Francisco Partners explores sale of scheduling software company QGenda, H.I.G. Capital targets $1.25b for challenging situations, HGGC co-founder Rich Lawson on holding virtual annual meetings

A new study shows the effects of the coronavirus meltdown on deals and H.I.G. Capital seeks to raise $1.25 billion for a new fund focused on challenging situations.

Morning Hubsters!

We have some stuff n’ things on the M&A front: Francisco Partners is exploring the sale of QGenda, which provides scheduling software for doctor offices, writes Sarah Pringle on PE Hub. The process is just starting and probably won’t be rushed considering the environment, she writes.

Francisco made a strategic investment in QGenda in 2016, with Raymond James advising on the sale. The company is led by CEO Greg Benoit.

Valuing assets in the downturn is a challenge, which is why much M&A activity is paused. Buyers and sellers are waiting for more certainty around pricing that will come once the world has more confidence in the health crisis in the form of a vaccine or solidly falling infection numbers.

Businesses that improve productivity in healthcare have been among the strongest performing since the downturn hit, Sarah said. Workforce management could become more important after the downturn as hospitals and practice groups focus on improved processes to reduce expenses, she said.

Read Sarah’s story here on PE Hub.

Big numbers: Great piece from Bain & Co showing some of the effects of the coronavirus meltdown: global buyout activity fell 60 percent from January to April, with leverage lending falling 80 percent this year, Bain & Co found.

As we know, deal flow has seized up as GPs turn inward and look to support existing investments in the portfolio that have lost cash flow from the pandemic lock down. Equity-focused funds are looking for creative structures like investments in preferred stock and warrants to private investment in public equity deals. Private equity firms and hedge funds invested more than $8.6 billion in US PIPE deals this year through May 12, Bain & Co found.

Exit activity has completely fallen off a cliff, as no PE sponsor is willing to sell a company that may have been valued 20 percent more earlier this year. Funds are waiting for the economic turmoil to calm before bringing assets to market (for the most part … see above for an example of an active process).

Exit transactions fell 72 percent since January. And returns expect to see write-downs of at least 15 percent in first-quarter valuations, Bain & Co wrote, citing a Campbell Lutyens report.

“It’s also difficult to value companies in this environment, given the disruption to company cash flows, market volatility and the lack of comparable transactions,” Bain & Co wrote. Read the full report here.

Top Scoops
H.I.G. Capital is targeting $1.25 billion for its next Capital Partners fund that focuses on challenging situations, I write today on Buyouts. H.I.G. Capital Partners Fund VI is expected to hold a one-and-done close in July. Check out my story here.

Rich Lawson, co-founder of HGGC, walks us through the challenges of communicating with limited partners virtually. The firm held its annual meeting earlier this month online, an event it usually hosts in Palo Alto, he told Milana Vinn on PE Hub.

“We felt that it is super important to over-communicate the impact of covid-19 on our portfolio,” Lawson said. “It was a high-stakes decision. How many people have ever tried to put hundreds if not a thousand people on the recurring virtual annual global meeting?”

Read the story here.

That’s it! Have a great day. Hit me up as always with tips n’ gossip, feedback or just to chat at cwitkowsky@buyoutsinsider.com, on Twitter or find me on LinkedIn.