October 19th, 2020

M&A Wrap: LLR, PE Fundraising, ConocoPhillips, Alibaba, Kainos, Thoma Bravo, Datasite, Most Influential Women


Lower middle-market private equity firm LLR Partners has raised its sixth fund at $1.8 billion. This firm has now raised over $5.3 billion across six funds since it was founded in 1999. While overall private equity fundraising is down in the pandemic, several firms have announced fundraising news recently including BC Partners, Levine Leichtman Capital Partners and Long Ridge Equity Partners. A total of 237 private equity funds closed in the third quarter, the lowest number since 2015, according to Preqin. On the plus side, the average fund size increased to $536 million. Fundraising efforts remained strong with a record 3,968 funds on the road. LLR focuses on the technology and healthcare sectors, investing between $25 million and $100 million in companies. LLR has invested in 108 companies since it was formed. The firm recently acquired YCharts, a cloud-based investment analytics and communications provider for broker-dealers and asset managers, and invested in TrueLearn, a provider of online test preparation and data analytics to healthcare education and training institutions. “The sector experience of our investment professionals, along with our value creation and sourcing resources, allow LLR to help companies accelerate organic and inorganic growth and become market leaders,” says LLR partner Mitchell Hollin. Asante Capital Group served as LLR’s placement agent and Latham & Watkins provided legal counsel. To see which other firms are raising funds, check out: PE Fundraising Scorecard: Accel-KKR, CVC, Golub, Wind Point.

M&A activity surged in the third quarter, and more momentum is expected in the fourth quarter. Datasite recently surveyed 600-plus dealmakers to find out what’s driving dealmaking. Mergers & Acquisitions asked Datasite CEO Rusty Wiley to share the results of the survey and his perspective on end-of-the-year dealmaking. Deal-Ready: Companies Prepare for Opportunities, as M&A Activity Picks Up in Q4

Mergers and Acquisitions has announced our Call for Nominations, and we are seeking candidates for for the 2021 Most Influential Women in Mid-Market M&A. Deadline is Monday, December 7, 2020. Click here to learn more and nominate a candidate. It will mark the sixth y ear we have produced the list, which recognizes female leaders with significant influence inside their companies and in the wider dealmaking world. It’s been gratifying to watch the project evolve over the years – and become more influential itself. Last year, we received more nominations than ever before. As a result, we expanded the number honored to 42 in 2020, up from 36 in 2019. Many dealmakers were new to our 2020 list, including Rockwood Equity Partners’ Kate Faust and Avante Capital Partners’ Ivelisse Simon. Read our full coverage of all the champions of change on our list, including Q&As with each individual. We will publish the list in the February issue of Mergers & Acquisitions.

DEAL NEWS
ConocoPhillips (NYSE: COP) has agreed to buy Concho Resources Inc. for about $9.7 billion, the largest shale industry deal since the collapse in energy demand earlier this year and one that will create a heavyweight driller in America’s most prolific oil field. The pandemic-induced price crash and lackluster global economic recovery have accelerated the push for consolidation across the shale patch, which is under severe financial strain after years of debt-fueled growth. Read the full story by Bloomberg News: Conoco Buys Concho for $9.7 Billion to Create Shale Giant.

Alibaba Group Holding Ltd. will invest about $3.6 billion to double its stake in Sun Art Retail Group Ltd., taking control of China’s largest chain of hypermarts to try and fend off rivals like JD.com Inc. in e-commerce’s hottest growth arena. The deal signals the intention of Asia’s most valuable corporation to accelerate an effort to dominate one of Chinese e-commerce’s largest untapped frontiers. Alibaba CEO Daniel Zhang has made expansion into physical retail and the grocery business in particular a cornerstone of his growth strategy, an effort that paid off during the coronavirus pandemic. Read the full story by Bloomberg: Alibaba Takes Over China’s Sun Art for $3.6 Billion.

Kainos Capital is acquiring direct-to-consumer weight management brand Nutrisystem from Tivity Health (Nasdaq: TVTY) for $575 million. Nutrisystem offers portion-controlled foods specifically designed to meet consumer needs and delivered directly to their doors. “Customers don’t need to leave their homes to travel to a weight loss center for scheduled appointments, and they don’t need to weigh their food or count calories,” says Kainos partner Bob Sperry. “Everything customers need to accomplish and sustain their weight management goals is delivered right to their doors.” Rabobank is providing financing for the transaction and is acting as financial advisor to Kainos. Winston & Strawn is Kainos’ legal counsel.

Thoma Bravo is buying a majority stake in AxiomSL, a cloud-based risk management and regulatory software provider for banking, investment management, broker dealers and commodity trading institutions. Evercore and Weil, Gotshal & Manges LLP are advisng AxiomSL. Kirkland & Ellis is advising Thoma Bravo.

Bansk Group is acquiring Woodstream, a maker of branded pest and animal control products, from Vestar Capital Partners. Kirkland & Ellis LLP, Goldman Sachs and William Blair are advising Woodstream and Vestar. Davis Polk & Wardwell LLP and Credit Suisse Securities (USA) LLC are advising Bansk. Ares Management is financing.

Sheridan Capital-backed long-term pharmacy Tarrytown Expocare has acquired Long’s Drugs in Thomson, Georgia, Long’s Closed-Door Pharmacy in Columbia, South Carolina and Adler’s Pharmacy LTC, in Cherry Hill, New Jersey. The acquisitions are part of Tarrytown’s strategy to expand geographically to serve more ntellectually and developmentally disabled populations.

EVENTS
Exponent Women is hosting: Raising Your M&A Career to the Next Power on Oct., 20. The event features talented, tenured investment professionals from top private equity and investment banking firms who will share their perspective on building a career and the challenges they faced along the way. Panelists include: Katie Harris Storer, principal, Blackstone Growth Equity; Julia Karol, president & COO, Watermill Group; Gillian Marcott, director, healthcare corporate finance, Citizens Financial Group.

