Thoma Bravo, Sunstone pick up UserTesting; ICG buys MME as add-on for Seaway; FTV expects 5-10x growth from ConnexPay investment

Thoma Bravo and Sunstone are acquiring UserTesting in a test-private deal for $1.3 billion.

Good morning! Aaron here on the Wire. I hope everyone’s week is as busy and productive as mine so far.

Take private. Breaking news hit my inbox as I was finishing writing this morning: public company UserTesting has been acquired by Thoma Bravo and SunStone Partners for $7.50 per share in an all-cash transaction valued at $1.3 billion, according to the press release.

Following the closing of the transaction, Thoma Bravo and Sunstone Partners intend to combine UserTesting and UserZoom, which Thoma Bravo acquired majority control of in April. Additionally, the combined company will benefit from the operating capabilities, capital support and industry expertise of Thoma Bravo and Sunstone Partners, the firms said.

According to the press release, the companies’ complementary offerings will create a powerful end-to-end solution in the customer experience space – helping more organizations around the globe innovate, drive revenue, manage risk, and deliver exceptional customer experiences.

Medical manufacturing. Yesterday I broke the news that ICG completed its first add-on for the London-based firm’s Seaway platform.

ICG acquired MME, a St Paul, Minnesota-based full-service contract manufacturer that provides injection molding, engineering, tooling and assembly for FDA-regulated medical and other products.

The private equity form bought Seaway, a provider of components and value-added services for the medical device, healthcare and specialty industrial sectors earlier this year from Tonka Bay Equity Partners.

I spoke with Uzair Dossani, managing director of ICG’s North American direct private equity group, and Kevin Gregory, the firm’s healthcare sector lead, about the organic and inorganic growth levels this acquisition adds to the platform, as well as about future add-ons.

Dossani said the firm was looking for “great businesses with great management teams that operate in fragmented industries where we can help accelerate growth by investing to relax whatever constraints exist, between both M&A-driven and organic growth.”

“We’ve made a push in both those areas,” said Dossani. “So, we’re making investments to grow organically, as we recently hired a new head of sales; we’ve committed capital to fund capacity expansion, and then inorganically, obviously, with the acquisition of MME we have made nice progress in pushing forward the M&A thesis.”

Opportunity for further M&A activity in this space is ripe, according to Gregory.

“I’d say in medical device manufacturing, these are very sticky relationships, and the supply chain is very fragmented,” he said. “So, we think that from a healthcare lens, the M&A opportunities are quite unique. I’d say the opportunity to do more M&A is at the better end of what we see across healthcare.”

You can read the entire story here.

Giant growth. Earlier this week, FTV Capital invested $100 million in ConnexPay, a payments technology company based in Minneapolis, Minnesota. Obey Martin Manayiti spoke with Adam Hallquist, principal at FTV, who said the firm is anticipating big-time growth.

Based on what he is seeing in the market and ConnexPay’s tech edge, Hallquist anticipates the company will grow “somewhere between five to 10 times” its current size within the next couple of years, wrote Obey.
Hallquist said that among other strategies, ConnexPay will target the European market.

“Europe is interesting because there is more fragmentation,” he said, adding that with the experience amassed by ConnexPay since its formation in 2017, the company can perform better against competition across the “entire payments process” in Europe.

Over the past 12 months, ConnexPay has more than doubled its number of active clients and its employee count. “The company is profitable while offering market-leading rebates to its clients and processing billions of dollars in payments.”

You can read the entire story here.

Extreme equity. ESPN sold a majority stake in the X and Winter X Games to MSP Sports Capital, a sports-focused private equity firm that also has stakes in McLaren Racing and a handful of European soccer teams, according to a report in Fortune Magazine. Terms were not released.

For those who are unaware, the X Games have brought action sports such as skateboarding and snowboarding into the mainstream, while helping to grow and popularize those types of sports. I was never into those sports growing up, as I am a team sport person, but I was always in awe watching those athletes compete.

You can read the whole story here.

Baby boomer businesses. With 10,000 baby boomers a day turning 65 in the US, coupled with Census Bureau data showing that the number of seniors aged 65 and over is expected to outnumber children for the first time by 2034, it’s no surprise that private equity has been especially bullish about the aging sector in the US. Iris Dorbian noticed a flurry of notable deals in this market and highlighted five of them.

With the growth in this sector expected to soar in the coming months and years, a likely recession notwithstanding, PE Hub expects the deal volume in this area to flow unabated.

You can read the entire story here.

VCJ rising stars. PEI West Coast bureau chief Larry Aragon is asking for your help in identifying great dealmakers, LPs and service providers under the age of 40 who are making a difference in the world of venture capital.
If you know someone great, please nominate them for our fourth annual Rising Stars feature. And please let us know as soon as possible, since the deadline for nominations is Nov. 1. Past honorees include Cathy Gao of Sapphire Ventures, Jonathan Andersin of DLA Piper, Tanya Kemp of San Francisco Employees’ Retirement System, Jessica Yi of Norwest Venture Partners, Dami Osunsanya of SoftBank’s Opportunity Fund and Sara Mattern of Foley Hoag. Check out Rising Stars from prior years: 2022, 2021 and 2020. All the details about how to nominate someone are here. Questions? Shoot an email to vcjrisingstars@peimedia.com.

That is a wrap for today. I will be back tomorrow, as per usual on Friday’s.

 

Cheers,
Aaron