Some notes before I head over to moderate a lunch debate in New York between U Maryland economist Peter Morici and Evercore CEO Ralph Schlosstein, over the economic impact of a President Clinton or President Trump.
• Talking points: Most of what we'll discuss at lunch will be macro, but there will be some discussion of issues specific to Term Sheeters. One, of course, will be carried interest. Both presidential candidates want carry to be reclassified, but other parts of their tax plans (namely Trump wanting to slash individual income rates for top earners and Clinton wanting to increase them) mean that their identical proposals are tangibly different.
The other issue will be the deductibility of interest on corporate debt, a tax code feature that fuels leveraged buyouts in general, and dividend recaps in particular. Trump wants to keep it, while also tacking on immediate expensing for corporate equipment and facilities investment (which, but together, likely would explode biz borrowing). Clinton has basically been silent (from what I can tell) on interest deductibility, not even publicly endorsing President Obama's longstanding (and nonspecific) call for a partial reduction.
• Deal data: PitchBook and the NVCA today released venture capital deal data showing a sharp decline in Q3 activity, coming in just shy of $15 billion (into nearly 1,800 companies). That represents a 32% fall over Q2, and the fifth straight quasrter-over-quarter drop. It also means that 2016 is not going to top 2015 in overall activity, but it still may best 2014 (so long as Q4 disbursement levels remain close to Q3).
• Making sense of it all: On Tuesday we noted how bank M&A fees are off just 7% over the first three quarters of 2016, even though actual M&A volume was off 22%. Twice yesterday I heard the following theory for this statistical disconnect:
Most M&A fee information is supplied by banks that are seeking to climb league tables, and which might not have to "officially" report the information elsewhere (either because they are closely-held, or because they don't break out such fees in public disclosures). Thus banks have the opportunity to gently inflate their fee results, plus incentive to do so (since they're only reporting them for league table purposes). I'm not saying the banks are being dishonest, but I sure am suggesting it..
• Today in Theranos: The troubled blood-testing company is no longer testing blood, based on a statement yesterday from founder and CEO Elizabeth Holmes. She says that Theranos will close its clinical labs and wellness centers, resulting in around 340 people losing their jobs. The new goal is to "commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care." No, it does not yet have FDA approval for such devices.
But the most interesting part came at the end, where Holmes wrote: "We are fortunate to have supporters and investors who believe deeply in our mission of affordable, less invasive lab testing, and to have the runway to realize our vision." This is the part I did to dig into more deeply. Did investors just commit more money to the new vision?
THE BIG DEAL
• Lam Research Corp. (Nasdaq: LRCX) has called off its $10.6 billion cash acquisition of fellow chip manufacturing equipment maker KLA-Tencor Corp. (Nasdaq: KLAC), following antitrust scrutiny. Read more.
VENTURE CAPITAL DEALS
• Payoneer, a New York-based company focused on helping businesses send and receive cross-border payments, has raised $180 million in new growth equity funding. Technology Crossover Ventures led the round, and was joined by return backer Susquehanna Growth Equity. Some of the proceeds will be used to purchase shares from existing holders. Read more.
• Welltok, a Denver-based health optimization platform, has raised $33.7 million in Series E funding. Backers include New Enterprise Associates, Bessemer Venture Partners, Georgian Partners, Emergence Capital, InterWest Partners, Sigma Partners, HLM Venture Partners, Flare Capital Partners, Trustmark, Qualcomm Life Fund, Hearst Health Ventures, EDBI, Okapi Venture Capital and Miramar Ventures. Welltok also secured a new $13 million debt facility from Silicon Valley Bank. www.welltok.com
• Twyla, an Austin, Texas-based platform for buying and selling limited-edition artwork, has raised over $14 million in Series A funding. Google Ventures led the round, and was joined by Institutional Venture Partners and Redpoint Ventures. www.twyla.com
• OpenGamma, a London-based provider of derivatives risk analysis, has raised $13.3 million in VC funding from Accel and ICAP. www.opengamma.com
• Gridco Systems, a Woburn, Mass.-based provider of grid infrastructure solutions for electric power distribution system operators, has raised $12 million in VC funding. Backers include General Catalyst, Lux Capital, North Bridge Venture Partners and Mashinenfabrik Reinhausen. www.gridcosystems.com
• Grana, a Hong Kong-based fashion e-commerce company, has raised $10 million in Series A funding. Alibaba Group led the round, and was joined by The Hong Kong Entrepreneurs Fund and return backers Golden Gate Ventures and MindWorks Ventures. www.grana.com
• HappyCo, a San Francisco-based mobile inspection platform, has raised $7.5 million in Series A funding. Backers include 500 Startups, Flight Ventures and SaaS Syndicate. www.happyco.com
• Madefire, a New York-based maker of a motion book tool for content creators, has raised $6.5 million in Series B funding. Plus Capital led the round, and was joined by return backer True Ventures and individual investors like Drake and Kevin Spacey. Read more.