PEOPLE MOVES
Scott Paton was hired by William Blair as a managing director in the firm’s financial sponsors group. He was most recently with SunTrust Robinson Humphrey.

Robert Caporale has joined private equity fund administrator Gen II Fund Services LLC as head of strategic business development. He was previoysly the CEO of Exchangelodge.

IN THE OCTOBER ISSUE OF MERGERS & ACQUISITIONS
“When Covid-19 hit, everything stopped,” says Jeri Harman, the founder of Avante Capital Partners, in the October cover story of Mergers & Acquisitions, written by contributing editor Danielle Fugazy. “We were looking internally to understand where our portfolio was and figure out how we could help existing portfolio companies. That lasted until May. Now we are busy again. It’s not like last year, but there is good deal flow.”

To find out what we can expect in the months to come, we turned to Churchill Asset Management’s Randy Schwimmer, the founder and publisher of The Lead Left, for a contributed article on predictions for 2021. “Transaction efficiency is key to getting deals done,” he says.

Mergers & Acquisitions interviewed Pam Hendrickson, COO of the Riverside Co., who serves on the board of the American Investment Council. Hendrickson urges: “We must remain engaged before, during, and after election day.”

For the full versions of these stories, click on these links:

Read the full digital edition of Mergers & Acquisitions here.

SPECIAL REPORTS
Most Influential Women of Mid-Market M&A is one of three special projects Mergers & Acquisitions publishes annually. For more details, see: Special reports: Advancing the middle market through Most Influential Women, M&A Mid-Market Awards and Rising Stars.

The M&A Wrap is a bi-weekly column that is published on Mondays and Thursdays.

October 19th, 2020

Alibaba Takes Over China’s Sun Art for $3.6 Billion


Alibaba Group Holding Ltd. will invest about $3.6 billion to double its stake in Sun Art Retail Group Ltd., taking control of China’s largest chain of hypermarts to try and fend off rivals like JD.com Inc. in e-commerce’s hottest growth arena.

Alibaba will raise its direct and indirect stake in the grocery chain to about 72% by acquiring equity from Auchan Retail International SA, then make a general offer to shareholders to buy out the rest of Sun Art. The latter’s Hong Kong-listed stock leapt as much as 30% Monday, its biggest intraday gain since 2011. Alibaba gained as much as 1.8% to touch an intraday record.

The deal signals the intention of Asia’s most valuable corporation to accelerate an effort to dominate one of Chinese e-commerce’s largest untapped frontiers. Alibaba Chief Executive Officer Daniel Zhang has made expansion into physical retail and the grocery business in particular a cornerstone of his growth strategy, an effort that paid off during the coronavirus pandemic. Sun Art already operates hundreds of hypermarkets across China under the Auchan and RT-Mart brands, a massive distribution and storage network that can supplement Alibaba’s own efforts in fresh produce.

The Chinese e-commerce giant is now grappling with intensifying competition from the likes of JD, food delivery giant Meituan Dianping and startups such as Tencent Holdings Ltd.-backed Missfresh, all chasing a market for groceries and fresh produce that HSBC expects to grow 2.5 times to 690 billion yuan ($103 billion) by 2022 from 2019. Alibaba was among the pioneers in that arena, announcing in 2017 it would spend about $2.9 billion for a 36% stake of Sun Art.

The deal “suggests that the tech giant seeks to further expand its one-hour home grocery delivery services such as Taoxianda, leveraging the grocer’s extensive offline hypermarts across China,” Bloomberg Intelligence analyst Kevin Kim said. “This could capture consumers flocking to online platforms, further induced by Covid-19 early this year, yet may hurt foot-traffic to the grocer’s physical stores.”

Zhang has been directly involved in the expansion into what the company calls its “new retail” strategy, combining e-commerce with physical stores. He helped launch a startup called Freshippo within Alibaba that aimed to combine a grocery store, a restaurant and a delivery app, a business that’s underpinned an overall new retail division that’s grown into a $12 billion operation, contributing a fifth of total revenue in the June quarter.

As Alibaba increases its stake to a majority, Sun Art’s financial statements will be consolidated into the larger company’s. Peter Huang, Sun Art’s CEO, will add the title of chairman for the business.

Alibaba’s $3.6 billion investment to raise its stake in Sun Art to 72% from the 36% acquired in 2017 signals the company’s intention to strategically ramp up its supermarket retail services. The acquisition should boost its Taoxianda and Tmall Supermarket and help compete against JD.com, Meituan and Pinduoduo, which are also aggressively trying to push into fresh produce e-commerce.

The online groceries segment has leapt to the forefront during Covid-19 when shoppers shunned restaurants and physical stores, though the industry — which requires more complex logistical structures such as so-called cold chain storage — has proven difficult to crack in years past.

Alibaba’s initial moves into physical retail were closely followed by WeChat-operator Tencent, which has itself invested in brick-and-mortar chains such as Yonghui Superstores Co. JD now also operates its own thriving groceries business, while Meituan and up-and-comer Pinduoduo Inc. in recent years began investing aggressively in the arena.

Sun Art is the industry leader in China’s hypermarkets, operating giant Costco- and Walmart-style stores that sell everything from seafood to wine and furniture under one roof. It held 14% of the market share in 2019, according to global intelligence firm Euromonitor International. Alibaba has also invested in many other brick-and-mortar retailers including Shanghai-listed Sanjiang Shopping Club Co., Shenzhen-listed New Huadu Supercenter Co., and Hong Kong-listed Lianhua Supermarket Holdings Co.

