Bid-ask spread still too wide for public market M&A, but PE-backed mid-market M&A is doing well, say dealmakers

PE-backed mid-market M&A is going strong.

Good morning, Hubsters. MK Flynn here with the Wire.

I’ve spent much of the week moderating panels at PEI Group’s Women in Private Markets Summit North America 2023, and I’ve got highlights to share from the summit, below.

But first, let’s take a quick look at some deals announced this morning.

News in brief
Here are a few deals covered by Iris Dorbian today:
Great Point Partners has divested its investment in Valenz, a Phoenix-based medical billing firm, to Kelso & Company.

XDimensional Technologies, which is backed by Serent Capital, has acquired Shelton, Connecticut-based insurance software firm I-Engineering.

GAI Consultants, which is backed by Comvest Partners, has acquired Fort Lauderdale, Florida-based Eland Engineering, a provider of engineering consulting and field maintenance services for intelligent transportation systems and traffic signal systems.

For ongoing up-to-date coverage on the latest deals, check out PE Hub’s news in brief section.

Who runs the world? Girls

As I mentioned, I’ve spent the last couple of days at PEI Group’s Women in Private Markets Summit North America 2023. (Note: PEI Group is the owner of PE Hub.)

The event was based on a very popular summit we’ve produced in London for many years, but this was the first time we’ve hosted this event in the US. It took place in midtown Manhattan, near Bryant Park and our US headquarters.

We had more than 400 registered attendees, and the energy and engagement was palpable.

We covered a wide range of topics.

I moderated a panel on the state of the market with Jackie Rantanen, head of product solutions, Hamilton Lane; Kim Hourihan, CIO, CBRE Investment Management; and Jingcai Zhu, co-founding partner and head of investor relations, NewVest.

And I led a panel about founding your own firm with Huda Al Lawati, founder, Aliph Capital; Alexandra Stanton, CEO and founder, Empire Global Ventures; and Shari Sentner, founding partner & CEO, Wilrich Energy.

Another notable discussion was an investment case study featuring Laura Held, partner, Shamrock Capital, and Amy Buckner Chowdhry, founder & CEO, Answerlab. I’ll be following up with them and hope to have more to share on that in the future.

In the driver’s seat
Laurie Mahon, former vice chair, global investment banking, CIBC Capital Markets, who chaired the summit, shared some reflections on the conference, including several things she learned. And she delivered a call to action for women in private equity.

Here are Mahon’s closing thoughts about the themes of the conference and the lessons learned:

Democratization: It remains to be seen, in my mind, whether we ever get there, but it’s an interesting concept to pursue.

Denominator effect: Re-open the public markets please. It’ll go away.

Energy trilemma: We need to balance reliability, affordability and sustainability, as we make decisions. It’s not an easy thing to do. We need to have better models, I think.
I learned a new definition of impact investing … which is that it is intent to do good, not just a scorecard like ESG, which measures whether or not you have managed to check the boxes.

I also learned one other really important thing, and that is that we shouldn’t use the phrase, “IR,” that the people doing [investor relations] are doing way more than that, and I thought that was a fascinating panel in terms of looking at the broader role they play – and in many cases it’s a role played by women in private equity firms.

We also heard about a game changer from Johnathan Medina [global head of diversity, equity and Inclusion for Macquarie Asset Management], who talked about putting a challenger into the performance review process to uncover unconscious bias among reviews.

Having sat on the diversity and inclusion committee for a major bank for the last 10 years and knowing that it is a huge issue, it seems like such a simple answer to be able to do that – to have an independent set of eyes look back over someone’s review and see if there’s unconscious bias in there…

We asked everyone about their outlook for the year, and, no surprise here, the bid-ask spread is still too wide for the public markets to come back for M&A, but we heard some good news that mid-market M&A is doing well, but it’s been doing well primarily with equity, not with cash, because the banks are not there – we know that.

High inflation, low growth: what are we going to do? We’re going to stay the course – that’s what we heard from everyone.

But I want to postulate something else: I think it’s okay if we stay the course, but I think we should consider changing the driver, specifically the sex of the driver – because the one thing that we certainly heard was that diversity creates good business, it generates higher returns, it creates more opportunity. It is not just about doing good, it’s about doing well.
And I think this room full of people – primarily women and the few men who were brave enough to sit through all this with us – has demonstrated that there is enough talent and competence and drive in this industry to wrestle those steering wheels away from the boys and get out on the race track, and let’s win!

Let’s end on that inspirational note.

And if you missed the summit, click here to register for the 10th annual Women in Private Markets Summit 2023, which will be held in London November 28-29.

Let me also take this opportunity to recommend reading PE Hub and Buyouts’ recent Women in private equity: Class of 2023, highlighting 10 women dealmakers in private equity. Click here.

I’ll be back with more tomorrow, as Obey Martin Manayiti, who usually writes the Friday Wire, will be taking a well-deserved day off.