Welcome New Q4 ACG Philadelphia Members
Phoenix Management Services
Blank Rome LLP
Fox Chase Bank
Sungard Availability Services
Mufson Howe Hunter & Co.
Janney Montgomery Scott
Stevens & Lee, P.C.
Pepper Hamilton LLP
Guardian Capital Partners
Reed Smith LLP
Mufson Howe Hunter
Bryant Park Capital
Penn National Gaming, Inc.
Eckert Seamans Cherin & Mellott
Independence Blue Cross
PNC Business Credit
Drinker Biddle & Reath LLP
Morgan, Lewis & Bockius LLP
Ernst & Young
Trends Continue to Improve with Strong Q4
- commentary by Ben McKean
Janney Montgomery Scott (ACG Marketing Committee Member)
Aided by strong transaction volumes in the fourth quarter, 2014 deal activity in the Philadelphia region eclipsed 2013, representing the fifth consecutive year over year increase. Improvements in overall economic conditions (total job growth averaging 246,000 per month, real GDP growth of 4.6% and 5.0% in Q2 and Q3, respectively) and the continued low interest rate environment continue to provide a positive backdrop for transaction activity. Wwhile the growth in deal volumes may not have been as robust as many were expecting, M&A activity in the Philadelphia region reached new highs in 2014 with 1,035 completed transactions yielding $66.1 billion of value (compared to 904 deals worth $52.1 billion in 2013).
Several of the primary catalysts for transaction activity in the region carried over from 2013 as both strategic and financial buyers looked to invest while favorable economic conditions remained. Buoyed by rising stock prices, but still facing relatively uncertain organic growth prospects, many larger strategic acquirers looked toward acquisitions and industry consolidation as a means to drive growth and minimize costs. This strategic interest helped to drive multiples and transaction values higher ($64 million avg. M&A value in the Philadelphia region, up 11% over 2013). And while this may have limited interest from private equity and other financial sponsors in the past, access to leverage and a need to put capital to work (as evidenced by a record private equity overhang, or the amount of capital available for acquisitions) allowed a number of financial buyers to be more competitive at higher multiples than they may have been historically.
In particular, Q4 2014 was a very strong quarter for both M&A and capital markets activity. Robust deal activity and transaction multiples in late 2013 and early 2014 may have helped to bring would-be sellers off the sidelines, increasing the number of transactions coming to market. This trend helped to drive multi-year highs in transaction volumes in the 4th quarter and bodes well for high-levels of continued activity in 2015.
Scroll down to read more about our 28 member firms' Q4 2014 transactions as well as their new hires and promotions.
Source: S&P Capital IQ
For a listing of all historical featured deals please go to the LIBRARY tab.
Showcasing ACG Member Deals
Quarterly Featured Deal...
Creative Co-Op Acquires Bloomingville
Eureka's cross-border deal involves 7 local ACG members and the ACGU network
Interview by Joe Spinelli, Vector Capital (ACG Marketing Committee Member)
Based on discussions with: Jonathan Chou, Principal of Eureka Growth Capital, and Doug Saylor, VP – International Relationship Manager of HSBC.
On October 1, 2014, Creative Co-Op, Inc. and its parent, Regent Holding Co., a portfolio company of Philadelphia-based Eureka Growth Capital, completed the add-on acquisition of Bloomingville A/S, a Denmark-based home accessories company.
Creative Co-Op is part of Regent Holding Co., a leading global provider of home décor products with distribution throughout North America, Europe, Asia, and the Middle East. Regent serves a variety of retail channels across different geographies, including servicing over 12,000 independent and national specialty retailers throughout North America with its Creative Co-Op brand and over 3,000 independent and national specialty retailers throughout Europe with its Bloomingville and Day Home brands. Regent’s Creative Co-Op Home division serves the Asian and Middle East markets through its extensive network of distributors as well as over forty branded storefronts throughout China.
Speaking the Language of International Expansion
The Regent portfolio of brands, with support from Eureka, had significantly expanded across the US and Asia with localized expertise in sales & marketing as well as distribution. Regent historically had a smaller presence in Europe, and Bloomingville was identified as a potential opportunity to complement the company’s existing global operations. Bloomingville had experienced tremendous growth across Europe in recent years with a sales and distribution profile that was very similar to that of the rest of the Regent portfolio, making for a great potential fit. Bloomingville entertained offers from a range of both financial and strategic partners, yet it was Regent and Creative Co-Op’s positioning as a PE-backed strategic, strong existing global footprint, dedicated Asian-based sourcing infrastructure, and structural creativity that became deciding factors in Eureka and Creative Co-Op winning the mandate.
Philadelphia as the Gateway to Cross-border Transactions
While any successful deal requires a combination of patience and perseverance, it takes a truly dedicated team to will a cross-border transaction across the finish line. The obvious difficulties such as time zone challenges and limited travel options certainly apply when the transaction target is 35 miles outside of Billund, Denmark, a small town best known as the home of LEGO Group. Beyond the mere logistical challenges, regulatory nuances, accounting differences, forex variances, and even cultural disparities in the M&A process can materially hinder transaction speed while adding potentially time-consuming and expensive barriers to closing.
Eureka’s team for this transaction started with counsel, transaction advisors, and lenders who not only possessed cross-border experience and networks, but also call the Philadelphia area home. Jonathan Chou of Eureka began discussions with Doug Saylor from HSBC’s Radnor office on potential cross-border expansion opportunities for Creative Co-Op nearly a year ahead of the acquisition. HSBC’s global banking and finance capabilities enabled them to provide a unified solution for the Bloomingville transaction as well as Regent’s world-wide operating footprint. In addition, Eureka selected Philadelphia based teams at Morgan Lewis & Bockius as lead transaction counsel, and KPMG for financial, tax, and IT due diligence. These transaction advisory partners were augmented with teams local to Bloomingville.
Tapping the ACG University Network
The ACG University program is a terrific opportunity for emerging professionals within the ACG Philadelphia membership to expand their M&A skills and network within the local deal community, and the Bloomingville transaction serves as a great example of the program’s ethos in practice. HSBC’s Doug Saylor was a participant in the ACGU program when he met Jonathan Chou, an ACGU committee member and class instructor at the time, following a class session. The ACGU event gave Doug the opportunity to introduce himself and his office’s global capabilities to Jonathan, founding the base of a relationship that resulted in their partnership on this transaction. During his time in the ACGU program, Doug also met a fellow ACGU participant from Blank Rome. Their relationship ultimately led to the utilization of Blank Rome by HSBC on this transaction as lender counsel.
The ever-expanding ACG University alumni network is a highly connected subset of the ACG Philadelphia membership, and this transaction is proof positive that both ACGU enrollees and senior member volunteers alike stand to gain new contacts, perspectives, and dealflow through their participation.
Eureka: Jonathan Zimbalist*, Jonathan Chou*, Tassie Oswald*, Brendan Stancato
HSBC: Doug Saylor*, Thomas Lunny, Leslie Fischman
Other ACG Philadelphia Chapter Involvement
Morgan Lewis: Barbara Shander*, Michael Pedrick
Blank Rome: Mark Rabinowitz, Andrew Hennessey *
KPMG: Scott Heery*
*ACG Philadelphia Members