaling or as a heavy-handed attack on traditional business practices, he has helped create and continue a conversation and debate that is undoubtedly positive.

January 17th, 2019

Helios & Matheson files to spin off struggling moviePass


Photo credit: Bloomberg New

Helios & Matheson Analytics Inc. filed for a spinoff of its MoviePass unit, a discount-cinema service whose struggles to find a workable business model have left the parent company on the brink of delisting.

A new entity called MoviePass Entertainment Holdings Inc. will distribute a minority of its shares to Helios & Matheson holders as a dividend, according to a filing Thursday with the Securities and Exchange Commission.

The New York-based company has been losing money after attracting millions of subscribers to MoviePass with the promise of seeing unlimited theatrical movies for $9.95 a month. It has had to restrict use of its service to retain cash and canceled a planned reverse stock split in November, having already done one in July. Helios & Matheson shares lost almost all of their value last year, battered by fears that the unprofitable MoviePass service won’t survive. The spinoff plan fulfills a commitment the company made in October.

Bloomberg News

January 17th, 2019 January 17th, 2019

Paramount Was Hollywood’s ‘Mountain.’ Now It’s a Molehill.

The real debacle started in 2005. To fortify Paramount’s slate, the studio bought DreamWorks SKG, bringing Steven Spielberg, Jeffrey Katzenberg and David Geffen into the fold. But the alliance quickly became a clash of personalities. At one point, Mr. Dauman told investors that Mr. Spielberg — the most powerful director in Hollywood then and now — was, in effect, “completely immaterial” to the company’s earnings. Mr. Geffen pried DreamWorks loose from Paramount and Viacom in 2008.

Then, in 2009, a micro-budgeted horror movie called “Paranormal Activity,” produced by Jason Blum and released by Paramount, became a runaway hit, spawning a $1 billion franchise. Instead of anointing Mr. Blum, Mr. Grey wanted to control the series — and take the credit. So he kicked him off the Paramount lot. Mr. Blum went to Universal, where he has printed money, churning out low-cost blockbusters like “Get Out,” “The Purge,” “Halloween” and “Split” through his Blumhouse Productions.

The next year, Paramount allowed Disney to buy out its rights to distribute Marvel superhero movies. The deal helped Viacom executives hit financial targets that triggered bonuses. Paramount, however, was hobbled down the road; Marvel became Disney’s most reliable hit machine.

Theories began to spread about how Mr. Grey kept his job. Early in his tenure, he had intervened at a movie premiere party to defend Mr. Dauman from an obscenity-laced fusillade by the producer Harvey Weinstein. Back then, nobody stood up to Mr. Weinstein, and the move endeared Mr. Grey to the refined Mr. Dauman. But it had been a setup. Mr. Grey had planned the confrontation with Mr. Weinstein, whom he had been close to ever since their early careers.

Mr. Grey received a $180 million exit package, and Mr. Dauman, who was fired in 2016, received $72 million in exit payments. At the time, Paramount was losing $450 million a year, and Viacom’s stock price had fallen 50 percent over two years.

Mr. Dauman could not be reached for comment. For his part, Mr. Grey insisted until the end that he had done the best he could with Paramount. He was proud that Mr. Dauman had allowed him to stick with a romantic notion of the film business — one that found a place for auteur-driven movies like “Silence” from Martin Scorsese and “Allied” by Robert Zemeckis — even as competing studios, adjusting to business realities, had shifted almost entirely toward fantasy tentpoles.

Hollywood saw Paramount as failing to evolve. It was almost as if Mr. Grey and certain cohorts were playing out scenes from “Sunset Boulevard,” which Paramount made in 1950.

January 16th, 2019

Goldman Sachs’s Tactic in Malaysian Fraud Case: Smear an Ex-Partner

They sound like the ingredients of a pulpy thriller: Bigamy. Secret religious conversions. A doctorate from a mail-order diploma mill. Affairs with powerful women.

The sordid list — a mixture of facts, accusations and insinuations, packaged in a glossy slide show — represents the crux of a well-orchestrated campaign by Goldman Sachs to discredit one of its former partners and to minimize the Wall Street bank’s role in the looting of a big Malaysian investment fund.

In recent presentations to American regulators and law enforcement authorities, according to people familiar with their contents, Goldman executives and their lawyers have depicted Tim Leissner, a former top investment banker, as a master con man, someone so sneaky that even the retired military intelligence officers who work for the bank couldn’t sniff him out.

The scorched-earth tactics, especially against someone who had been a star banker, reflect just how worried Goldman is about the criminal investigations into its role in the theft of at least $2.7 billion from the 1Malaysia Development Berhad, or 1MDB, sovereign wealth fund.

One big reason for concern is that senior Goldman officials, including the bank’s chief executive at the time, helped win Malaysian business. And the relationship became a crucial engine of profits for the bank, generating about $600 million in fees.

The bank’s hope is that by casting Mr. Leissner as a rogue employee, Goldman will reduce its legal and reputational liability.

