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Submit Your Q1 2014 Deals Now

ACG Philadelphia members with closed Q1 2014 deals can now respond to the DealWire survey anytime during the quarter. Click Here for the DealWire Survey

Please note that you can now re-enter the survey to update your responses up until Monday, April 7th.

You can also 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 January 1 - March 31, 2014 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.
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).

Click here for Historical Featured Deal Summaries

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


 


The latest deal news from around the region
DealWire Philadelphia, Q1 2014 Volume X, Issue I

 

Strong Regional Deal Flow Continues in Q1
- commentary by Michael Rittinger, Klehr | Harrison | Harvey | Branzburg LLP
& ACG Marketing Committee Member

 


A Cautiously Optimistic Seller's Market

 
Market conditions continue to favor sellers in liquidity transactions.  Corporate buyers have record cash balances that they are under pressure to deploy in acquisitions in order to achieve revenue growth in a slow growth economy.  Private equity funds have significant capital overhang that they need to invest.  Both have the benefit of an active lending environment at low interest rates and increasing levels of leverage.  These factors should continue to drive demand and increased value for liquidity transactions for the balance of 2014.

Although these market factors also existed last year, M&A volume in 2013 failed to meet expectations.  The "pull forward" effect of the 2013 federal tax changes, a sluggish economy and political and regulatory uncertainty are faulted for the 2013 M&A volume shortfall.

The 2013 federal tax changes are now on the books.  Near-term political and economic uncertainties have for the most part been removed.  With these drags on seller motivation reduced, we are hopeful for a continued uptick in transaction activity and a profitable 2014.

Regional Q1 '14 Outpaces Prior Year by 27%

 
The opening quarter of 2014 maintained comparable total transaction volume (M&A, Private Placements and Public Offerings) to the last quarter of 2013, with 429 deals closing in Q1 2014 to 440 deals in Q4 2013, a 3% decrease. On a year-over-year basis, however, 2014 is off to a much better start than 2013 with transactional volume increased by 27% from the 338 deals in Q1 2013. As detailed in the following graphic, although slightly off the post-recession volume peaks set last quarter, both M&A deals and capital market transactions remained at elevated levels compared to the trailing 16 quarters. 



Scroll down to read more about our 24 member firms' Q1 2014 transactions as well as their new hires and promotions.
 
Regional transaction value established a new post-recession high in Q1 2014 of $53.5 billion, a 15% increase from the Q4 2013 level of $46.4 billion and a 19% year-over-year increase from the Q1 2013 level of $44.8 billion. The Q1 2014 deal value of $53.5 billion is 30% above the trailing six quarter moving average of $41.0 billion and almost on par with the Q2 2008 peak of $55.3 billion.

The following graphic presents the detailed quarterly transaction value since 2011.

 

M&A and Capital Markets Activity


At 263 deals, Q1 2014 M&A deal volume was consistent with the 264 M&A deals closed in Q4 2013. M&A deal value in Q1 2014 of $17.2 billion, however, represents an 18% decrease from the Q4 2013 results of $21 billion. Although a drop from last quarter, the $17.2 billion value is roughly 26% above the six quarter moving average of $13.7 billion in M&A deal activity.

On a year-over-year comparison, M&A deal volume in Q1 2014 was up 34% from the same period prior and M&A deal value was up 121% from the $7.8 billion in Q1 2013.

The uptick in total deal value is attributable to the $33.4 billion in Public Offerings that closed in Q1 2014, which represents a 48% increase from the $22.5 billion in Q4 2013.


Industry Sector Analysis


The following stack graph depicts the number of total transactions in the greater Philadelphia area across industry sectors during the past 12 quarters.

REGIONAL QUARTERLY TRANSACTION COUNT
BY INDUSTRY SECTOR (Q2 2011 to Q1 2014)
 

 

During Q1, the deal count in Industrials, Healthcare, Materials and Financials were all up over Q4 2013, with Materials registering the biggest gain with 51 transactions in Q1 2014 compared to 37 transactions in Q4 2013, a 38% increase. Utilities, Energy, Consumer and Info Tech were all down from Q4 2013, with Consumer registering a 18% drop with 56 deals in Q1 2014 compared to 68 deals in Q4 2013. As seen in past quarters, the top five segments (Info Tech, Financials, Healthcare, Industrials, and Consumer) continue to dominate the region’s activity, comprising 81% of the total transaction count.