Meanwhile, France’s Auchan has become the latest in a slew of foreign retailers to step back from China after struggling in the market. Last year, Carrefour SA sold an 80% stake in its China unit at a discount while German wholesaler Metro AG sold a majority stake in its operations there.

Big box offerings are faring better. Costco Wholesale Corp. opened its first outlet in China last year to frenzied crowds and is planning its third store. Walmart Inc. plans to quadruplethe number of its members-only warehouse chain Sam’s Club in China to 100 stores over the next eight years, as growth outpaces the company’s separate network of over 400 Walmart stores selling basic groceries.

October 19th, 2020

Conoco Buys Concho for $9.7 Billion to Create Shale Giant


ConocoPhillips agreed to buy Concho Resources Inc. for about $9.7 billion in stock, the largest shale industry deal since the collapse in energy demand earlier this year and one that will create a heavyweight driller in America’s most prolific oil field.

Investors will get 1.46 Conoco shares for each Concho share, the companies said in a statement. The transaction represents a 15% premium over Concho’s closing price on Oct. 13, the last trading session before Bloomberg News first reported the companies were in talks.

The pandemic-induced price crash and lackluster global economic recovery have accelerated the push for consolidation across the shale patch, which is under severe financial strain after years of debt-fueled growth. The combination of Conoco and Concho will be one of the dominant operators in the Permian Basin of West Texas and New Mexico, rivaling only the likes of Occidental Petroleum Corp. and Chevron Corp. in terms of crude output.

It’s Conoco’s biggest deal under its current chief executive officer, Ryan Lance, who until now has sought to position the company almost as an anti-shale option for Wall Street, touting little-to-no-growth, steady cash flow and disciplined spending.

While Lance has made no secret of his desire to take advantage of the downturn to expand in shale, he said in July that any transaction must meet Conoco’s criteria of having a low cost of supply while being able to compete with the rest of the company’s portfolio.

Houston-based Conoco emerged from the oil market slump in a relatively strong position with about $7 billion of cash on hand. It recently resumed share buybacks. But its growth outlook is challenged: second-quarter production was down by almost 25% from a year earlier after it joined many other U.S. drillers in curbing output in response to lower prices.

Adding Concho will dramatically alter its production profile. The Midland, Texas-based shale company is entirely focused on the Permian and pumped 319,000 barrels in the second quarter, about six times what Conoco produced there.

The combination will save $500 million a year by 2022, and hand shareholders more than 30 percent of cash from operations through dividends and other distributions, the companies said.

The Conoco-Concho deal may also signal further mergers and acquisitions in the sector. Despite a compelling rationale for more consolidation in order to cut costs, a lack of cash and Wall Street’s antipathy toward the sector has made it hard to get deals across the line.

But with oil stable at around $40 a barrel, there are signs that M&A may be picking up. Chevron Corp. completed its acquisition of Noble Energy Inc. in early October, and in late September Devon Energy Corp. announced it was buying Permian operator WPX Energy Inc. Unlike some shale deals in 2019, Devon’s tie-up with WPX was well-received, with both companies agreeing on a small deal premium. That follows investor criticism of some deal premiums last year for being excessive.

Goldman Sachs Group Inc. is Conoco’s financial adviser on the deal and Wachtell, Lipton, Rosen & Katz is its legal adviser. Credit Suisse Group AG and JPMorgan Chase & Co. are Concho’s financial advisers and Sullivan & Cromwell LLP is its legal adviser.

October 19th, 2020 October 19th, 2020

Marching Orders for the Next Investment Chief of CalPERS: More Private Equity

Marcie Frost, the chief executive of CalPERS, said that Mr. Meng’s departure would not prompt the board to change CalPERS’s investment strategy. She said a study by CalPERS and its outside consultants showed that private equity and distressed debt were the only asset classes powerful enough to boost the fund’s overall average gains up to 7 percent a year, over time.

“So we have to have a meaningful allocation to those,” she said, adding: “There are no guarantees that we’re going to be able to get 7 percent in the short term or, frankly, in the long term.”

Data show that CalPERS’s private equity returns are consistently lower than industry benchmarks, but private equity has still performed better than other assets and “has generated billions of dollars in additional returns as a result of our investments,” said Greg Ruiz, CalPERS’s managing investment director for private equity.

Mr. Meng was a big proponent of private equity, telling trustees that “only one asset class” would deliver the returns they sought and that the fund would need to direct more money into it. But while CalPERS sought, under him, to increase its private equity allocation to 8 percent of total assets, the holdings fell to 6.3 percent, in part because the private equity managers were returning money from previous investments and CalPERS did not jump to reinvest it. Overall, the fund had about $80 billion — or 21 percent of its assets — in private equity, real estate and other illiquid assets as of June 30, the end of its last fiscal year.

CalPERS has sometimes moved slowly on private equity partly because of its trustees’ qualms.

At one recent meeting, Ms. Taylor, the investment committee chair and formerly a senior union official, recalled that some of CalPERS’s private equity partners had bought Toys ‘R’ Us in 2005. The transaction loaded it up with $5 billion in debt just as the retailer’s bricks-and-mortar sales strategy was becoming antiquated, and the company went into a long, slow collapse that ended in liquidation and cost more than 30,000 jobs. “I’m hoping that we can get to a better strategy of mitigating some of these problems,” she said.

Other trustees questioned the validity of the internal benchmark CalPERS uses to evaluate its private equity investments, saying they didn’t believe the returns were all that good after fees were deducted.

October 19th, 2020 October 18th, 2020

Approval given for Hong Kong leg

The Ant Group Co. logo and the Alibaba Group Holding Ltd. logo are displayed behind a reception desk at the company’s headquarters in Hangzhou, China, on Monday, Sept. 28, 2020.

