Francisco Partners, TPG to take New Relic private; plus a deep dive on Blackstone’s ‘Zoom effect’ deal

Good morning, Hubsters. MK Flynn here with today’s Wire.

This morning, we’re exploring deals in a range of sectors.

First up, Francisco Partners and TPG unveiled a big take-private deal for a software development company yesterday. We’ll share the details, below.

It’s summer, so the bugs are out. We’ve seen a lot of pest-related transactions this year, and another one was announced this morning.

And, we’ll take a Deep Dive into a recent deal from Blackstone that takes advantage of the “Zoom effect.”

Need for visibility
Francisco Partners and TPG have agreed to buy New Relic, a provider of tools for developing software, for $6.5 billion.

The PE firms reportedly had tried to buy the software maker earlier in the year, but talks ended when they were unable to raise financing to meet New Relic’s desired price. Since then, the firms were able to raise the funding and come to terms, CNBC reported.

New Relic has a 45-day go-shop period.

“We are pleased to have reached this agreement with Francisco Partners and TPG, which delivers significant, immediate value to shareholders,” said Hope Cochran, lead independent director of the New Relic board, in a statement. “This transaction is the result of a comprehensive process that included engagement with both financial and strategic parties, led by a transaction committee that included representatives of two of our largest public shareholders. The board is unanimous in its belief that today’s transaction appropriately reflects the company’s innovative and strong business while maximizing shareholder value….”

Added Nehal Raj, co-managing partner of TPG Capital: “As technology continues to become more feature rich and AI-enabled, the need for visibility is only increasing. New Relic is a pioneer in the observability market, providing developers and engineers with a unified platform to proactively monitor and manage mission critical applications.”

Bugging me
If there’s a mosquito within a mile, it finds me, so pest-control deals always catch my eye.
This morning, Palmetto Exterminators, a portfolio company of CenterOak Partners, said it has acquired Sterling, Virginia-based PestNow, a provider of pest control services, and formed Entomo Brands, reports Iris Dorbian.

Entomo Brands manages multiple insect-related service companies operating under regional and local brands. The company will maintain its corporate headquarters in Charleston, South Carolina and Palmetto Exterminators CEO Brian Butler will serve as CEO of the combined business. PestNow and Palmetto Exterminators will retain their existing trade names and continue to serve customers across the Southeast and Mid-Atlantic regions.

There have been a lot of pest control deals this year, and they’re part of a bigger trend of PE firms increasing investments in home maintenance services.

Speaking of which … TSG Consumer Partners just announced an investment in Trinity Solar, which aims to help households manage their energy needs.

You can read about previous home service and pest control deals here and here.

Zoom effect
Blackstone will leverage the ‘Zoom effect’ to drive international growth for Lazeo, a family-owned provider of aesthetic medicine services, senior managing partner Raphael de Botton told PE Hub Europe’s Nina Lindholm.

Paris-headquartered Lazeo is a founder-led, family-owned provider of non-invasive aesthetic medicine services such as laser hair removal, injectables, body contouring and medical-grade facials. Funds managed by Blackstone Tactical Opportunities announced an investment in Lazeo in July.

The boom in videoconferencing platforms such as Zoom since the outbreak of the covid pandemic has provided a lift to the sector, said de Botton.

“There’s a bit of a ‘Zoom effect’ – people are seeing their face in the mirror a lot more, and therefore looking for ways to improve the way they look,” said de Botton. “However, they don’t want to go into anything intrusive, so the non-invasive medicine [sector] has a great future.”

As the popularity of videoconferencing platforms skyrocketed, so did appearance dissatisfaction, according to a study published in the Aesthetic Surgery Journal in December 2021. The study found that over one-third of participants had identified new appearance concerns while on video and that these individuals reported greater interest in obtaining future aesthetic procedures.

The market is very underpenetrated, considering the amount of people using the services, according to de Botton. Blackstone had not previously invested in the laser hair removal sector, but the firm is not stepping completely into the unknown either. In 2020, it acquired a majority stake in ZO Skin Health, an Irvine, California-based skincare brand. In 2021, Blackstone Growth agreed to make a majority investment in Supergoop!, a skincare brand focused on sunscreens.

Laser hair removal, Lazeo’s biggest business, has an unfair reputation for being expensive, according to de Botton. “On a long-term basis however, it is actually much cheaper than having to go for waxing every now and then,” he said. “You do six to eight sessions and you’re done with it, making it economical.”

On that note, I’ll sign off.

Buyouts’ Chris Witkowsky will bring you the Wednesday Wire, as usual, and I’ll be back on

Thursday.

Cheers,

MK