PE Weekly: Dealmakers Show Tech Isn’t Off the Table

Tech has had a rough year, but there could be signs of life on the dealmaking front. This week, M&A activity across the middle market included several technology targets within marketing, finance and compliance software. Elsewhere, investors continued to lean on sectors that have seen consistent dealmaking activity despite choppy market conditions, including manufacturing and healthcare.

Looking ahead, middle-market investors are gearing up for additional dealmaking with two firms closing new funds with more than $1.6 billion in combined capital commitments. Plus, the focus on private capital continues as Bow River launches its own private capital team. Read the latest headlines below.

Platform Investments

One Equity Partners to Acquires Marketing Business MSQ. One Equity Partners, a middle-market private equity firm, has announced its acquisition of MSQ Partners, a marketing technology agency group. The firm noted that the investment will serve as a platform to further consolidate the tech-enabled marketing sector through add-on acquisitions. One Equity’s investment will support MSQ’s geographic expansion.

Transom Acquires Aden & Anais Brands. Middle-market private equity firm Transom Capital has announced the completion of Aden & Anais, a designer and manufacturer of infant products sold under the brand names HALO and aden & anais. Transom will collaborate with Aden & Anais to expand its market reach and invest in product development to fuel growth, according to a press release provided to Middle Market Growth. The company also aims to enter new markets and strengthen customer relationships with the support of Transom.

Kohlberg Joins H.I.G. in Backing Business Advisory Firm Riveron. Business advisory firm Riveron, which focuses on private equity, the office of the CFO and other capital providers, has announced that it will be acquired by Kohlberg & Company, a middle-market private equity firm. H.I.G. Capital, an alternative assets investment firm that previously invested in Riveron, will retain a minority investment in the company.

Ampersand Capital Invests in NanoImaging Services. Ampersand Capital Partners, a middle-market private equity firm, has invested in NanoImaging Services, a company providing cryo-electron microscopy imaging services to pharmaceutical, biotechnology and nanotechnology customers. The growth equity investment will support NanoImaging’s global expansion and help strengthen its microscope capacity. The company also plans to introduce complementary services to its offering.

Capital Constellation Takes Minority Stake in Greenbelt Capital. Energy-focused private equity firm Greenbelt Capital Partners has announced investment platform Capital Constellation, managed by Wafra, has acquired a minority stake in the firm. Greenbelt targets the new Energy Economy through private equity, infrastructure development and late-stage growth investment. “We believe the ongoing transformation of the energy complex presents a generational investment opportunity for Greenbelt, and this partnership with Constellation will accelerate our growth,” stated Greenbelt managing partner Glenn Jacobson.

Add-Ons

Bellview Capital’s Ryeco Announces Manufacturing Acquisition. Ryeco, a manufacturer of control marking systems, has announced its acquisition of turn-up systems and packaging solutions manufacturer Sandar Industries. Ryeco is backed by family office Bellview Capital Partners. In a statement provided to MMG, Bellview CEO Michael Joseph described Sandar as “an exceptional strategic and cultural fit that solidifies our commitment to growing Ryeco’s paper and packaging footprint.”

Boathouse’s Spark Hire to Merge with Boathouse Capital. Spark Hire, a video interview platform and portfolio company of Philadelphia-based private equity firm Boathouse Capital, has announced its plans to merge with venture capital-backed Comeet, a collaborative recruitment software solution. Their announcement pointed to complementary services between the companies that support the talent acquisition process. Comeet investors include Flashpoint VC and Upwest VC.

Further Global-Backed E78 Acquires Finance Firm. E78 Partners, a financial technology and accounting business targeting middle-market portfolio companies and their financial sponsors, has acquired finance and accounting service provider Outliers. Outliers similarly targets private equity portfolio companies with a range of services, including interim CFOs, post-merger integration and distressed and turnaround services. E78 is backed by private equity firm Further Global Capital Management.

Canerector’s Conrex Steel Acquires Prescor. Canerector, a Toronto-based conglomerate of more than 50 companies in the manufacturing and industrial space, has announced that one of its portfolio companies, Conrex Steel, has acquired Prescor. Conrex Steel manufactures ASME-code heads for tanks and pressure valves. Its investment in Arizona-based Prescor, also an ASME tank head manufacturer, allows the company to expand into the U.S. market. In its announcement, Canerector noted “organizational culture was a big consideration” in Conrex’s investment.

Kian Capital’s SPATCO Acquires Petro Services Business. SPATCO Energy Solutions, which supplies and installs fueling station and EV-charging infrastructure solutions, has acquired MSCS, a petroleum construction and installation services business. Based in Dallas, MSCS allows SPACTO to expand within Texas, and follows its acquisitions of McKinney Petroleum Equipment and Petro Supply earlier this year. SPATCO is a portfolio company of lower middle-market private equity firm Kian Capital Partners.