• Cybric, a Boston-based software security startup led by former Yahoo chief information officer Mike Kail, has raised $6.3 million in second-round funding, according to Fortune. Capstone Ventures led the round, and was joined by Petrillo Capital. Read more.
• Ollie, a New York-based premium petfood startup, has raised $4.4 million in seed funding. Primary Ventures and Lerer Hippeau Ventures co-led the round, and were joined by Canaan Partners. www.myollie.com
• TapFwd, a San Francisco-based mobile data marketplace, has raised $3 million in seed funding. Partech Ventures led the round, and was joined by AngelPad, Boldstart Ventures, Vaizra Investments, Tekton Ventures and individual angels. www.tapfwd.com
• Reaction Commerce, a Los Angeles-based real-time commerce platform for retailers, has raised $2.7 million in new VC funding. CrossCut Ventures led the round, and was joined by Double M Partners. www.reactioncommerce.com
• Factom Inc., an Austin, Texas-based blockchain startup that “secures data via decentralization,” has raised an undisclosed amount of Series A funding led by Tim Draper. www.factom.com
PRIVATE EQUITY DEALS
• Alpine Investors has acquired ARCOM, a Salt Lake City-based provider of software used to integrate residential building specification content. No financial terms were disclosed. www.arcomnet.com
• Avaap, an Infor systems integrator backed by New MainStream Capital, has acquired Falcon Consulting LLC, a New York-based Epic Systems implementation and optimization company. No financial terms were disclosed. www.avaap.com
• GTM Holdings, a Costa Rica-based chemicals distributor owned by Advent International, has acquired Peruquímicos, a Peruvian chemicals distributor. No financial terms were disclosed. www.gtm.net
• Incline Equity Partners has made an investment in Ned Stevens, a Fairfield, N.J.-based provider of gutter and outdoor cleaning services. www.nedstevens.com
• Levine Leichtman Capital Partners has agreed to acquire Nothing Bundt Cakes, an Addison, Texas-based franchisor of gourmet bakeries. No financial terms were disclosed. www.nothingbundtcakes.com
• New Heritage Capital has invested in The Execu|Search Group, a New York-based recruitment, temporary staffing and workforce management company focused on the tech and healthcare spaces. No financial terms were disclosed.
• New Mountain Capital has acquired Convey Health Solutions, a Ft. Lauderdale, Fla.-based provider of healthcare tech and business process outsourcing, from Comvest Partners. No financial terms were disclosed. www.conveyhealthsolutions.com
• One Rock Capital Partners has agreed to acquire North Pacific Paper Co., a Longview, Wash.-based manufacturer of newsprint and other publication paper products. No financial terms were disclosed. NORPAC is a current joint venture between Weyerhaeuser Co. and Nippon Paper Industries. www.onerockcapital.com
• Windjammer Capital Investors has acquired Mission Critical Electronics Inc., a Santa Ana, Calif.-based maker of power conversion, battery charging and battery products. www.mission-critical-electronics.com
• Wing Inflatables Inc., a Lafayette, Calif.-based maker of inflatable boats and other inflatable products, owned by Armada Acquisition Group, has acquired UK-based rival Henshaw Inflatables Ltd. for an undisclosed amount. www.wing.com
• Advanced Disposal Services, a Ponte Vedra, Fla.-based waste collection company, has raised $347 million in its IPO. The company priced 19.25 million shares at $18 per share (low end of $18-$21 range), for an initial market cap of around $1.51 billion. It will trade on the NYSE under ticker symbol ADSW, while Deutsche Bank served as left lead underwriter. ADS reports a $14 million net loss on $692 million in revenue for the first half of 2016. Shareholders include Highstar Capital (65.12% pre-IPO stake), the Canada Pension Plan Investment Board (23.14%) and BTG Pactual (7.17%). www.advanceddisposal.com
• AquaVenture Holdings, a Tampa, Fla.-based provider of wastewater treatment and purification services and systems, has raised $117 million in its IPO. The company priced 6.5 million shares at $18 per share (low end of range), for an initial market cap of around $457 million. It plans to trade on the NYSE under ticker symbol WAAS, while Citigroup, Deutsche Bank and RBC Capital Markets served as lead underwriters. AquaVenture reports around an $8.2 million net loss on $55 million in revenue for the first six months of 2016. Shareholders include Element Partners and the Virgin Green Fund. www.aquaventure.com