Qilai Shen | Bloomberg | Getty Images

GUANGZHOU, China — Ant Group has won approval from the Chinese securities regulator for the Hong Kong leg of its initial public offering (IPO), moving it one step closer to listing, CNBC has confirmed.

The financial technology giant, which is 33% owned by Alibaba and controlled by billionaire Jack Ma, is seeking to list in Shanghai and Hong Kong in a concurrent IPO.

The China Securities Regulatory Commission has given the green light for the Hong Kong portion, a person familiar with the matter told CNBC. A hearing with the Hong Kong stock exchange, a key part of the approval process, will take place on Monday, the person said.

IFR first reported the news. Ant Group declined to comment to CNBC.

Ant Group’s IPO could be one of the biggest of all time. Reuters has previously reported that the company is looking to raise $35 billion. One analyst previously told CNBC that Ant’s valuation could be north of $200 billion.

The Chinese firm runs the massively popular Alipay mobile payments app in China which has over 700 million monthly active users. It also has various other financial products from insurance to wealth management. But a large part of its business model is selling financial technology products and generating technology service fees.

Ant Group’s IPO process has been pushing ahead despite a report that the U.S. is trying to get the company put on a trade blacklist called the Entity List, a move experts said would be “largely symbolic.”

October 16th, 2020

In Reversal, Twitter Is No Longer Blocking New York Post Article

For nearly four years, the social media companies have had time to develop content policies to be ready for the 2020 election, especially after Russian operatives were found to have used the sites to sow discord in the 2016 election. But even with all the preparations, the volume of last-minute changes by Twitter and Facebook suggests that they still do not have a handle on the content flowing on their networks.

That raises questions, election experts said, about how Twitter and Facebook would deal with any interference on Election Day and in the days after. The race between Mr. Trump and his Democratic challenger, Joseph R. Biden Jr., has been unusually bitter, and the social media sites are set to play a significant role on Nov. 3 as distributors of information. Some people are already using the sites to call for election violence.

The chaotic environment could challenge the companies’ policies, said Graham Brookie, director of the Digital Forensic Research Lab, a center for the study of social media, disinformation and national security. “Everybody has a plan until they get punched in the face,” he said.

Other misinformation experts said Twitter and Facebook have had little choice but to make changes on the fly because of the often norm-breaking behavior of Mr. Trump, who uses social media as a megaphone.

Alex Stamos, director of the Stanford Internet Observatory and a former Facebook executive, noted that after Mr. Trump recently made comments to his supporters to “go into the polls and watch very carefully,” some companies — like Facebook — created new policies that forbid a political candidate from using their platforms to call for that action. The companies also prohibited candidates from claiming an election victory early, he said.

“These potential abuses were always covered by very broad policies, but I think it’s smart to commit themselves to specific actions,” Mr. Stamos said.

From the start, the New York Post article that Twitter blocked was problematic. The article featured purported emails from Hunter Biden, a son of Joe Biden, and discussed business in the Ukraine. But the provenance of the emails was unclear, and the timing of their discovery so close to the election appeared suspicious.

October 16th, 2020

Robert F. Smith Admits He Cheated on Taxes for 15 Years


Billionaire Robert F. Smith has been hailed as a brilliant investor who built Vista Equity Partners into a private equity powerhouse and a generous philanthropist lauded for paying off the student debt of Morehouse College’s entire graduating class last year.

But federal prosecutors undercut that image, saying Smith concealed income and evaded taxes for 15 years by using foreign trusts, corporations and bank accounts to cheat the Internal Revenue Service.

Smith, 57, avoided prosecution only by cooperating in a case against Robert Brockman, a Houston businessman accused of using a web of Caribbean entities to hide $2 billion in income in what prosecutors called the largest U.S. tax case ever against an individual.

“Smith committed serious crimes, but he also agreed to cooperate,” said David Anderson, the U.S. attorney in San Francisco. “Smith’s agreement to cooperate has put him on a path away from indictment.”

Smith signed a non-prosecution agreement in which he admitted he repeatedly made false filings with the IRS, even after he attempted to enter an amnesty program in 2014. He agreed to pay more than $139 million in back taxes, interest and penalties after a four-year investigation first reported by Bloomberg News.

A statement of facts that Smith agreed to chips away at the carefully crafted public image that he had erected over the past five years as he has used a charitable foundation he runs and his family money to donate hundreds of millions of dollars to various philanthropic causes. Recipients included Cornell University, Carnegie Hall and the United Negro College Fund.

Smith admitted that he used $2.5 million in untaxed funds to buy and renovate a vacation home in Sonoma, California, paying for it in 2005 with private equity funds deposited into accounts in the British Virgin Islands and Banque Bonhote in Switzerland. In 2010, Smith moved to Switzerland for a time and bought two ski properties and a commercial property in the French Alps, all with untaxed money in the Swiss account. Smith, who owns several homes throughout the U.S., now lives in Austin, Texas.

He transferred more than $13 million from Banque Bonhote to a U.S account. Smith used the money “to build a home and make improvements to property that he owned in Colorado and to fund charitable activities on that property for inner city children and wounded veterans,” according to his statement of facts.

Smith understood that Brockman’s offer in 2000 to invest $1 billion to seed Smith’s first private equity fund would rely on money concealed from the IRS, he admitted. Smith viewed the offer as a unique business opportunity and willingly went along, he said. He also took Brockman’s advice that he work with a Houston lawyer to structure his own foreign entity, Belize-based Excelsior Trust, and paid the attorney about $800,000 to create a false paper trail involving related entities from 2000 to 2014.

In 2014, Smith directed Excelsior to contribute $182 million in shares in a Nevis-based entity, Flash Holdings LLC. The shares went to Fund II Foundation, a U.S.-based charity that he co-founded. Smith falsely claimed that he’d been required to make that charitable contribution as part of his original agreement with Brockman. Had it been true that the offshore assets had always been designated for charity, it could have supported the view that Smith didn’t owe taxes on them.