On Wednesday, in a sign of how the stakes are rising, Goldman disclosed that in the fourth quarter of 2018 it set aside an additional $516 million to cover potential legal and regulatory penalties, including those related to 1MDB. And executives said Goldman could owe $2 billion on top of what it has already put in its reserves.

“For Leissner’s role in that fraud, we apologize to the Malaysian people,” David M. Solomon, the bank’s chief executive, told analysts Wednesday. “As you would expect, we have looked back and continue to look back to see if there is anything that we as a firm could have done better.”

A Goldman spokesman, Michael DuVally, said that since Mr. Leissner left the bank in 2016, Goldman found new violations of its internal policies “that we have shared with the Department of Justice and other relevant authorities.”

While it’s not uncommon for companies to defend themselves by blaming lone employees, Goldman’s ad hominem attacks on Mr. Leissner stand out for their aggressive, charged nature. The bank has not presented authorities with proof to substantiate all of its allegations, and some of them — including a focus on Mr. Leissner’s supposedly converting to Islam on two occasions — are, at best, inflammatory.

Mr. Leissner, 48, has been criminally charged by American and Malaysian prosecutors with bribery and money laundering in connection with the theft from 1MDB. He pleaded guilty last year to the United States charges. He is scheduled to be sentenced in June. His lawyer did not respond to requests for comment for this article.

For years, Mr. Leissner was one of Goldman’s most powerful dealmakers in Asia. Among other things, he helped Goldman win lucrative assignments selling bonds for 1MDB. Mr. Leissner facilitated at least one meeting between Goldman’s chief executive at the time, Lloyd C. Blankfein, and a Malaysian financier named Jho Low, who subsequently was charged as the mastermind of the 1MDB theft.

Goldman suspended Mr. Leissner in 2016, and the bank’s executives have publicly faulted him for lying to Goldman and snaring the bank in the fraud.

But in private meetings with federal and state officials and employees in recent months, Goldman has intensified its efforts to blame Mr. Leissner, according to five people familiar with the bank’s campaign who were not authorized to discuss it publicly.

In November, for example, the bank met with federal prosecutors in Washington and delivered a lengthy PowerPoint presentation that sought to paint Mr. Leissner as a man practiced in the art of deception, according to two people familiar with the presentation.

One slide in the presentation said that Mr. Leissner may have been briefly married to two women at the same time.

Another slide included a photo of Mr. Leissner praying with other men, as well as images of a government-issued ID card that showed Mr. Leissner describing himself as Muslim. The people familiar with the presentation said Goldman officials used the slide to claim that Mr. Leissner twice converted to Islam in order to impress wealthy Muslim women he was dating.

The inch-thick presentation also accused Mr. Leissner of having had a sexual relationship with at least one Goldman client and of having received a mail-order Ph.D. from a now-defunct university, the people said.

It isn’t clear what evidence Goldman has of the alleged affair, which bank officials believe took place before Mr. Leissner married the fashion designer and model Kimora Lee Simmons in 2013.

In addition to the Justice Department, Goldman delivered similar multi-hour presentations to bank regulators, the people said. As well as the section seeking to discredit Mr. Leissner, the presentation outlined the vetting Goldman performed before agreeing to sell bonds for 1MDB. It also had a section on Mr. Low, including clips from news articles describing him as a promising entrepreneur and investor.

In part, Goldman is using the presentation to argue that, given Mr. Leissner’s supposed slipperiness, the bank’s compliance system should not be faulted for failing to detect his scheme. The bank also is hoping to dissuade authorities from relying on any testimony or cooperation that Mr. Leissner might provide and that could put Goldman in a bad light.

As part of his guilty plea last year, Mr. Leissner admitted to misappropriating at least $50 million from 1MDB’s bond offerings and to deceiving Goldman about Mr. Low’s role in those deals. But Mr. Leissner also told a federal judge that hiding his actions from Goldman’s compliance department was “very much in line” with a wider culture at the firm, especially in Asia.

Senior executives at Goldman have been spreading the blame-the-rogue-employee message to its partners, according to six people familiar with Goldman’s efforts.

In December, Goldman held an annual dinner for retired partners at the Conrad Hotel in Lower Manhattan. Mr. Solomon talked about the 1MDB investigation, explaining that Goldman has muscular compliance programs but would not always be able to protect against ill-intentioned employees, according to five people who were there. They said they were struck by Mr. Solomon’s bitter tone.

Goldman’s efforts to defend itself by attacking Mr. Leissner’s behavior could raise more questions for the bank. Some Goldman executives knew about his alleged romantic relationships with clients, but the bank did not object to them until after Mr. Leissner became a target of investigations.

Five current and former Goldman bankers said in interviews that they were aware of Mr. Leissner’s hard-partying reputation and romantic overtures to wealthy women, including several who were executives at companies that were bank clients.

Joe Ravitch, a former Goldman partner who helped hire Mr. Leissner from Lehman Brothers in Hong Kong in 1999, said it was common knowledge that Mr. Leissner was misbehaving. “A lot of the people that worked for me would tell me the stories about Tim being a wild man,” he said.

In one case, Goldman investigated Mr. Leissner’s relationship with a top female executive of a Malaysian media company, but the bank ultimately didn’t take any action against Mr. Leissner, according to a Goldman official.