Outlier Ajustments - Philadelphia Region


During Q1 2014, there were eight outlier M&A deals totaling approximately $47.0 billion of transaction value that were excluded from the overview provided herein. Regarding their "outlier" status, note that these eight outliers averaged $5.9 billion each, whereas the other 263 transactions included in Q1’s normalized metrics averaged $65.4 million each.


*To create a more realistic picture of the region's Total Transaction Dollar Value going forward, large outlier M&A deals will be excluded and listed within this footnote.


Source: S&P Capital IQ


 


Ballard Spahr LLP
Ballard Spahr LLP (Craig Circosta, Brian Doerner, Carl Fridy, Anuj Goswami, Amit Kakkar, Robert Krauss, Steven Miller and Matt Potalivo members) represented its clients on 11 completed transactions in Q1.
See list of deals

 


Blank Rome
Blank Rome (Steven Dubow, Andrew Hennessy, Mathew Rotenberg and Alex Tablin-Wolf members) served as legal advisor for its clients on 3 closed transactions in Q1.
See list of deals

 


Boenning & Scattergood, Inc.
Boenning & Scattergood, Inc. (Alex Bondroff, Charles Hull and Jim McCormick members) served as sell-side financial advisor on one closed transaction in Q1. 
See list of deals

 


Drinker Biddle & Reath LLP
Drinker Biddle & Reath LLP (Elizabeth Babson, Joshua Bernstein, Stephen Burdumy, William Clark, David Denious, Neil Haimm, Laura Householder, Daniel Krane, Matthew Meyers, Lauren Platko,  Douglas Raymond and John Talbot members) served as legal counsel for its clients on 19 closed transactions in Q1. 
See list of deals

 


Duane Morris LLP
Duane Morris LLP (Peter Byrne, Heather Carmody, John Coogan, Maria Rose Granholm, Richard Jaffe, Darrick Mix, Kathleen Shay, Richard Silfen, Thomas Spencer, Barry Steinman and David Toner members) provided legal advisory to its clients on 14 closed transactions.  The firm also added 2 new attorneys in Q1. 
See list of deals and new hires

 


Fairmount Partners LP
Fairmount Partners LP (Bill Burns, Charles Eckert, Bill Frame and Richard Wainwright members) provided investment banking advisory for its clients on 5 closed deals in Q1.  
See list of deals

 


Fox Chase Bank
Fox Chase Bank (Patrick Beaner, Michael Gubicza and John Haurin members) agented a senior secured credit facility for one closed transaction in Q1. 
See list of deals

 


Fox Rothschild LLP
Fox Rothschild LLP (Terrence Kerwin and Sandra Romaszewski members) named a new chair to the Corporate Department and new co-chairs to Tech & Venture Finance Practice Group in Q1. 
See list of promotions

 


Graham Partners
Graham Partners (Matthew Arden, Scott Conklin, Joseph Heinmiller, Joseph May, Clemente Micara-Sartori, Robert Newbold, Andrew Snyder, Christopher Voudouris and Joshua Wilson members) completed 2 transactions in Q1.
See list of deals

 


Griffin Financial Group, LLC
Griffin Financial Group, LLC (Glenn Bernabeo and John Lee members) provided M&A advisory on 6 completed transactions in Q1.  
See list of deals

 


Inverness Graham Investments
Inverness Graham Investments (Sean Dougherty, Ken Graham and Matthew Moran member) completed one sale in Q1.
See list of deals

 


Janney Montgomery Scott LLC
Janney Montgomery Scott LLC (Joseph Culley, Steven Higgins, Benjamin McKean, James McNaughton, Joseph Reichert and Brian Van Der Waag members) provided investment banking advisory for its clients on closed 16 transactions in Q1.
See list of deals

 


