M&A wrap: Uber, Lyft, SEC, Pinterest, Shorehill, Incline Equity


Photo credit: Bloomberg News

Uber, Lyft and other companies expected to go public in 2019 face timing challenges, including racing to debut before a potential recession and likely delays caused by the U.S. government shutdown. “Uber and Lyft lead a handful of Silicon Valley multibillion-dollar companies founded during the last recession that may go public in 2019,” reports CNBC. “But with many economists forecasting a recession by 2020, it seems these rideshare companies, as well as other IPO candidates, such as Airbnb, Slack and Palantir, may be racing against a recession clock for deals that in all could reach more than $200 billion in valuation. History shows the IPO market does suffer when stocks and the broader economy tank, but big names like Uber and Lyft can likely get deals done in any market. They just may have to swallow lower deal pricing than they want.” They may also have to wait a bit. The U.S. government shutdown is “is beginning to gum up the IPO process,” Kathleen Smith, principal at Renaissance Capital, a manager of IPO exchange-traded funds, told MarketWatch. As the shutdown continues, “a backlog is building that will delay the IPO process for companies of all sizes, including the large tech deals such as Uber, Lyft, Slack, Pinterest, etc., that are on file confidentially.” The U.S. Securities and Exchange Commission’s Edgar system is “operated pursuant to a contract and thus will remain fully functional as long as funding for the contractor remains available through permitted means,” according to the agency’s website. “SEC personnel will be able to process requests for Edgar access codes and password resets; answer questions about fee-bearing Edgar filings and other emergency questions regarding Edgar submissions. However, the Divisions of Corporation Finance, Investment Management, and Trading and Markets, and the Office of Compliance Inspections and Examinations will be unable to process filings, provide interpretive advice, issue no-action letters or conduct any other normal Division and Office activities. As a result, new or pending registration statements or applications for exemptive relief will not be processed regardless of the status of any review of those filings.” Even after the government re-opens, there will likely be holdups. “Once the shutdown ends, delays in agency actions should be expected given the backlog that will have developed,” attorneys from Fried Frank Harris Shriver & Jacobson LLP point out in an article on Lexology.

Deal news
Shorehill Capital has acquired a majority stake in Functional Devices. The target produces relays, power supplies, transformers, sensors, enclosures and wireless devices used in building and lighting controls and energy management. Katten Muchin Rosenman advised Shorehill. Ice Miller advised the seller. Madison Capital Funding and Maranon Capital provided financing.

Incline Equity Partners has acquired Profile Products, a manufacturer of soil products, from Platte River Equity. Brown Gibbons Lang & Co. advised Profile Products and Bartlit Beck advised Platte River.

Atlantic Street Capital has formed Advancing Eyecare Holdings by merging portfolio companies Lombart Instrument and Marco Ophthalmic.

Salt Creek Capital has acquired the lawn and snow-related assets of Beauchamp Lawn & Snow Service Inc.

For more deal announcements, read the The weekly wrap: Advent, Eli Lilly, RLJ Equity.

Outlook 2019
Mergers & Acquisitions asked leading dealmakers about their outlook for the middle market in 2019. View 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. Watch the full video: Outlook 2019: Great time to sell.

Private equity firms and strategic buyers will use their excess cash and capitalto look for deals, says Bharat Ramprasad of Stifel Nicolaus. Watch the full video: Outlook 2019: Excess capital to fuel M&A.

Rising interest rates and regulatory changes may increase volatility, cautions Mark Emrich of Murray Devine. Watch the full video: Outlook 2019: Keep an eye on rising interest rates.

People moves
Olamide Ajibesin has joined Anchin, Block & Anchin where she is concentrating on due diligence. She was previously with Duff & Phelps.

Terrence Everett was hired by Blank Rome as a partner. Everett was most recently with Carlsmith Ball LLP and concentrates on M&A.

Chris Manderson has formed law firm Manderson PC. Manderson was previously with Skadden, Arps, Slate, Meagher & Flom LLP and Paul, Hastings, Janofsky & Walker LLP, and he focuses on M&A, restructuring and venture capital.

Dan Rudgers was hired by Stonington Capital Advisors as a senior managing director where he is focusing on private equity fund placement. He previously held roles at First Avenue Partners and Lazard.

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.

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.

Infrastructure investors can no longer afford to think about only concrete, glass and steel. Digitalization is transforming the role played by physical assets, and Paris private equity firm Ardian has identified five critical attributes, which form the foundation of a new approach to value creation called Augmented Infrastructure. For more, read: How digital disruption is transforming private equity investments in infrastructure.

With the rising number of cyberattacks, conducting due diligence on data is more important than ever in dealmaking. Read the full guest article by Neil Coulson and Cynthia Cole of Bakter Botts: Why mitigating data risk is crucial in M&A.

The NFL divisional round of the playoffs kicks off this weekend with the Kansas City Chiefs hosting the Indianapolis Colts and the Los Angeles Rams hosting the Dallas Cowboys on Saturday. The New England Patriots host the Los Angeles Chargers and the New Orleans Saints take on the Philadelphia Eagles on Sunday. Off the field, football players build companies. 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
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.


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.