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Clearlake buys IPG for $2.6bn; break the bias on International Women’s Day

Private equity folks weigh in on impact of Russian invasion of Ukraine's on PE.

Good morning, Hubsters. MK Flynn here with the Wire on International Women’s Day.

Take private. In deal news this morning, Clearlake Capital announced it is buying Intertape Polymer Group in a $2.6 billion take-private deal. Headquartered in Montreal, Quebec and Sarasota, Florida, IPG develops packaging materials and machinery for industrial and retail use. Demand for packaging materials has soared along with e-commerce during the pandemic.

“We believe this transaction is a great next step in the evolution of our business, as Clearlake has strong industry knowledge in the protective packaging and e-commerce ecosystems,” said Greg Yull, president and CEO of IPG. “Clearlake provides us the operational and financial resources to accelerate our acquisition strategy, as well as organic growth opportunities such as investing in product innovation, sustainability, and market expansion.”

Said José E. Feliciano, co-founder and managing partner, and Arta Tabaee, managing director, of Clearlake: “We believe IPG’s customer-centric and sustainability-oriented approach and capabilities position the Company well to capitalize on growth within its target end markets, and the addition of IPG to our portfolio highlights our thesis that long-term consumer trends favor providers focused on sustainability and innovation.”

#BreakTheBias. The theme of this year’s International Women’s Day is Break the Bias. At PEI Media, we’re conducting a workshop on bias later this morning, and I’m looking forward to participating as a moderator.

More than 120 stock market exchanges throughout the world, including the New York Stock Exchange and the Nasdaq in New York, are participating in the annual “Ring the Bell for Gender Equality” today. Now in its eighth year, the initiative is designed to “promote gender equality, highlight the benefits of a diverse and inclusive workplace, and recognize the contribution of women in building a better future for all,” according to the World Federation of Exchanges.

Earlier this morning, the American Investment Council released a video featuring women in private equity, including Pam Hendrickson, chairman of AIC and the vice chairman of the Riverside Company; Suzanne Yoon, founder and managing partner, Kinzie Capital Partners; and Jeri Harman, founder and chairman, Avante Capital Partners.

At PE Hub and Buyouts, we recently published Women in private equity: The class of 2022. In the special report, we profiled 10 women who stand out for their prowess in dealmaking, and we’re featuring them here on the Wire throughout March.

Today, we’re featuring Amy Christensen, partner and co-head of healthcare at The Vistria Group, which she joined as a founding member in 2013. Christensen serves on the boards of Alacura, Chiro One, St Croix Hospice, Supplemental Healthcare and Behavioral Health Group.

“At the Vistria Group we are trying to create a next gen PE firm at the intersection of purpose and profit,” Christensen told Aaron. “We want to demonstrate you can make a great return while at the same time, make a great impact on other people’s lives.”

Diversity is a key component of Vistria’s mission. “The LPs have led the charge, and they truly believe it, which is key, because if you are getting more diverse just to check off a box, I don’t think we are going to see sustainable change, and it won’t be meaningful change. LPs are telling the GPs, you need to be more diverse, not for diversity’s sake, but we believe it leads to better returns.”

For more on Christensen and all the dealmakers in our report, read the story.

Ukraine invasion impact on PE. Many of you have taken me up on my invitation to share your thoughts on how Russia’s invasion of Ukraine may affect the private equity industry. Here are insights from a couple of dealmakers.

“The transaction balance between buy-side and sell-side is expected to swing in favor of the buy-side,” Jeremy Swan, managing principal of CohnReznick’s financial sponsors and financial services industry practice, told me. “At the end of 2021 into the beginning of 2022 the market remained a seller’s market with valuations still at or near record levels and plentiful capital on the sidelines waiting to be put to work, which produced a heavier weighting in the market of sell-side transactions. As inflation proved to be more than transitory and supply chain issues continued to plague goods manufacturers, distributors and retailers, we began to see more volatility in earnings and the broader markets. The invasion of the Ukraine has begun to exacerbate increasing inflationary pressures as well as supply chain issues (one step forward and two steps back), as well as adding geopolitical uncertainty to the base of economic risk factors. The overall impact on the private equity markets is and will continue to be felt through declining valuations in both existing and potential portfolio companies as public market valuations decline and companies struggle to maintain earnings growth. The decline in valuations will likely make PE firms think harder and potentially pull back on portfolio company exits but will allow for more cost-effective acquisitions on the buy-side, both for new platforms and existing portfolio company add-ons. The seller’s market seems to be ending for now and we expect the pendulum to swing towards a heavier weighting towards buy-side transactions in the current environment.”

Beata Stepantchenko, associate in the political due diligence team at Global Counsel, also reached out and shared a LinkedIn post she wrote on how the war in Ukraine will affect PE deal flows.

“For portfolio companies that have supply chains going through eastern Europe, disruptions will impact routes and see increases in price,” Stepantchenko wrote. “Air cargo is currently avoiding Ukrainian airspace, leading to higher cost of flying and longer routes. Shipping routes in the Black Sea are also disrupted as some logistical companies have begun charging a danger premium for transpiration near Russian and Ukraine.”

She also said that political due diligence will take on more urgency. “Precautionary measures should be made before they become unavoidable. Reviews to portfolio companies’ touch points with Russia and Ukraine will be needed to assess whether these connections could present legal, commercial, or reputational issues.”

I’d love to hear from more of you about the impact of the invasion of Ukraine on private equity deals. Email me at mk.flynn@peimedia.com

That’s all for now. Chris writes the Wire on Wednesdays, so I’ll see you on Thursday.

Happy International Women’s Day,
MK