Klehr Harrison Harvey Branzburg LLP
Klehr Harrison Harvey Branzburg LLP (Patrick Murphy and Michael Rittinger member) provided legal advisory for a client on one closed transaction in Q1. The firm also hired 2 attorneys.
See list of deals and new hires

 


LLR Partners 
LLR Partners (Christian Bullitt, Vignesh Chandramouli, Kristy DelMuto, Mitchell Hollin, Chris Mahatma, Todd Morrissey, Zachary Sigal and David Steines members) closed 2 transactions in Q1.  The firm also added a new operating partner and promoted 3 to vice president.
See list of deals and new hires and promotions

 


Lovell Minnick Partners 
Lovell Minnick Partners (Brad Armstrong member) led one buyout in Q1.
See list of deals

 


Morgan, Lewis & Bockius, LLP 
Morgan, Lewis & Bockius, LLP (Louis Ballezzi, Tracy Dowling, David Gerson, Barbara Shander and Kevin Shmelzer members) represented its clients closing 5 transactions in Q1.
See list of deals

 


NewSpring Capital 
NewSpring Capital (Gregory Barger, Michael DiPiano, Kara Herrick, Steven Hobman, Jonathan Hsu, Eric Jensen, Skip Maner, Brian Murphy, Andrew Panzo, Anne Vazquez and Adam Veverka members) completed one mezz investment in Q1.
See list of deals

 


Phoenix Capital Resources

Phoenix Capital Resources (Vincent Colistra, Michael Jacoby, Mark Karbiner and Michael McCauley members) served as financial advisor to a client on one completed transaction in Q1.
See list of deals

 


Pine Hill Group
Pine Hill Group (Jerry Buckley, Michael Estadt, Chuck Jacobson, Stephen Nardi and Barry Smith members) provided services to its clients on 7 closed transactions in Q1.
See list of deals

 


SSG Capital Advisors, LLC 
SSG Capital Advisors, LLC (Mark Chesen, Michael Goodman, Michael Gorman, Matthew Karlson, Terry Kohler and J. Scott Victor members) acted as investment banker on closed 6 transactions in Q1.
See list of deals

 


Stifel
Stifel (Lauren Harrington, John Honovich, Robert Kent and Bharat Ramprasad members) provided investment banking services to its clients on 2 completed transactions in Q1.
See list of deals

 


Stradley Ronon 
Stradley Ronon (Michael Bonner, Christopher Rosenbleeth and Todd Vanett members) provided legal advisory to its clients on 6 completed transactions in Q1.
See list of deals

 


Teleflex Incorporated
Teleflex Incorporated (Jan Monster and Dwayne Ritchie 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) served as legal counselor to a client on one completed transaction in Q1.
See list of deals

  
Q1 2014 Featured Deal

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

Showcasing ACG Member Deals
 


 

Featured Deal:

Inverness Graham Investments Creates and Sells a Market Leader


 

Eight ACG Members involved in deal!

Based on a discussion with:
Trey Sykes, Managing Principal of Inverness Graham Investments, concerning the sale of ICC-Nexergy.  The interview was led by Craig Karasin, President, VentureScope and marketing committee member.Steven Higgins, Managing Director of Janney Montgomery Scott, concerning the sale of Markel Corporation to Alliance Holdings, Inc.

Synopsis
In March, 2014, Inverness Graham Investments announced the sale of ICC-Nexergy to KRG Capital Partners.  By identifying and capitalizing upon a strategic opportunity in the rechargeable power systems industry, Inverness Graham was able to deliver a 5.5x gross cash-on-cash return and a 34% gross IRR to their fund.

Pursuing the Strategic Opportunity
Since inception, Inverness Graham (IG) has focused on opportunities within the burgeoning Wireless & Mobility market, in addition to several other key growth sectors. Through their ownership of SkyBitz (a previous Fund 1 company, also in the Wireless & Mobility sector), IG management identified the need for sophisticated custom wireless rechargeable battery solutions to meet the rapid growth in wireless mobile devices.  Further analysis showed the industry to be highly fragmented, with no emerging market leader.  IG further concluded that by purchasing a solid company as a base, and leveraging IG’s strong operations and manufacturing expertise to grow the company through add-ons and organic growth, they could create a market leader, commanding a premium selling price.