Fund II Foundation lists Smith as founding director and president. Its high-profile contributions have gone to fight breast cancer afflicting women, create science programs for Black students and preserve the homes of Martin Luther King Jr. and other prominent Black Americans.

Beyond paying $139 million, Smith agreed to abandon refund claims of $182 million based on charitable deductions filed in 2018 and 2019.

Smith took steps to come clean after Banque Bonhote urged him in November 2013 and January 2014 “to report his non-compliance” to the IRS, according to his admission. He applied in March 2014 for amnesty from prosecution through an IRS program used by more than 56,000 Americans who failed to report offshore assets. But the IRS rejected him.

He then filed a false report of foreign bank and financial accounts, known as an FBAR, failing to declare his financial interest in his BVI and Swiss accounts, he admitted. He also submitted a false tax return that failed to declare his interest in those accounts.

Smith’s false filings continued. He entered a “streamlined” disclosure program but filed false FBARs and tax returns spanning several years, according to his admission.

“Smith willfully failed to report on Streamlined Tax Returns over $200 million of partnership income” distributed to Flash from private equity funds from 2005 through 2014, according to the statement of facts.

Smith has been represented by lawyers of some renown in the white-collar and tax defense world. His non-prosecution agreement was signed by five lawyers, including three from Kirkland & Ellis, the firm where William Barr worked until he became President Donald Trump’s attorney general.

Two of the Kirkland & Ellis lawyers are Mark Filip, a former deputy attorney general under President George W. Bush, and W. Neil Eggleston, a former White House counsel for President Barack Obama.

October 16th, 2020

Citi’s Ray McGuire Makes Pitch for New York Mayor

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The veteran deal-maker Ray McGuire announced Thursday that he was stepping down as Citigroup’s vice chairman to join the crowded race for New York City mayor. His fellow finance executives sing his praises, but it’s unclear whether that helps or hurts his bid to run a city whose voters have shifted away from the centrist politics of leaders like Mike Bloomberg toward the progressive views of Representative Alexandria Ocasio-Cortez.

Mr. McGuire is well-connected on Wall Street — and beyond. Raised by his single mother and grandparents in Dayton, Ohio, he won a scholarship to the private Hotchkiss School and then earned three degrees from Harvard. Mr. McGuire then became an M.&A. rainmaker at First Boston, Morgan Stanley and Citigroup, which he joined in 2005 as global co-head of investment banking.

• He has close ties to Black civic and political leaders, including the Rev. Al Sharpton and the former top Obama administration official Valerie Jarrett. He has spoken out about social justice issues, saying “I could easily be George Floyd” and calling Mr. Floyd’s death “coldblooded murder.”

His pitch is fixing New York City’s economy. He is focusing on the city’s fragile financial state as it faces a $9 billion revenue shortfall. “New York is in a financial crisis that has exploded into a whole bunch of crises — educational, health and criminal justice,” he told The Times. “If there is a moment in history where my skill set can help lead, this is it.”

Fellow financial executives are big supporters. “We need someone who is going to walk into the room and say, ‘Let me see the spreadsheets, and let’s deal with the crisis at hand,’ ” said Bill Lewis, a co-chairman of investment banking at Lazard who has known Mr. McGuire since they were undergraduates at Harvard. The former Infor C.E.O. Charles Phillips, whom Mr. McGuire met when the two were at Morgan Stanley, is a co-chair of his campaign.

But those ties could hurt him with left-leaning voters. Mr. McGuire has resisted comparisons to the last financial tycoon to run for mayor, Mr. Bloomberg, and supporters point to his socially liberal credentials. But New York’s Democrats have moved leftward, as the party’s primary elections this year showed, and may resist having another Wall Streeter in Gracie Mansion.

• Mr. McGuire is opting out of the city’s public finance system, which allows him to accept larger donations and avoid limits on spending — but that could increase skepticism of his run among the party’s progressive wing.

🗽 For more about Mr. McGuire’s candidacy, check out the latest edition of our sister newsletter, New York Today.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin and Lauren Hirsch in New York, Ephrat Livni in Washington, and Michael J. de la Merced and Jason Karaian in London.

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Republicans fight over a stimulus package. President Trump said that he “would go higher” than the $1.8 trillion proposal his administration has put forward in negotiations with Democrats. But Senator Mitch McConnell, the majority leader, said that would be “a much larger amount than I can sell to my members.”

Pfizer will not seek approval of its coronavirus vaccine until late next month. It’s a shift in tone for the drug maker, which had previously emphasized the month of October, aligning itself with Mr. Trump’s push for a vaccine before the Nov. 3 election. In other vaccine news, Gilead’s high-profile antiviral drug, remdesivir, failed to prevent deaths in a 11,000-person W.H.O. study. The company disputed the findings.

Europe’s aviation regulator says the Boeing 737 Max is safe to fly again. It could return to service in the region before the end of the year, Bloomberg reports. Analysts expect U.S. regulators to allow the plane to return to the skies early next year; it has been grounded since March 2019, following two crashes that killed 346 people.

Twitter reverses course on a New York Post story about Joe Biden. It will now allow the unverified story to be shared, after originally banning it, but will add a label to provide context about the source of the information. Republicans on the Senate Judiciary Committee said they would subpoena Jack Dorsey, Twitter’s chief, to answer questions about it.

Businesses push back on a Trump executive order limiting diversity training. In a letter to the White House, more than 150 companies and nonprofit groups, including the U.S. Chamber of Commerce, said the order was having a “broadly chilling effect on legitimate” training programs. Earlier in the day, the Business Roundtable (which also signed the letter) announced a range of actions that C.E.O.s of the country’s largest companies pledged to put in place to “advance racial equity and justice.”

