Will ChatGPT find your next deal? We’ll let you know. Plus, new transactions from AIP, Comvest, Monomoy

Monomoy buys direct mail firm Japs-Olson.

Good morning, Hubsters. MK Flynn here with the Wire.

At PE Hub, we’ve been thinking a lot about the impact ChatGPT and generative AI will have on private equity.

Today, we’ve got a Deep Dive into how generative AI is being used – already – in the deal sourcing process.

But before we get to that story, let’s take a quick look at some of today’s most interesting deal news from Monomoy, AIP and Comvest.

Direct mail
Monomoy Capital Partners has acquired Japs-Olson Company, a family-owned provider of direct mail marketing services for the financial services, nonprofit, insurance, healthcare, retail markets.

Founded in 1907 and headquartered in St. Louis Park, Minnesota, Japs-Olson manufactures and distributes over one billion personalized mailings annually, according to the company.

“As a marketing channel, direct mail generates the highest return on investment among omnichannel marketing strategies and represents a stable sector with a robust total addressable market,” according to the deal announcement.

Power play
CES Power, a Memphis-based provider of power and temperature control for large events, has acquired Immedia Event Productions, a Cherry Valley, Massachusetts-based company that provides power generation and HVAC services for events throughout the northeastern US.

CES is backed by Houston-based Allied Industrial Partners.

The deal provides a new hub in New England, expanding CES’ offerings in the Boston area.
It also marks CES’ sixth acquisition since being acquired by AIP in June 2021, and the company said it will continue to seek further add-on acquisitions in areas of strategic interest.

Water, water everywhere
Duke’s Root Control, an Elgin, Illinois-based provider of wastewater and gas-focused inspection, diagnostics, and remediation services has acquired Underground Infrastructure Services (UIS) of Livonia, Michigan.

A platform investment of West Palm Beach-based Comvest Partners, Duke’s provides wastewater and gas-focused inspection, diagnostics, and remediation services.

UIS is Duke’s fifth acquisition in the last five years and takes the municipal wastewater management services provider into “attractive adjacent markets such as clean drinking water delivery, an area of increased federal and state focus as a result of the Bipartisan Infrastructure Law of 2021,” according to the deal announcement.

“With up to 10 million American households receiving their water through lead service lines, replacement projects are a top priority for many municipalities,” said Matt Kunz, a principal at Comvest.

ChatGPT on tap
The deal sourcing process promises to get a lot faster and a lot better, thanks to generative AI.

PE Hub’s Rafael Canton spoke with a range of dealmakers at private equity and folks at third-party origination services to find out what’s possible today and what’s coming tomorrow.

With the ability to pull a significant amount of data about potential companies to invest in and then draft up an email to a prospective company that a firm wants to invest in, generative AI is quickly evolving into a regular piece of the investment process.
Already, deal sourcing service providers like SourceScrub and Finquest are using a combination of traditional AI with generative AI.

Traditional AI represents web scraping and data processing, while generative AI involves training a learning model to produce original content such as music, art or words.

“Where AI comes in is: it helps scale, helps show recency and it’s comprehensive,” SourceScrub CEO Jim Obsitnik told PE Hub.

In the past, it would take a PE firm a week or several weeks to pull lists and add contacts. Next would be a process of inputting the contacts into a customer relationship management system and then creating a mail merge.

“If a source servicing provider can boil the ocean for me and identify 100 targets that we feel really good about and I can get emails out to those people in 24 or 48 hours versus the olden days, the vault, the volume and the velocity that these tools can bring to deal sourcing is tremendously valuable,” Jessica Ginsberg, managing director of business development at lower mid-market private equity firm LFM Capital, told Rafael.

More to come
At PE Hub, we’ve been talking to a lot of PE firms, advisers and service providers about generative AI, and we’ll be sharing their insights over the coming weeks.

If you’d like to weigh in, we’d love to hear from you.

Reach out to us at:
• Mary Kathleen Flynn: mk.flynn@peimedia.com
• Obey Martin Manayiti: obey.m@peimedia.com
• Rafael Canton: rafael.c@pei.group

That’s all for now. Buyouts’ Chris Witkowsky will be with you tomorrow for Wednesday Wire.

I’m taking a little time off and will be back with you again on the 15th.

Until then, happy dealmaking,