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Thursday, May 24th, 2012

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DealWire Deadline: Submit Your Q2 Soon

Submit Your Q2 Deals Anytime: Members Will Be Able to Submit Your Q2 Closed Deals Anytime During the Quarter.

ACG Philadelphia members with closed Q2 2012 deals can now respond to the DealWire survey by anytime during the second quarter.

You can reply to the DealWire survey multiple times throughout the quarter, instead of waiting until the quarter closes. Describe one transaction per box, use as many or as few as you need.

Note: only deals LED BY YOUR LOCAL OFFICE and CLOSED DURING April 1 - June 30, 2012 are eligible for submission.

Members on the Move - we'll include announcements relevant to the deal community such as new hires or promotions within your M&A group.

Members Click Here for the DealWire Survey.

About DealWire

ACG Philadelphia's quarterly M&A report, captures deal and transactional activities from around the region based on ACG Philadelphia members' and other dealmakers (investment bankers, private equity professionals, professional service firms and corporate executives).

Questions about DealWire Philadelphia should be directed to Jen Simons at jsimons@acg.org.

The latest deal news from around the region

The latest deal news from around the region
DealWire Philadelphia, Q1 2012 Volume VIII, Issue I

Despite Slow Start, Favorable Conditions Flow in Balance of Year
- commentary by James McNaughton, Janney Montegomery Scott & ACG Marketing Committee

M&A: It's Groundhog Day ... Again...

Follow us: Data provided by:

Dealmakers in the greater Philadelphia region saw their shadow in February, despite record breaking temperatures that suggested Spring had already arrived. Total transaction volume numbered 261 deals in the first quarter and represented a decrease of 13% from Q4 2011 and a decrease of 10% compared to Q1 2011. Total adjusted transaction value of $20 billion decreased 14% compared to Q4 2011 and decreased 18% compared to Q1 2011.

From an M&A perspective, volume numbered 184 transactions in Q1 2012 a slight decrease of 6% from Q4 2011 and remained essentially flat on a year-over-year basis. However, adjusted M&A transaction value of $8 billion substantially declined 33% from Q4 2011 and 13% from Q1 2011. Flat M&A volumes combined with significantly lower transaction values suggests continuation of the trend seen in 2011 where a greater proportion of smaller middle market transactions dominate the market.

Sector Growth Focused on the Consumer

From an industry perspective, consumer sector transaction volume of 45 deals represented strong growth of 18% compared to Q4 2011 and 55% compared to Q1 2011. Consumers opened their wallets with the unseasonably warm winter in the Northeast and retail sales performed above expectations, supporting demand for consumer companies.

Sectors that experienced declines in transaction volumes in both the quarter-over-quarter and year-over-year periods included information technology, healthcare and industrials. Private equity and growth investors typically focus on these sectors so it will be interesting to see if they bounce back next quarter in line with commentary and anecdotal evidence that an increasing proportion of sell-side transactions in the market today represent sponsor-backed businesses rather than owner/entrepreneur held businesses.

Favorable Market Conditions Support Strong Deal Flow in 2012

Despite the slow start to 2012, favorable market conditions support strong deal flow for the remainder of 2012. Private equity funds and strategic acquirers remain flush with cash, banks are aggressively willing to lend, interest rates have traded at historic lows, the economy appears to be improving and valuations seem to be increasing. Although dealmakers may have been spending more time than usual at the mall and Home Depot earlier than normal this year, commentary and anecdotal evidence suggests that they have returned to the office to focus on their growing transaction backlogs. With private equity funds also tiring of being outbid by strategics over the last 12 months, look for more financial sponsors to take advantage of favorable market conditions by putting their companies up for sale through the balance of the year.

To read about our members' Q1 2012 transactions as well as their new hires and promotions scroll down.

Transaction Value and Volume Comparison by Quarter

*To create a more realistic picture of the region's Total Transaction Dollar Value, large outlier M&A deals will be excluded and can be viewed via this link.

Q1 2012 Sector Comparison by Transaction Volume
(Percentage Change Over Same Period Prior Year and Quarterly Analysis)

Industry Sector	Q1 2012 # of Deals	YoY % Change	Quarterly % Change
Consumer	45	55%	18%
Financials	52	49%	-5%
Utilities	9	13%	125%
Telco Svcs	2	NA	NA%
Info Tech	53	-17%	-24%
Materials	14	-22%	17%
Healthcare	39	-37%	-25%
Industrials	32	-37%	-30%
Energy	5	-44%	0%

About DealWire Philadelphia
ACG Philadelphia's quarterly M&A report captures deal and transactional activities from around the region based on submissions by ACG Philadelphia members as well as data provided by CapitalIQ. Questions or feedback on DealWire should be directed to Jen Simons at jsimons@acg.org.