Many companies don’t expect their workers to return to offices until next summer, and even then things may never be the same as before, judging by the comments executives made this week.

Offices are still mostly empty. On earnings calls, executives from Goldman Sachs said that about a third of workers in New York and London were coming in regularly; at JPMorgan, it’s around 20 percent in both cities; and Citigroup said “a small percentage” of employees in North America had returned.

• ”Being together enables greater collaboration, which is key to our culture,” said David Solomon, Goldman’s chief.

They may never return to their previous capacity. Jamie Dimon of JPMorgan acknowledged that some working habits may have changed permanently, which “will ultimately reduce the space you need for your employees.” Terrance Dolan, the finance chief at U.S. Bancorp, told analysts that the bank will most likely “consolidate” its corporate real estate.

Is that a problem? Steven Goulart, the chief investment officer at MetLife, said at an S.E.C. round table that the “pressure to de-densify” offices to support social distancing could support demand for real estate even if buildings aren’t as full as before. (See, for example, the interest in low-rise “groundscrapers.”)

• As executives conduct more business remotely, going back to in-person meetings and pitches seems less urgent. Natarajan Chandrasekaran, the chairman of Indian conglomerate Tata Sons, said in an interview with The Times that he used to fly from India to the U.S. to pitch a $50,000 project. But recently, he said, his firm’s consultancy business closed $2 billion worth of deals in “five or six Zoom calls.”

Consider the perks. BlackRock’s Larry Fink is excited about what employees could do with the two hours they save on daily commutes by staying home. “They spend that two hours to do more work,” he said on a conference call. “They could spend two hours improving their health by exercising. They could spend two hours more in building a deeper, stronger, more resilient family.”

Reeves Wiedeman is a contributing editor at New York magazine and the author of the book “Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork,” which comes out next week. It’s been a year since Mr. Neumann was ousted from the co-working company he founded, seemingly with billions in tow.

Mr. Wiedeman talked to DealBook about the man, the myth and the money.

We have to start with the title of the book.

There were two reasons for the title. Neumann became a theoretical billionaire at the moment when his company failed. “Billion Dollar Loser” captures that contradiction and speaks to larger themes. WeWork lost billions in pursuit of growth, but it wasn’t alone. It was typical of an era that may seem distant during the pandemic, when investors really believed in unicorns, a time that might not be over. SoftBank backed WeWork and is now subsidizing DoorDash, which is planning an I.P.O., in the hope the financials will someday make sense.

So, was Mr. Neumann sincere or just selling a story for a fortune?

I thought a lot about his sincerity and talked to many people. Was it just a sales pitch?

He took the decent but ordinary business of co-working and gave it a feeling of magic with charisma and a founding myth. Neumann’s time on a kibbutz gave him a useful talking point, and WeWork’s buzzword — community. Community is something we all want. Ultimately, WeWork learned community is hard to scale and maintain around the world. But I came to believe that he believed the story that he was changing the world and was more qualified than governments to solve its big problems. This thinking is endemic to Silicon Valley and venture capitalism. Neumann was just more open about expressing his grand ambitions.

What should we make of this epic tale of success and failure? Are there lessons?

Well, I hope people don’t read the story like a how-to. I didn’t intentionally write a guide to being an ambitious entrepreneur. But it could be read that way.

For me, as someone who is conservative about career choices, the lesson is that it is worth thinking about taking risks, in addition to knowing when to stay the course. Generally, it may be that we need to think about how we define success culturally. We only pay attention to growth, not to satisfaction. But you can build very nice businesses without trying to be a world-famous billionaire. And, interestingly, when I talked to Neumann’s competitors, I discovered most weren’t jealous of him even when he was at his most successful.

Is “loser” a temporary judgment? Could Mr. Neumman “win” again?

He promised and wanted a lot and it was hard to deliver. But given his ambition, charisma and work ethic, he won’t retire early. I think people will give him a second chance.

“The medium to longer term is still highly uncertain in particular as it relates to future stimulus. And so we remain heavily weighted to our downside scenarios.” — Jennifer Piepszak, the C.F.O. of JPMorgan Chase

“The consumer number in my view is going to be highly dependent on whether they provide more fiscal stimulus, which I think they absolutely need to do.” — William Demchak, the C.E.O. of PNC Financial Services

“For both sides, I think what they need to keep in mind is that there are Americans that need them, that don’t really care about politics, aren’t really tied up in this election and they just need some help.” — Doug McMillon, the C.E.O. of Walmart, on CNBC

Deals

• Talks to sell J.C. Penney’s retail operations to its biggest landlords, Simon Property Group and Brookfield Property Partners, have reportedly stalled. (Bloomberg)

• Blackstone plans to sell BioMed Realty Trust, which supplies office space to health care companies, from one of its funds to another at a $14.6 billion valuation. (Reuters)

• Blank-check funds have accounted for nearly half of proceeds raised by I.P.O.s in the U.S. last quarter, and well over 40 percent of money raised so far this year. (EY)

Politics and policy

• Fact-checking Thursday’s Trump and Biden town halls. (NYT)

• The Trump administration rejected California’s request for federal aid to clean up the damage from recent wildfires. (L.A. Times)

Tech

• Amazon said that third-party merchants earned over $3.5 billion from this year’s Prime Day, but the company didn’t disclose total sales from the two-day event. (CNBC)

• Google’s former C.E.O., Eric Schmidt, called on the U.S. to adopt a national strategy to compete with China on A.I. (Politico)

Best of the rest

• A former Deutsche Bank executive who exposed accounting fraud at the lender, and refused a $8.25 million whistle-blower award, said he’s going broke. (FT)

• The latest training for retail store workers: how to handle fights between customers over face masks. (NYT)

• “A lot of your children and grandchildren do not respect your work”: The writer Anand Giridharadas let rip at the National Association of Corporate Directors’ annual summit. (Business Insider)

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

October 15th, 2020

Watch CNBC’s full interview with Goldman Sachs’ co-head of investment banking

CNBC’s “Closing Bell” team discusses global mega deals, the economic recovery, the surge of SPACs, diversity in the workplace and more with Gregg Lemkau, co-head of investment banking at Goldman Sachs. The markets have been incredibly busy. What’s been amazing about the M&A market is that back in March, April and May there was no activity, Lemkau says. It was down 85 percent and completely dead. We started to see activity pick up meaningfully in September, he adds.

