Elliott, Patient Square, Veritas agree to Syneos take-private; LightBay hits hard cap on Fund II

Morning Hubs!

This is Chris, on for Wire Wednesday.

A quick reminder that we are putting together our annual emerging manager project, mostly focusing on first-timers, but also funds II and III. The package explores challenges faced by emerging managers in today’s market, and as always, includes our home-grown database of mostly first-time funds in the market.

If you have thoughts on interesting new PE names we should include, hit me up at cwitkowsky@buyoutsinsider.com.

Speaking of, below you’ll find some news about one of the newer names in the industry that has reached final close on its sophomore pool.

But first …

Big one: This just crossed the wire this morning – Syneos Health, a contract research organization, agreed to be acquired by an investor consortium in an all-cash deal for about $7.1 billion, including outstanding debt. The consortium, comprising Elliott Investment Management, Patient Square Capital and Veritas Capital, is offering $43 per share, a 24 percent premium over the closing share price on Feb. 13, 2023.

The deal is expected to close in the second half subject to approval of Syneos shareholders and other closing conditions, including regulatory approvals. Goldman Sachs, UBS, RBC Capital Markets, BMO Capital Markets, HSBC Securities, Wells Fargo, Citigroup, Jefferies, Macquarie, Natixis and Truist Securities provided committed financing for the deal.

Syneos started trying to sell itself earlier this year amid a plunge in share value as the company saw a reduction in its backlog of clinical research contracts, Reuters reported at the time. The company had worked with Centerview Partners in 2020 on a sale process, which was disrupted by the Covid-19 pandemic, Reuters said.

Centerview and Bank of America worked as advisers to Syneos on the process.

“Based on first-hand experience in the industry, we are huge believers in the value that contract research and commercial organizations provide to their clients by accelerating and maximizing the likelihood of clinical success and optimizing a product’s potential to impact patients,” said Jim Momtazee, managing partner of Patient Square, in a statement.

Some numbers: DC Advisory sees improvements in the deal environment, with continued strength in the second quarter around infrastructure, defense, education, healthcare, tech and ESG-related sectors. Transactions in other sectors could potentially increase over the summer, the advisor said.

The first quarter, while slow around M&A and fundraising, will provide a foundation to build on for the rest of the year, DC Advisory said in the report.

“2023 deal activity is likely to increase sequentially as fierce competition returns to the mid-market, especially for exceptional assets and the now attractive smaller ‘bite size’ yet high quality situations, leading the way back,” according to DC Advisory’s US PE Mid-Market Monitor report.

Interesting tidbits in the report: Sellers are reluctant to launch full processes right now, though they are starting to engage in “fireside chats” in anticipation of a sale later this year; lenders are focused on resolving stress in their portfolios and eyeing new opportunities with total debt packages of $100 million or less; and buyers, perhaps best positioned of all because of generous uncalled capital levels, are assessing opportunities for businesses that can endure or benefit from inflation generating margins.

Final: As mentioned above, one of the newer managers we’ve been tracking has closed its second fund. LightBay Capital, led by former Ares executives, closed Fund II on just over $1 billion, beating its $800 million target.

The firm focuses investments in consumer, healthcare and business services, employing a “flexible capital” approach. The firm can invest through various structures, including LBOs, growth and minority deals. Read more here on Buyouts.

That’s it for me! Have a great rest of your Wednesday. Reach me at cwitkowsky@buyoutsinsider.com or LinkedIn with tips n’ gossip, feedback or Drama situations. Or of course book recommendations! I’m just finishing up a re-reading of Bleak House.