Oak Hill’s Petauri Health Acquires Healthcare Advisory Company. Pharmaceutical services company Petauri Health, a platform formed by Oak Hill Capital Partners, has announced its acquisition of health advisory and marketing company The Kinetix Group (TKG). The acquisition is the first add-on for the Petauri platform. “The time could not be more critical, as scientific innovation continues to outpace society’s ability to pay for it, resulting in widespread healthcare inequities that must be resolved,” stated TKG cofounder John Strapp.

Odyssey Investment’s Service Champions Inks Home Services Acquisition. Service Champions, a plumbing and HVAC services platform, has announced its acquisition of Seatown Electric, Plumbing, Heating and Air. The family-owned business was founded in 2014 and subsequently added HVAC and plumbing solutions, as well as went through a rebrand. Champion’s investment in the company will support its expansion into the Pacific Northwest.

Halmos Capital’s and NewSpring’s Northpoint Roofing Announces Acquisition. Northpoint Roofing Systems, a provider of residential roof replacement and repair services, has acquired Cardinal Roofing and Restoration. The investment marks Northpoint’s third add-on acquisition this year and expands its geographic footprint in the Southeast. The business is a portfolio company of lower middle-market private equity firm Halmos Capital Partners as well as investment firm NewSpring Capital.

Exits

Main Capital to Exit cleversoft Group to Levine Leichtman. Private equity firm Levine Leichtman has announced it reached an agreement to acquire financial services regulatory software company cleversoft Group from its current backer, Main Capital Partners. Main Capital, which first invested in the business in 2018, will exit its investment. In a statement, founder Florian Clever said Levine Leichtman’s support will fuel the company’s position within the RegTech sector.

Fundraising

Hidden River Closes Inaugural Lower-Midmarket Fund. Hidden River Strategic Capital, a Philadelphia-based investment firm, has announced the close of its inaugural Hidden River Strategic Capital I, LP fund. The firm secured $245 million in capital commitments, surpassing its initial target. The firm is founded by lower middle-market specialists Steve Gord, Todd Morrissey and Kevin Condon, who launched Hidden River to focus on providing junior capital for lower middle-market owner-operators. In a statement, founding partner Gord said, “private lower middle-market businesses tend to face a funding void between the often rigid investment approaches of traditional credit funds and the overly dilutive, controlling approaches of growth equity and buyout funds.”

GrowthCurve Capital Closes Inaugural PE Fund at $1.4 Billion. Private equity firm GrowthCurve Capital, which focuses on AI, digital transformation and human capital, has closed its inaugural private equity fund with $1.4 billion in capital commitments. GrowthCurve Capital Partners I follows the launch of GrowthCurve in 2021. In a statement, the firm’s CEO and founder Sumit Rajpal said the firm’s investment strategic “is well-suited to empowering our portfolio companies to drive growth by unlocking the value of their data.”

Insights

Bonaccord Capital Broadens Asia Footprint with Asia Heritage. Bonaccord Capital Partners, a private equity firm targeting the middle market, has announced a partnership with Asia Heritage, a Singapore-based asset manager. The collaboration supports Bonaccord’s ability to support existing portfolio companies’ capital formation initiatives within Asia, which it described in a press release as “a critical growth market for private markets allocations.” Ajay Chitkara, Bonaccord’s managing partner, noted, “This partnership provides a transformative value proposition for our portfolio companies, supplementing our resources in North America, Europe, and the Middle East to support our portfolio companies’ institutional priorities.”

Bow River Capital Launches Private Credit Unit. Denver-based alternative asset manager Bow River Capital announced the formation of its Private Credit Team and Private Credit Investment Committee, according to a press release. In a statement, Richard Thackray, Bow River Capital president, said the team “advances our ability to offer a differentiated approach to private credit investing” and will support the firm’s investors, sponsors and their middle-market companies in search of capital. The team will be headed by Eli Muraidekh, managing director and head of both the Private Credit Team and Investment Committee.

Great Rock Capital Expands Midmarket Lending Capacity with KeyBank. Great Rock Capital, a middle-market lender, has announced the expansion of its leverage facility with KeyBank National Association. The facility adds new lending partners First Citizens Bank, Regions Bank and Synovus Financial Corp, and offers $450 million of capital. “After a record year in 2022, the expansion of our capital base will allow Great Rock to continue supporting the liquidity needs of middle market companies across North America as they execute on their strategic business initiatives,” stated Great Rock CEO Stuart Armstrong.

ACG Detroit Honors M&A All-Stars. ACG Detroit, in collaboration with DBusiness magazine, have announced its M&A All-Stars awards. The chapter named Martin Stein, managing director for Blackford Capital Grand Rapids, as Dealmaker of the Year, while Arjun Murthy, director at Cascade Partners Southfield, was named Rising Star. Additional award categories include Deal of the Year Over $50 Million, Deal of the Year Under $50 Million, Advisor of the Year, Investment Banker of the Year and the Lifetime Achievement Award, the latter being given to Scott Eisenberg, managing director of financial advisory services at Capstone Partners Birmingham.