October 15th, 2020

M&A Wrap: Cascadia, Datasite, Tata, Leonard Green, Avista, Clearlake, Most Influential Women

Middle-market investment bankCascadia Capitalhas formed a new group to leverage growing deal activity in artifiical intelligence. Advanced technologies, such as robotics, automation and artificial intelligence, or RAAI, are spurring paradigm shifts in critical industries from manufacuring to healthcare to energy, according to Cascadia. As companies adapt to incorporate these technologies, M&A is a natural answer for bringing on added capabilities that will give them a competitive advantage, the firm adds. The new group is led by Cascadia chairman and CEO Michael Butler (pictured) along with managing directors Jamie Boyd and Firdaus Pohowalla. “We have been active in the RAAI space for several years with growing excitement and felt that the time was right to formally pull together the firm’s expertise in a way that maximizes the service we deliver to our clients,” Butler says. “Our bankers have established a deep understanding of the underlying technologies and end markets while simultaneously developing unparalleled relationships with strategic buyers and investors.” Some of Cascadia’s most recent RAAI clients include: Lucidyne Technologies Inc., a manufacturer of AI-enabled computer vision systems; Vexcel Imaging, a provider of digital mapping and drones; and Qi2, a developer of robotic sensor systems for the oilfields. “Unlike other industries that have known groups of buyers and investors, the RAAI market is inefficient due to its broad spectrum of technologies, multiple end markets, and international scope,” the firm points out.

Mergers and Acquisitions opened the nominations and are actively seeking candidates now for the 2021 Most Influential Women in Mid-Market M&A. Deadline is Monday, December 7, 2020. It will mark the sixth y ear we have produced the list, which recognizes female leaders with significant influence inside their companies and in the wider dealmaking world. It’s been gratifying to watch the project evolve over the years – and become more influential itself. Last year, we received more nominations than ever before. As a result, we expanded the number honored to 42 in 2020, up from 36 in 2019. Many dealmakers were new to our 2020 list, including Rockwood Equity Partners’ Kate Faust, William Blair’s Shay Brokemond and Avante Capital Partners’ Ivelisse Simon. Read our full coverage of all the champions of change on our list, including Q&As with each individual. We will open up the 2021 nomination process in October and will publish the list in the February issue of Mergers & Acquisitions.

M&A activity surged in the third quarter, and more momentum is expected in the fourth quarter. Datasite recently surveyed 600-plus dealmakers to find out what’s driving dealmaking. Mergers & Acquisitions asked Datasite CEO Rusty Wiley to share the results of the survey and his perspective on end-of-the-year dealmaking. Deal-Ready: Companies Prepare for Opportunities, as M&A Activity Picks Up in Q4

DEAL NEWS
Tata Group, India’s conglomerate that sells almost everything from cars to apparel and steel, is seeking to buy Indian online retailers to beef up its presence in e-commerce, according to Bloomberg News. The group has reached out to IndiaMart InterMesh Ltd., a business-to-business marketplace, for a potential stake purchase. Supermarket Grocery Supplies Pvt., commonly known as BigBasket, is also among Tata’s potential investment targets. Read the full story by Bloomberg News: Tata Group Chases E-Commerce Deals to Bolster Retail.

Leonard Green & Partners has invested in optical retailer Eyemart Express. The PE firm joins existing investor FFL Partners. Eyemart operates 223 stores in 41 states. Evercore, Barclays and BofA Securities advised Eyemart and FFL.

Avista Capital Partners-backed Arcadia Consumer Healthcare Inc. has bought supplements and vitamins brand Naturelo. “As consumers increasingly turn to self-directed health and wellness regimens, the appetite for premium products like those made by Naturelo presents an incredible opportunity,” says Arcadia CEO Mike DeBiasi.

Cinven-backed Barentz International is acquiring Maroon Group from CI Capital. Maroon is a distributor of life science ingredients and chemicals. Moelis & Co. and Paul, Weiss, Rifkind, Wharton & Garrison LLP advised Maroon. Kirkland & Ellis LLP advised Barentz.

Clearlake-backed Dude Solutions is buying software company Confirm. The latter helps businesses with infrastructure services, operational efficiencies and leverage Internet of Things.

Elvisridge Capital has acquired SurfaceLogix, a maker of of decorative and maintenance care products for pavers, stone and concrete surfaces.

IN THE OCTOBER ISSUE OF MERGERS & ACQUISITIONS
“When Covid-19 hit, everything stopped,” says Jeri Harman, the founder of Avante Capital Partners, in the October cover story of Mergers & Acquisitions, written by contributing editor Danielle Fugazy. “We were looking internally to understand where our portfolio was and figure out how we could help existing portfolio companies. That lasted until May. Now we are busy again. It’s not like last year, but there is good deal flow.”

To find out what we can expect in the months to come, we turned to Churchill Asset Management’s Randy Schwimmer, the founder and publisher of The Lead Left, for a contributed article on predictions for 2021. “Transaction efficiency is key to getting deals done,” he says.

