PE Weekly: IPOs Back on the Table as PE Dealmaking Expected to Climb

The long-awaited Federal Reserve interest rate cut is here, much to the relief of dealmakers who have been struggling with expensive financing. The cut is sure to support a boost to dealmaking in the months ahead, but already, positive signs are emerging. Business services retain the focus of private equity investors this week, while analysts anticipate a bright future ahead for dealmakers: New research from EY-Parthenon forecasts a significant uptick in PE dealmaking for 2024 compared to last year, while separate reports suggest IPOs are back on the table for a growing number of sponsored companies. Review the latest news below.

Platform Investments

GenNx360 Acquires Infrastructure Company Shenandoah. GenNx360, a middle-market private equity firm focused on the B2B industrials and business services spaces, has announced its acquisition of Shenandoah Industrial Solutions. Shenandoah provides underground infrastructure services including pipe cleaning and rehabilitation.

Point 41 Launches Restoration Services Platform. Middle-market private equity firm Point 41 Capital Partners has announced the formation of a new restoration services platform following its partnerships with Georgia Water & Fire and Property Medics of Georgia. The combined company will provide loss mitigation, environmental remediation, cleaning and storage, and reconstruction solutions.

Osceola Capital Forms Exterior Home Services Platform. Two acquisitions made by private equity firm Osceola Capital have resulted in the formation of an exterior home services platform, Valor Exterior Partners. A press release said Osceola Capital formed the platform following its acquisitions of HP Roofing and WeatherCheck. The platform offers a range of services including repair and maintenance of roofing, siding, windows, decking and more.

New Heritage Capital Takes Majority Stake in Brilliant. Corporate gifting and branded merchandise solution provider Brilliant has announced the sale of a majority stake in the business to private equity firm New Heritage Capital. New Heritage made the acquisition via its Private IPO strategy, which enables current management of targets to retain operating control of the business.

RF Investment Partners Launches Pet Pharmaceutical Platform. RF Investment Partners announced two acquisitions to form a pharmaceutical platform. The firm acquired Altro and Amini Pharmaceuticals, two companies providing strategic sourcing, market insights and production of generic pharmaceuticals for pet and animal end clients. RF’s investment is supported by Aquimont Capital and Miramar Equity Partners.

Add-ons

HCI’s LawnPRO Acquires Highest Quality Lawn & Pest. LawnPRO Partners, a residential lawn care platform backed by lower middle-market private equity firm HCI Equity Partners, has acquired Highest Quality Lawn & Pest, according to a press release. Highest Quality provides lawn care treatment and tree, shrub and pest control services. The investment marks the seventh add-on acquisition for LawnPRO.

Grovecourt Capital’s TMC Acquires Propel Engineering. Traffic & Mobility Consultants (TMC), a transportation planning and traffic engineering company, has acquired Propel Engineering, a civil engineering business. Propel specializes in highway design and traffic analysis. TMC is backed by lower middle-market private equity firm Grovecourt Capital Partners.

Wynnchurch’s EMS Acquires Aluminum Products Wholesale. Eastern Metal Supply (EMS), a distributor of aluminum products backed by Wynnchurch Capital, has announced its acquisition of Aluminum Products Wholesale (APW). The acquisition target specializes in products used to install and repair patio enclosures and screen rooms.

Nexa Equity’s Easy Metrics Acquires TZA. Easy Metrics, backed by Nexa Equity, has acquired TZA, a labor management system. Easy Metrics is a labor analytics platform for warehouses and manufacturers. Combined with TZA, the platform will serve more than 550 facilities, according to a press release.

Unity Partners’ Prosperity Partners Acquires CCA. Accounting company Prosperity Partyers, backed by private equity firm Unity Partners, acquired tax, business valuation and accounting firm Cendrowski Corporate Advisors, according to a press release. Following the acquisition CCA employees will join Prosperity’s employee ownership plan.

Solace Capital’s ACC Acquires Communications Company. Acceleration Community of Companies (ACC), a marketing and communications company backed by Solace Capital, has acquired communications business DKC, one of the U.S.’s top 10 independent PR agencies, according to a press release. The transaction included growth equity firm Verance Capital as another strategic investor, the announcement noted.

Strategics

R-Zero Acquires SecureAire to Boost Decarbonization Capabilities. R-Zero, a smart building technology innovator, has announced its acquisition of SecureAire, a sustainable HVAC solution provider. The acquisition augments R-Zero’s decarbonization capabilities, an announcement noted, allowing building owners to reduce energy consumption and remain compliant with climate regulations.

Exits

Swander Pace Exits Reliance Vitamin to Impetus Wellness Group. Swander Pace Capital, a consumer-focused private equity firm, announced the sale of portfolio company Reliance Vitamin to Impetus Wellness Group, a wellness platform backed by AEA Small Business Private Equity. Reliance is a formulator and manufacturer of private label vitamin, mineral and supplement products.

Stephen Ross Said to Seek Miami Dolphins PE Deal. Stephen Ross, majority owner of the Miami Dolphins, is reportedly seeking a deal with a private equity buyer to sell a percentage of the NFL team. The New York Times reported that Ross is in discussions with several PE firms, including Arctos Partners, for a sale that would value the team at $7 billion. The report follows a decision last month allowing private equity ownership in NFL teams up to 10%.

Insights

EY-Parthenon Analysis Signals M&A Uptick Ahead. A new report from EY-Parthenon finds M&A activity is likely to pick up through the end of 2024. In its latest Deal Barometer, EY-Parthenon forecasted a 20% increase in M&A deal volume, while private equity-led M&A is likely to increase 16% this year. That would follow a 15% contraction in PE M&A volume in 2023. The report pointed to CEO interest in asset divestitures as a key driver of dealmaking ahead.

PE Revives IPO Focus: WSJ. Reports in the Wall Street Journal say private equity investors are reviving their focus on IPO exits, citing filings with the Securities and Exchange Commission (SEC). The publication pointed to KinderCare Learning, backed by private markets investment manager Partners Group, as one example of a sponsored business seeking a public listing. KinderCare called off its previous IPO plans in 2021. The WSJ reported that eight PE-backed companies have raised $11.8 billion through IPOs in the last year, compared to $2.6 billion raised by six listings in the same period a year prior.

Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.