Over the next 2-3 years from 2004-2007, IG reviewed 50-60 companies in the field, and visited 20-25, before selecting ElectriTek-AVT, which was acquired in early 2007.

Building the Business
To build ElectriTek-AVT into the industry leading ICC-Nexergy Inc., IG implemented a multi-faceted plan:

Add-Ons: Shortly after the initial acquisition in 2007, IG purchased Nexergy, combining the two companies into Nexergy, Inc.  In 2010, IG merged Nexergy, Inc. and International Components Corporation ("ICC") creating ICCNexergy, a leading global supplier of fully integrated custom rechargeable power solutions including lithium-ion battery packs, battery chargers, docking stations, and highly efficient power supplies, with manufacturing facilities around the world.  Lastly, in 2013, IG acquired two smaller add-ons to bolster the company’s technology and further penetrate the growing medical device market.

Improved Profitability: Working with company management, the Inverness Graham Operating Group (IGOG) focused on multiple strategic initiatives to optimize ICCNexergy’s operations, workforce, and facilities to position for growth.  IG consolidated facilities and aggressively drove manufacturing efficiencies, increasing margins from 5% to 20%.

Focus on Key Verticals: Working with company management, IGOG helped the firm to concentrate sales and product development efforts on key industry verticals, including healthcare and other high growth opportunities (such as server/storage) where better, highly specialized backup power systems were needed.

Geographic Expansion: During the hold period, the company grew its customer footprint from primarily a domestic base to be a global provider.

New Products: A key growth driver involved expanding the company’s initial rechargeable battery line to include new technologies (Lithium battery packs), battery chargers, docking stations and power supplies.

Management Changes and Incentives: By supporting and fostering senior management as owner-operators alongside IG in the business, and making management changes as circumstances dictated, IG’s operational experience helped ensure a highly engaged and motivated management team.

"ICC-Nexergy has been an exceptional investment for us and a great example of both our buy and build strategy and Inverness Graham’s operational value-add," stated Ken Graham, Chairman of ICC-Nexergy and Senior Managing Principal of Inverness Graham. The result of this multi-faceted growth plan was revenue growth of more than 7x and EBITDA of more than 15x over the seven year hold period.


Sale of the Company
Upon determining that it was the appropriate time to sell, IG brought in a number of key team players from the Philadelphia region:

Harris Williams & Co. was brought in early to represent ICC-Nexergy in the sales process.

Drinker Biddle & Reath LLP provided legal support.

KPMG LLP provided transaction and transition services.

The sale of the company to KRG Capital Partners, a Denver, CO Private Equity firm, was closed on 3/14/14.



Inverness Graham Investments Participants

  •     Steve Wood, ICC-Nexergy Board member and CEO of IGOG

  •     Trey Sykes (ACG MBR), Managing Principal on the ICC-Nexergy deal

  •     Ken Graham (ACG MBR), Chairman of ICC-Nexergy and Senior Managing Principal of  Inverness Graham

  •     Paul Nolan, Vice President, Inverness Graham Investments

  •     Chris Frystock, Associate

  •     Denis Connell, Financial Operating Partner with IGOG


Other Noteworthy ACG Philadelphia Chapter Involvement:

  •     Blank Rome LLP  – Mathew Rotenberg (ACG MBR), Partner

  •     Harris Williams & Co. – John Neuner, Director, Bob Baltimore, (ACG MBR), Managing Director and  David Allebach, (ACG MBR), Vice President

  •     Drinker Biddle & Reath LLP – Neil Haimm (ACG MBR), Partner and Peter Lively, Associate

  •     KPMG LLP – Scott Heery (ACG MBR), Partner and Alex Bala, (ACG MBR), Director

Q1 2012 Featured Deal Video Interview



Member John Nowaczyk discusses the completed Q1 2012 recapitalization of Image API, LLC by Milestone Partners. Fairmount Partners advised Image API and the transaction involved several Philadelphia-area companies.
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