Value Unleashed

Market Updates

Last week, despite lackluster earnings reports, North American equity indices increased as a result of positive sentiment from an OPEC meeting, the possibility of U.S.-E.U. trade deal and a slower than expected rise in U.S. interest rate. As a result of lost ground regained over the last several weeks, North American indices are near their cyclical highs while the Canadian dollar continued to strengthen.

Mid-market credit conditions continue remain positive with average leverage steady at just over 5 times EBITDA. However, credit spreads are now 1.3% above prior year levels.
 

Valitas Insights: 98% of U.S. PE funds closed in 1Q hit or exceeded their target

While M&A activity has been slowing since mid-2015, the liquidity underpinning the M&A market continues to accumulate at unprecedented rates. On April 21, the PitchBook published an article regarding the continued strength of U.S. private equity fundraising. In the first quarter of 2016, 71 funds raised a total of $51.8 billion (USD) in capital commitments. Of these funds, 98% either hit or exceeded their fundraising target.

To view the full report explaining these unprecedented market conditions, click here.

Business Transitions Forum in Toronto on June 8: Maintaining Confidentiality During a Competitive Sale Process

The most successful transactions are those that bring the “outlier” to the surface, that one acquirer or investor who sees more value in a business than any of the others. It’s often difficult to identify the outlier, it is essential that multiple parties be contacted through a structured sale process to uncover outliers. To keep bidders honest, the competitive tension between bidders should be palpable.

How do you run a competitive sale process under the radar without information leaks to employees, customers or suppliers? How do you protect yourself against potential competitors using information gained through the due diligence process against you in the marketplace? What strategies come into play when speaking to different potential buyers concurrently and how can business owners manage the complexity of a confidential sale process? At what stage should personnel within and outside your organization be made aware of the bigger picture? What do you say (and do) if there is a leak? How should the announcement be made when the deal is finalized? What role can you expect your senior management, board, advisors and the rest of your employees to play?

Paris Aden is moderating a panel discussion at the Business Transitions Forum Program in Toronto on June 8^th. The panelists include some of Canada’s leading M&A professionals:

Harry Blum, Managing Partner, Collins Barrow Toronto LLP

Curtis Cusinato, Partner, Stikeman Elliott LLP

Tim Morton, Managing Partner and Founder, Prompta Consulting Group

This panel will discuss the best practices and protocols that they use to maintain strict transaction confidentiality for their clients during the process. They will also discuss when and how the deal is best communicated to key stakeholders. We look forward to seeing you there.

As an event sponsor, Valitas invites you to take advantage of our 20% discount for Day 1, Day 2 or both days of the conference, using code BTFTSPOR1620. This early bird offer expires on May 6. Don’t hesitate to contact Paris Aden for more information.

Weekly Canadian Private Market M&A Report

Announced deals

Ontario Teachers to sell specialty insurer ANV for $218.7 million

Ontario Teachers’ Pension Plan has agreed to sell its interest in ANV Holdings BV, a specialty insurance and reinsurance company based in London, United Kingdom. The buyer in the deal, AmTrust Financial Services Inc. (Nasdaq: ASFI), has agreed to pay US$218.7 million in cash for the company. Wayne Kozun, Senior Vice-President, Public Equities at Teachers’, commented on the deal, “We are pleased the sale to AmTrust advances ANV’s strategic objective of becoming a global specialty insurance leader. We would also like to recognise and thank acting CEO Lynsey Cross for her significant commitment and contributions to the success of ANV.”

FirstOnSite to combine with Delos-backed InterstateFirstOnSite

FirstOnSite Restoration LP, a Canadian disaster restoration services business, has agreed to be acquired by its U.S. counterpart Interstate Restoration LLC. No financial terms were disclosed. The two companies said their combination will create North America’s second largest independent restoration and reconstruction services provider. Stacy Mazur, CEO of Interstate Restoration said, “The combined companies bring financial strength, a broader customer base and a wide array of resources, talented personnel and new proficiencies. Together, we will have the scale necessary to respond to commercial and residential emergencies across Canada and the U.S., from localized disasters to major catastrophes.” Dave Demos, CEO of FirstOnSite Restoration, also commented on the deal, “Interstate Restoration brings exceptional industry and operational expertise, and this sale allows us to join forces and serve customers across the continent.”