Mergers & Acquisitions interviewed Pam Hendrickson, COO of the Riverside Co., who serves on the board of theAmerican Investment Council. Hendrickson urges: “We must remain engaged before, during, and after election day.”

For the full versions of these stories, click on these links:

SPECIAL REPORTS
Most Influential Women of Mid-Market M&A is one of three special projects Mergers & Acquisitions publishes annually. For more details, see: Special reports: Advancing the middle market through Most Influential Women, M&A Mid-Market Awards and Rising Stars.

The M&A Wrap is a bi-weekly column that is published on Mondays and Thursdays.

October 15th, 2020 October 15th, 2020

Tata Group Chases E-Commerce Deals to Bolster Retail


Tata Group, India’s conglomerate that sells almost everything from cars to apparel and steel, is seeking to buy Indian online retailers to beef up its presence in e-commerce, people familiar with the matter said.

The group has reached out to IndiaMart InterMesh Ltd., a business-to-business marketplace, for a potential stake purchase, the people said, asking not to be identified as the plans are confidential. IndiaMart’s shares have surged 140% in Mumbai this year, giving it a market value of about $2 billion. Supermarket Grocery Supplies Pvt., commonly known as BigBasket, is also among Tata’s potential investment targets, one of the people said.

Deliberations are at an early stage and there’s no certainty Tata’s pursuit of the assets will result in transactions, the people said. The Financial Times reported Tata’s talks with BigBasket on Wednesday and The Economic Times on Thursday reported that Tata has held initial discussions with IndiaMart.

A representative for Tata declined to comment, while V.S. Sudhakar, one of the BigBasket founders, also declined to comment.

“Any talk of IndiaMart being in discussions with Tata Group for investment or acquisition is completely baseless,” Dinesh Agarwal, founder and chief executive officer of IndiaMart, said in a response to a Bloomberg News query.

IndiaMart’s shares rose as much as 3.1% on Thursday in Mumbai outpacing the benchmark S&P Sensex which advanced as much as 0.6%, data compiled by Bloomberg show.

Mumbai-based Tata Group, with a revenue of $113 billion and marquee brands such as Jaguar Land Rover and tea maker Tetley, is scouting for local e-commerce assets at a time when the race for Indian online shoppers is heating up. While billionaire Mukesh Ambani’s JioMart is seeking to shake up the industry dominated by the local units of Amazon.com Inc. and Walmart Inc., Tata is seeking potential acquisitions to narrow the gap with its rivals.

Tata is pursuing a two-pronged strategy to modernize its online model, which is at present fragmented. Besides seeking acquisitions, it is also in talks with potential investors about taking stakes in a digital platform it is creating, people familiar with the matter said last month.

Tata’s digital platform will center around an all-in-one e-commerce app that aims to bring disparate online businesses of its entrenched consumer units under one umbrella. These include Tanishq jewelry stores, Titan watch showrooms, Star Bazaar supermarkets, chain of Taj hotels and a joint venture with Starbucks Corp. in India.

The expansion of Ambani’s Reliance Industries Ltd. into technology and retail businesses has added urgency to Tata’s plans. The tycoon, who’s Asia’s richest man, raised more than $20 billion this year, selling 33% of his technology venture Jio Platforms Ltd. to investors including Facebook Inc. and Google. His Reliance Retail Ventures Ltd. has embarked on its own fundraising spree, mopping up $5.1 billion from private equity and sovereign wealth funds in the past two months.

On its website, IndiaMart says it controls 60% of the Indian online B2B classified market, providing a platform to small and medium enterprises. It was founded in 1999 and has 3,150 employees located across 84 offices across the country.

Bigbasket, started in 2011, delivers groceries in some of India’s biggest cities and towns. The company became a so-called unicorn last year with a $1 billion valuation.

October 15th, 2020 October 14th, 2020 October 14th, 2020 October 14th, 2020 October 14th, 2020

How to Deal With a Crisis of Misinformation

How do we adapt to avoid being manipulated and spreading false information to the people we care about? Past methods of spotting untruthful news, like checking articles for typos and phony web addresses that resemble those of trusted publications, are now less relevant. We have to employ more sophisticated methods of consuming information, like doing our own fact-checking and choosing reliable news sources.

Here’s what we can do.

Get used to this keyboard shortcut: Ctrl+T (or Command+T on a Mac). That creates a new browser tab in Chrome and Firefox. You’re going to be using it a lot. The reason: It enables you to ask questions and hopefully get some answers with a quick web search.

It’s all part of an exercise that Ms. Byron calls lateral reading. While reading an article, Step 1 is to open a browser tab. Step 2 is to ask yourself these questions:

From there, with that new browser tab open, you could start answering those questions. You could do a web search on the author of the content when possible. You could do another search to see what other publications are saying about the same topic. If the claim isn’t being repeated elsewhere, it may be false.

You could also open another browser tab to look at the evidence. With a meme, for example, you could do a reverse image search on the photo that was used in the meme. On Google.com, click Images and upload the photo or paste the web address of the photo into the search bar. That will show where else the image has shown up on the web to verify whether the one you have seen has been manipulated.

With videos, it’s trickier. A browser plug-in called InVID can be installed on Firefox and Chrome. When watching a video, you can click on the tool, click on the Keyframes button and paste in a video link (a YouTube clip, for example) and click Submit. From there, the tool will pull up important frames of the video, and you can reverse image search on those frames to see if they are legitimate or fake.

Some of the tech steps above may not be for the faint of heart. But most important is the broader lesson: Take a moment to think.

“The No. 1 rule is to slow down, pause and ask yourself, ‘Am I sure enough about this that I should share it?’” said Peter Adams, a senior vice president of the News Literacy Project, a media education nonprofit. “If everybody did that, we’d see a dramatic reduction of misinformation online.”

October 14th, 2020