Lower Middle Market Weekly Outlook

Maybe Mitt’s 2012 legacy is fading. Last week, three candidates with PE background were elected into office: Bruce Rauner, Charlie Baker, and Gina Raimondo.

But, their victory is not the real story of the midterm election. With both houses of Congress now controlled by Republicans, dealmakers have some reasons to be excited. Potential revisions to corporate tax law, Dodd-Frank, and more could show to be in the favor of the corporate finance community. Some dealmakers are particularly hopeful that the elections can bring some “sanity” to the middle market.

In other news, LPs seem to be fighting for the opportunity to invest in top funds. The WSJ reported that “nearly a third of endowment and foundation investors were locked out of private equity funds or saw their commitments to managers cut in 2014, according to a study from investment consulting firm NEPC.” The renewed interest is likely due to the past few quarters of strong returns. But, the LP-GP relationship still seems to be rocky at the moment.

Transactions:

• Industrial Opportunity Partners acquires Vita Nonwovens
• Actis invests in Tekkie Town
• GI Partners completes Kellermeyer Bergensons Services acquisition
• Industrial Growth Partners acquires Grakon
• Bridge Growth Partners buys CRGT
• Raytheon buys Blackbird Technologies for $420 million
• Walker & Dunlap acquires Johnson Capital
• TA Associates acquires stake in Insurity
• Generation Growth Capital invests in Accurate Home Care
• Omnitracs buys XRS Corporation
• Watts Water buys Aerco for $265 million
• Highlander Partners completes sale of The Composites Group
• CapX Partners closes a $2.25 million secured term loan to the Arro Corporation
• CDI Computer Dealers buys Lifespan Recycling
• Charlesbank Capital Partners acquires Herff Jones
• Global Healthcare Exchange picks up Vendormate
• Ancor Capital Partners buys Transhield
• Investcorp acquires Dainese

Events:

•   Monday: ACG’s 12th Annual Wine Tasting Gala

Opinions:

• In PE, individual investors take a bigger role
• Strategic buyers show will to win in big year of M&A
• PE employees may get biggest bonus hikes this year
• Private equity appetite: Public vs. private pension plans
• After startup phase, the real work begins
• Healthcare M&A boom leaves buyout firms on sidelines
• Strategics borrow from the private equity model
• Japan private equity market hungry for sellers
• How this private equity firm punches above its weight
• Middle market M&A bounced back in October
• How branding can bring clarity and focus to M&A
• Shrinking margins and higher costs drive down investment banks’ returns
• Retail, consumer mega deals beefed up during third quarter
• PE firms don’t want you to know how expensive they are
• Falling oil prices are slowing mergers
• PE investment on track for strong year

This week in history…Unisys is formed through the merger of Sperry Rand and Burroughs (1986).