In Malaysia, where Goldman itself has been criminally charged, prosecutors and senior government officials are unlikely to be receptive to the bank’s claim that Mr. Leissner was a lone wolf.

The whole world knows that their senior executives were involved with wrongdoing and don’t feel that guilty, so I think there needs to be some accountability,” said Malaysia’s finance minister, Lim Guan Eng, in an interview on Monday. “You have to show genuine remorse for what has happened. You must pay the penalty.”

January 16th, 2019

Fiserv buying First Data in $22 billion deal to build fintech scale

Fiserv will acquire First Data in an all-stock deal with a value of about $22 billion that will combine two of the financial services industry’s largest technology and processing companies. Fiserv shareholders will own almost 58%t of the combined company, with First Data’s shareholders holding the rest. The acquisition is expected to close in the second half of 2019.

The combined company will be called Fiserv; and current Fiserv President and CEO Jeffery Yabuki will be CEO and chairman. Current First Data Chairman and CEO Frank Bisignano will be president and chief operating officer.

Jeffery Yabuki, president and CEO of Fiserv.

Jeffery Yabuki, president and CEO of Fiserv.

Bloomberg News

Both companies have been adding new technology to adjust to the expansion of digital financial services that have threatened traditional business models for companies that service financial transactions. It’s an environment that challenges these companies despite their considerable size, and has put pressure on companies such as Ingenico, which traditionally thrived in a plastic card-centered commerce system.

The growth of e-commerce and digital has helped relatively smaller companies that serve that model, such as Square and Stripe, and is forcing the larger established companies to team up and diversify to create larger umbrellas to add a larger and more automated menu of services to lure banks and merchants that no longer want multiple vendor relationships.

First Data has enhanced its point of sale technology, and has made acquisitions such as its $750 million CardConnect deal to build e-commerce, CRM and security. It has also enhanced its distribution via collaborations such as its recent deal with Alipay.

And while Fiserv controls more than a third of the U.S. core banking market, it also finds itself challenged to deal with the encroachment of fintech companies.

The Fiserv/First Data deal’s impact starts with massive scale that will be a formidable competitor to both bank technology vendors and merchant acquirers. Fiserv has more than 12,000 financial services clients in 80 countries, and First Data serves more than 6 million merchant locations.

When combined, Fiserv and First Data create a global franchise that can serve both merchant and card-issuing interests, covering account processing, digital banking, card issuer processing, e-commerce, and integrated payments. It also opens new channels for First Data’s Clover point of sale system.

Fiserv and First Data will combine merchant and cash management services, supporting merchant account enrollment to be integrated with digital banking; and combine First Data’s corporate payment services with Fiserv’s billing technology.

This is a developing story …


John Adams

John Adams

John Adams is executive editor of PaymentsSource.

January 16th, 2019

Sears Won’t Close Yet as Its Chairman, Edward Lampert, Fends Off Creditors

Sears lives. For now.

The bankrupt retailer and its chairman, Edward S. Lampert, have reached a $5.3 billion deal that would keep its 425 stores open and its 50,000 employees at work, according to a person familiar with the situation.

In the deal, which was reached in the early hours on Wednesday, Mr. Lampert would acquire most of Sears’s assets, the person said. The final details of the sale still needed to be arranged, and negotiations continued through the day.

Mr. Lampert, a hedge fund manager, was the only bidder at a closed-door auction this week who sought to keep the company operating. All of the competing bidders planned to liquidate the company’s real estate, inventory and brands.

A federal bankruptcy judge must still approve Mr. Lampert’s bid, giving the company’s creditors a chance to derail the deal. Last week, the bankruptcy judge, Robert D. Drain, said Mr. Lampert’s bid was “a good development” because it offered Sears a shot at survival.

If the deal is approved, Sears will emerge from bankruptcy with less debt, but it will still face steep odds in winning back shoppers. Mr. Lampert is deepening his investment in Sears at a time of great uncertainty for old-line retailers. While overall consumer spending has been solid, some retailers like Macy’s and J. C. Penney reported weak holiday sales, signaling that their turnaround plans are floundering as Americans change the way they shop.

[Read more about what led Sears to file for bankruptcy.]

Founded shortly after the Civil War, Sears was once the nation’s largest retailer. But it has been in a precipitous decline for years, losing ground to Amazon and Walmart as consumers moved their spending online and mall-based chains suffered.

It is unclear how Mr. Lampert plans to turn Sears around. The company filed for bankruptcy in October, as its sales stalled and its debt payments mounted.

Mr. Lampert, who took control of Sears in 2005 when it merged with Kmart, was the company’s largest shareholder and lender through his hedge fund, ESL Investments.

Some creditors have criticized Mr. Lampert for making deals, including selling some of the company’s most valuable real estate and the Lands’ End brand, that have benefited his hedge fund while harming Sears in the long run.

Mr. Lampert has countered those arguments by saying in interviews that his investments in Sears have hurt him financially.

Even without Mr. Lampert’s financial engineering, analysts acknowledge that Sears would still probably struggle to compete against more innovative retailers with greater resources.