AMETEK
AMETEK (Kevin Coleman, Bill Eginton, John Henriques and Rose Ndindiri) closed one transaction in Q1.
See list of deals

Ballard Spahr LLP
Ballard Spahr LLP (Craig Circosta, Brian Doerner, Carl Frida, Justin Klein, Robert Krauss and Steven Miller members) provided legal advisory for its clients on 18 completed deals in Q1.
See list of deals

Blank Rome
Blank Rome (Steven Dubow, Thomas McKernan and Matthew Rotenberg members) counseled its clients on 5 completed transactions in Q1.
See list of deals

Boathouse Capital
Boathouse Capital (Bill Dwyer, Steve Gord, Ken Jones, Chong Moua, Andrew Olsen and Colin Raws members) finalized two subordinated debt transactions and brought aboard a business development director in Q1.
See list of deals and new hires

Boenning & Scattergood, Inc.
Boenning & Scattergood, Inc. (Charles Hull and Jim McCormick members) provided investment banking advisory on 2 closed transactions in Q1.
See list of deals

Bryant Park Capital, Inc.
Bryant Park Capital, Inc. (Joel Magerman member) provided investment banking advisory to its clients on 2 closed transactions in Q1 and promoted one of its own to principal.
See list of deals and promotions

Drinker Biddle & Reath LLP
Drinker Biddle & Reath LLP (Joshua Bernstein, William Clark, Neil Haimm, Daniel Krane, Matthew Meyers and Douglas Raymond members) represented its clients on 17 closed transactions and added 2 new transactional and regulatory associates in Q1.
See list of deals and new hires

Element Partners
Element Partners (Brian Dwyer and Michael DeRosa members) completed one acquisition in Q1.
See list of deals

Fairmount Partners LP
Fairmount Partners LP (Bill Burns, Charles Eckert, William Rottschaefer, Jonathan Smith, and Richard Wainwright members) served as investment banker for 3 closed deals in Q1. Additionally, Fairmount Partners promoted one employee and hired another analyst.
See list of deals, promotions and new hires

Fesnak & Associates, LLP
Fesnak & Associates, LLP (Robert Fesnak, Lisa McLemore, James Murphy, Joseph Pellerite and Michael Verrill members) brought in a new manager of Valuation and Litigation Support in Q1.
See list of deals

Fox Chase Bank
Fox Chase Bank (Michael Gubicza and John Haurin members) provided senior debt for 2 closed transactions in Q1.
See list of deals

Graham Partners, Inc.
Graham Partner, Inc. (Joseph Heinmiller, Christopher Lawler, Joseph May, Clemente Micara-Sartori, Robert Newbold, Andrew Snyder and Joshua Wilson members) completed one acquisition in Q1.
See list of deals

Griffin Financial Group, LLC
Griffin Financial Group, LLC (Glenn Bernabeo, Paul Delaney, John Lee and Kevin Leigh members) acted as investment banker on 3 completed transactions in Q1.
See list of deals

Janney Capital Markets
Janney Capital Markets (Steven Higgins, Joseph Culley, Andrew Kurz, John Lindeman, James McNaughton, Joseph Reichert and Andrew Schmucker members) provided investment banking services closing 19 transactions for its clients in Q1.
See list of deals

Kaulkin Ginsberg
Kaulkin Ginsberg (Michael Lamm member) served as sell-side investment banker closing one transaction in Q1.
See list of deals

Larsen MacColl Partners, L. P.
Larsen MacColl Partners, L.P. (Gray Gifford, Kristen Hubbert, Jeffrey Larsen, Tim MacColl, Todd Marsteller, Satya Ponnuru, Taylor Rooke and Mark Tyson members) closed one deal in Q1.
See list of deals

Milestone Partners
Milestone Partners (Adam Curtin, Peter Elkes, Brooke Hayes, John Nowaczyk, Theodore Piotrowicz, Daniel Ryan, Geoffrey Veale and Kelly Widman members) completed 2 deals and hired 2 new employees in Q1.
See list of deals and new hires

Morgan, Lewis & Bockius, LLP
Morgan, Lewis & Bockius, LLP (Louis Ballezzi, David Gerson, Barbara Shander and Kevin Shmelzer members) finalized 10 transactions for its clients as legal adviser in Q1.
See list of deals

