PE Weekly: M&A Dealmakers, Partners Planning for Brighter Future

This may not have been the strongest week for M&A transaction volume, but dealmakers in the middle market continue to build momentum for a brighter future. Recent transactions span landscaping, home improvement and more. Looking ahead, an investment bank expands into the buy-side of M&A, a new private credit joint venture forms to support PE-backed middle-market businesses and new research finds growing optimism among midmarket companies. Read more on the latest in middle-market M&A below.

Platform Investments and Acquisitions

Truelink Acquires HVAC Business from Johnson Controls. Middle-market private equity firm Truelink capital announced this week it is acquiring air management and filtration solution provider Air Distribution Technologies from its previous owner, Johnson Controls. The firm said it expects the transaction to close in the second half of this year. The investment is Truelink’s fifth acquisition, a press release noted.

Add-Ons

Blue Point’s Transtar Acquires PPi Automotive. PPi Automotive, an automotive parts wholesale distributor, has been acquired by Transtar Holding Company, backed by private equity firm Blue Point Capital Partners. Transtar provides original equipment and aftermarket automotive product distribution and manufacturing. The platform is also comprised of NexaMotion Group and The CoverFlexx Group.

Verde Equity’s Verde Property Services Acquires Landscaping Business. Verde Property Services, backed by private equity firm Verde Property Services, has acquired Labahn’s Landscaping, broadening the platform’s commercial landscaping offering. A press release said the transaction moves Verde Property Services into the top-100 landscaping maintenance companies in the U.S.

Gryphon’s TTDS Acquires Thermal Devices. Thermal Technology Distribution Solutions (TTDS), an industrial temperature management product distributor backed by Gryphon Investors, has acquired Thermal devices, a press release from the middle-market private equity firm said. Thermal Devices distributes industrial electric heaters, controls and other products to manufacturers. The acquisition includes Thermal Devices’ Heat Tracing Sales support business.

Exits

Audax Exits ELM Home & Building Solutions. Audax private Equity said in a press release this week it has exited ELM Home & Building Solutions. The middle and lower middle-market private equity firm sold the company and its ELM LeafGuard gutter system brand, as well as its Englert roofing products brand, to direct-to-consumer home remodeling business Great Day Improvements. Audax acquired ELM in 2019.

Gemspring Exits Minority Stake in Sparkstone Electric. Gemspring Capital, a middle-market private equity firm, said this week it sold its minority stake in Sparkstone Electrical Group, a power distribution product and service provider. Gemspring first invested in the business in January of 2023, supporting its previous investment in IER Electric, a press release noted.

Fundraising

Partners Group Secures $15 Billion in Commitments for Fifth PE Program. Private markets firm Partners Group announced this week that it secured $15 billion in commitments from clients to its private equity program. The program comprises the firm’s Partners Group Direct Equity V, its fifth direct private equity fund, as well as open-ended funds. Partners Group targets the technology, health and life, goods and products, and services sectors in the middle market.

Insights

Stifel, Lord Abbett Form Private Credit Joint Venture. Financial services holding company Stifel Financial and asset management firm Lord Abbett announced this week they have formed a joint venture to deepen their presence in the leveraged lending space. The firms are launching SBLA Private Credit to issue loans to small and medium-sized portfolio companies of financial sponsors. Senior representatives from Stifel Bank and Lord Abbett will manage the entity.

Midmarket Business Optimism Spikes: Umpqua Bank Report. A new barometer report from Umpqua Bank found optimism among middle-market operators is on the rise. The bank’s annual Business Barometer revealed a widening gap between the optimism levels of small businesses compared to middle-market companies: 29% of small businesses reported an excellent outlook on the economy, compared to 68% of medium-sized businesses.

Middle-Market Take-Private Deals Rise: PitchBook. A new report from PitchBook revealed an increase in take-private M&A transactions within the middle market during the year’s first quarter. Sponsors announced or completed 15 take-private deals under $1 billion, an increase from eight announced or completed in Q1 of 2023. PitchBook noted that in several of these transactions, acquisition target valuations dropped below $1 billion since their debut on stock exchanges, positioning them well for midmarket investors.

Configure Partners Report Finds Financing Shift in Favor of Borrowers. A new report from Configure Partners was released this week examining the latest trends in private credit. The investment bank’s Q1 2024 Private Credit Quarterly Report found a shift in terms in favor of borrowers as well as a resurgence in the broadly syndicated loan market. Configure Partners said it expects both of these trends to continue for the coming two quarters.

Technology Holdings Launches Buy and Build Division. Investment bank Technology Holdings has launched its buy-side investment banking division, TH Buy and Build. The firm announced this week that the unit will operate across 11 countries to support private equity buy-and-build strategies, bold-on and tuck-in transactions and other M&A activity.

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.