• Coupa Software Inc., a San Mateo, Calif.-based corporate spend management platform, raised $133 million in its IPO. The company priced 7.4 million shares at $18 per share (high end of upwardly-revised range), for an initial market cap of approximately $866 million. It will trade on the Nasdaq under ticker symbol COUP, while Morgan Stanley was listed as left lead underwriter. Coupa reports a $24 million net loss on around $60 million in revenue for the first half of 2016, compared to a $25 million net loss on $34.5 million in revenue for the year-earlier period. It had raised over $160 million in VC funding from firms like Mohr Davidow Ventures (16.3% pre-IPO stake), Battery Ventures (16.2%), El Dorado Ventures (13.9%), BlueRun Ventures (12.7%), Crosslink Ventures (11.1%), Iconiq Capital (5.1%), Meritech Capital Partners, Rally Ventures and T. Rowe Price. www.coupa.com
• Jose Cuervo, a Mexican tequila maker, is postponing a planned IPO in Mexico until after the U.S. election, due to expected market volatility, according to Reuters. Read more.
• Obalon Therapeutics Inc., a Carlsbad, Calif.-based developer of a balloon-based weight loss device, raised $75 million in its IPO. The company priced 5 million shares at $15 per share, for an initial fully-diluted market cap of around $267 million. It will trade on the Nasdaq under ticker symbol OBLN, while UBS served as left lead underwriter. Obalon has raised over $75 million in VC funding from firms like Domain Associates (34.6% pre-IPO stake), InterWest Partners (21%), Bader Sultan & Bros. (8.8%), Opaki Venture Capital (7.7%), Axon Ventures, Mirae Asset Venture Investment, NeoPlux Co. and Striker Asia Opportunities Fund. www.obalon.com
• eBay (Nasdaq: EBAY) has acquired Corrigon, an Israeli provider of computer vision and visual search technology. No financial terms were disclosed, although TechCrunch reports a price just south of $30 million. Sellers include Qualcomm Ventures. www.corrigon.com
• Samsung has agreed to acquire Viv, an AI-based assistant that was created by engineers behind Siri. No financial terms were disclosed. Viv had raised over $20 million in VC funding from firms like Iconiq Capital, Horizons Ventures and Pritzker Ventures. Read more.
• Google and Walt Disney Co. are not expected to make takeover bids for Twitter (NYSE: TWTR), according to Recode. Read more.
• McDonald’s Corp. (NYSE: MCD) has agreed to sell 20-year franchise rights to its Malaysia and Singapore stores to Reza Food Services of Saudi Arabia for upwards of $400 million, according to Reuters. Read more.
• Shenzhen Qianhai Financial Holdings and Shenzhen Investment Holdings Corp. have agreed to buy Singapore-based reinsurance group ACR Capital Holdings at a reported value of around $1 billion. Read more.
FIRMS & FUNDS
• Corazon Capital, a Chicago-based early-stage VC firm, has raised $37 million for its second fund, according to an SEC filing.
MOVING IN, UP AND ON
• Steve DeAngelis has joined FS Investments as EVP and head of distribution. He previously was with Goldman Sachs Asset Management and head of U.S. advisor solutions. www.fsinvestments.com
• David Lipkin has joined McDermott Will & Emery as a Menlo Park-based partner focused on tech and life sciences M&A. He previously was with Morrison & Foerster. www.mwe.com
• Christian Mariager has joined consumer-focused private equity firm L Catterton as an operating partner in Europe. He previously was CEO of the parent company of Danish retailer Flying Tiger. www.lcatterton.com
• Giles Tucker has rejoined Harris Williams & Co. as a managing director in the firm’s industrials group. He previously spent 13 years with the middle-market investment bank, before leaving to co-found Blue Edge Capital. www.harriswilliams.com
• Brian Wilson is delaying plans to join The Carlyle Group as a senior advisor to the firm’s Asia buyout team. Now he won’t come aboard until next April, when his term officially ends as chairman of Australia’s Foreign Investment Review Board. www.carlyle.com
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