MVP Capital Partners
MVP Capital Partners (Ryan Northington and David Pegg members) completed one deal in Q1.
See list of deals

Pepper Hamilton
Pepper Hamilton (Steven Abrams, Bruce Fenton, Michael Gallagher, Matthew Greenberg, Shirley Kuhlmann, Phil Mellet, Christopher Miller and Joshua Slavitt members) provided legal advisory closing 3 deals for its clients in Q1.
See list of deals

Renovus Capital Partners
Renovus Capital Partners (Frederick Hill member) completed one acquisition in Q1.
See list of deals

Spring Capital Partners
Spring Capital Partners (Michael Donoghue and Brian McDaid members) closed one sub-debt investment in Q1 .
See list of deals

SSG Capital Advisors, LLC
SSG Capital Advisors, LLC (Mark Chesen, Michael Goodman, Matthew Karlson and J. Scott Victor members) provided special situations investment banking advisory to its clients on 3 closed deals in Q1.
See list of deals

Stifel Nicolaus Weisel
Stifel Nicolaus Weisel (Patrick Dolan, Lauren Harrington, Robert Kent, David Lazar, Modi Ravi, Bharat Ramprasad and Meredith Ruble members) served as investment banker for its clients on 4 completed transactions in Q1.
See list of deals

Stradley Ronon
Stradley Ronon (Michael Bonner and Christopher Rosenbleeth members) served as legal counselor on 9 completed transactions in Q1.
See list of deals

Vishay International, Inc.
Vishay International, Inc. (Ronald Disantis and Lior Yahalomi members) completed one acquisition in Q1.
See list of deals

White and Williams LLP
White and Williams LLP (George Hartnett, Michael Mentzel and Ryan Udell members) advised clients on 3 closed transactions in Q1.
See list of deals

Featured Deal Video Interview

Member John Nowaczyk discusses the completed recapitalization of Image API, LLC by Milestone Partners. Fairmount Partners advised Image API and the transaction involved several Philadelphia-area companies.

Deal of the Quarter

For a listing of all historical featured deals please go to the LIBRARY tab.

Showcasing ACG Member Deals

Featured Deal:

Fairmount Partners advises Image API on its recapitalization with Milestone Partners

Interview with: Dick Thatcher, Managing Director and Head of Fairmount Partners’ Business & IT Services Practice and the Image API Deal Team

ACG: Please describe Image API’s business.

Image API is the leading provider of electronic document management solutions and related outsourced services to state and local government agencies. The Company utilizes its proprietary systems and solutions offerings to help state and local governments increase productivity, improve constituent services, streamline business practices and materially reduce costs. These services help drive down costs for government agencies that manually process large quantities of documents. Its offerings include project management, business process outsourcing, production services and enterprise content management systems.

ACG: What was the genesis of the transaction and how did Fairmount come to be involved?

Fairmount Partners was introduced to Image API by another investment banker who knew that our firm was very knowledgeable and experienced in the Technology Services market.

ACG: Where is Image API located and who are its major clients?

Image API is headquartered in Tallahassee, Florida with branch offices in Pennsylvania and Texas. Clients include the states of Florida, Texas, New York, Maryland, New Jersey and Virginia, as well as the District of Columbia.

ACG: Tell us about the transaction process and outcome.

As a result of a comprehensive marketing effort, Fairmount Partners identified Milestone Partners as the optimal financial partner who best understood the industry and who would best support the Company’s organic and acquisition growth plans on a proactive basis. The outcome was a successful majority recapitalization of the business by Milestone Partners and Rick Griffith, CEO and owner of Image API.

ACG: In addition to a recap, did the company consider any other alternatives?

No. We were approached by several major strategic buyers. However, since our collective view was that Image API had such a bright future, it was agreed that it would be premature to sell out now.

ACG: How would you characterize the due dilegence process?

Rigorous and thorough on both sides.

ACG: Besides Fairmount and Milestone Partners, were other ACG members involved in this transaction?

Yes, there was significant local ACG member involvement in this transaction: White and Williams – counsel to Image API; Drinker Biddle – counsel to Milestone Partners; Grant Thornton – advisor to Milestone Partners; TD Bank – senior debt provider; and Ballard Spahr – counsel to TD Bank.

ACG: What else can you tell us about the deal and company?

Yes. I would just like to say that Image API is a superb company, highly regarded by its clients for its quality performance. It has consistently out-performed its goals, and, with its organization and unique proprietary offerings, has a great future. Milestone Partners has added an excellent firm to its portfolio. It has been an exceptional pleasure for our firm to have been Image API’s advisor on this transaction.