Closed deals

Wynnchurch’s Calyx sells beverage transport unit to Frontier

Winnipeg-based Frontier Supply Chain Solutions Inc. has acquired the assets of Euroworld Transport Systems Canada Inc. from Calyx Transportation Group Inc., a portfolio company of U.S. private equity firm Wynnchurch Capital. No financial terms were disclosed. “As part of Frontier’s continuing effort to grow International Forwarding services, the new acquisition of Euroworld brings [a] strong team, improves our volume and positions us with new strategic industry segments,” said Michael Butterfield, President and CEO of Frontier.

Constellation Software affiliate buys hospitality software company

Gary Jonas Computing Ltd., an affiliate of Constellation Software Inc. (TSX: CSU), has acquired the assets of Multi-Systems Inc. (MSI), a Phoenix, Arizona-based software provider to the hospitality industry. No financial terms were disclosed. Barry Symons, CEO of Jonas, said “MSI, with its strong presence in the hotel market, is a valuable addition to the Jonas group of companies. Adding MSI to our growing hospitality business unit further strengthens our place in this significant market. We are very excited to welcome MSI’s dedicated customers and employees to our organization.”

PE-backed Cobra acquires action-sports camera maker WASPcam

Cobra Electronics Corp, a U.S. supplier of mobile and consumer products, has bought WASPcam, the Canadian maker of an action-sports camera. No financial terms were released. Sally Washlow, CEO of Cobra’s parent company Cedar Electronics said, “We continually strive to enhance our brand portfolio and value proposition to meet the needs of our driving, boating and outdoor enthusiast customer segments, whether organically or through acquisition, and WASPcam helps us achieve that objective. With a focus on superior performance, affordability and reliability at our core, our customers can anticipate rapid and insightful innovation from us in the action-sports camera category as we continue to support our customers’ bold and aggressive lifestyles.”

Wind Point-backed Workrite acquires ergonomics specialist ISE

Wind Point Partners, a U.S. private equity firm, said Workrite Ergonomics has acquired Toronto-based International Source for Ergonomics (ISE). No financial terms were disclosed. “The acquisition of ISE will provide Workrite with an expanded presence in our already well established office dealer distribution channel as well as access to new customers and markets”, commented Charlie Lawrence, President of Workrite. “The combined resources of Workrite and ISE provide an enhanced product portfolio featuring a full array of ergonomic accessory products and exciting new growth opportunities through the addition of the Line of Sight training and education products for corporate and government users. Furthermore, distribution capabilities on both the east and west coasts will enhance our ability to reduce lead times for our products and better serve our customers.”

Venture-backed Mobify buys machine learning platform Pathful

Mobify, a mobile customer engagement platform has acquired Pathful, a Vancouver-based provider of advanced machine learning technology for behaviour-based targeting. No financial terms were disclosed for the acquisition. According to Mobify CEO Igor Faletski, “We’re very pleased to welcome Campbell and Boris and their team and to introduce Mobify customers to Pathful’s exciting technology. With more insights into the needs and wants of online and retail audiences, Pathful’s advanced machine learning technology makes intelligent mobile marketing automation a breeze.”

IOP invests in recapitalization of Alexandria Moulding

U.S. private equity firm Industrial Opportunity Partners (IOP) has invested in the recapitalization of Moulure Alexandria Moulding Inc., a Canadian maker of wood mouldings and related millwork products for residential housing markets in North America. No financial terms were released for the deal, which is being done in partnership with Alexandria’s management, including President and CEO Andre Cholette. Ken Tallering, Senior Managing Director of IOP, stated, “We are excited to partner with the Alexandria team. We believe that Alexandria is a growing business with an excellent reputation for quality and customer service and strong relationships with both customers and suppliers.”