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In today's Daily Pitch, you'll find: - Despite headwinds, the US PE middle market thrived in Q2. From exits to fundraising, our analysts break it all down.
- Investment firms haven't been spared in the Great Resignation. New data from a recent J.Thelander-PitchBook survey shows why employees are quitting.
- DraftKings has bid more than $22 billion for its UK peer Entain—but MGM could have something to say about the deal.
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| US PE middle-market dealmaking remains red-hot | | Despite several macroeconomic headwinds, middle-market PE dealmaking in the US has continued its unprecedented run, supported by continued economic recovery and significant capital availability.
In our Q2 US PE Middle Market Report, sponsored by Antares, SRS Acquiom and Baker Tilly, PitchBook analysts break down the middle-market environment of last quarter. A few key takeaways: - Add-ons continued their decade-long trend and increased as a share of PE deals, with middle-market firms pursuing specific strategies toward these acquisitions.
- Even as exits to strategics lagged, attractive valuations and investor confidence led to healthy exit activity in the middle market, especially in sponsor-to-sponsor deals.
- Middle-market fundraising set off at a rapid clip in the first half of 2021, as firms benefited from LPs' robust appetite for private markets exposure.
| | | | | | | | | | VC, PE firms resort to salary hikes amid historic quitting spree | |  | | (Chalirmpoj Pimpisarn/Getty Images) | | | The ongoing tidal wave of employees quitting their jobs in search of more money and flexibility hasn't spared investment firms.
New data shows that 27% of venture capital, corporate venture capital and private equity firms lost a partner or key recruit in 2021, according to a recent J.Thelander-PitchBook survey of more than 760 respondents.
Find out more about where those who resigned went, and how compensation at VC firms changed between 2020 and 2021. | | | | | | | |
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| Analyzing opportunities for expansion-stage business software companies | | In the latest edition of the Road to Next series, Deloitte examines how expansion-stage business software companies are adapting in an era of unprecedented change. Key findings include: - Analysis of how hybrid work models will affect business operations and tax implications
- With a record sum of investment in the year already, how are they making capital allocation choices?
- As they expand, business software companies increasingly face challenges related to evolving digital service taxes—how can they best prepare?
Read it now | | | | | | | |
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| DraftKings makes $22B+ bid for Ladbrokes owner Entain | |  | | (Robert Cianflone/Getty Images) | | | US sports betting group DraftKings has offered to pay £16.4 billion (about $22.4 billion) for London-listed rival Entain, dwarfing an earlier bid from casino operator MGM. With assumed net debt, the deal would have a total value of about $25 billion. - Entain said DraftKings has twice bid to acquire the company, which owns bookmaker Ladbrokes. The first approach, a cash-and-stock offer of £25 per share, was rejected, but the board said it will carefully consider the new offer of £28 per share, a 46% premium to Entain's Monday closing price.
- MGM abandoned its efforts to acquire Entain in January after its £8 billion offer was rejected. The pair have equal stakes in a US sports betting platform, BetMGM, set up in 2018.
- In response to DraftKings' bid, MGM argued that, because of the joint venture, any deal in which Entain or its affiliates own a competing business in the US needs MGM's consent. MGM added that it would seek full control of BetMGM.
| | | | | | | | | | Just weeks after the fall of Kabul, a nascent cryptocurrency economy is already establishing itself in Afghanistan. [Financial Times]
Freshworks went public this week at a $10 billion valuation. From the Indian company's 2010 founding in a warehouse to its fundraising from firms like Sequoia and Tiger Global, a look at how the customer service specialist got here. [Forbes]
A factory in Toronto is using plastic bottles to create outdoor dining structures. Why they could be the future of disaster relief. [Fast Company] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 399 Deals | 1568 People | 429 Companies | 22 Funds | | | | | | |
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| 2012 Vintage Global Growth Funds | | | | | | |
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| Mexico's Kavak grabs $700M at $8.7B valuation | | | Kavak, a used car marketplace based in Mexico, has reportedly raised a $700 million Series E at a valuation of $8.7 billion, making it the second most valuable startup in Latin America. The financing was reportedly led by General Catalyst, with participation from investors including Tiger Global, D1 Capital Partners, Founders Fund and SoftBank. The new financing comes less than six months after Kavak raised a $485 million round at a reported $4 billion valuation. | | | | | | | | Hai Robotics picks up $200M+ | | | | | | | | | | Flyr Labs has raised a $150 million Series C led by WestCap. The company offers an AI-based platform for airlines to forecast demand and set prices. | | | | | | | | SoftBank leads $100M round for StreamElements | | | | | | | | | | Ketch has raised $20 million in Series A1 funding led by Acrew Capital. The Bay Area-based startup offers a platform to help enterprise customers such as Snowflake and Smartsheet manage data privacy and governance processes. | | | | | |
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| Bitcoin miner Genesis raises $431M | | | Bitcoin mining company Genesis Digital Assets has raised $431 million in financing led by Paradigm. UK-based private equity firm Kingsway Capital, which invested $125 million in Genesis in July, also took part in the round. Active since 2013, Genesis has mined over $1 billion in bitcoin. It recently acquired 20,000 mining machines from China's Canaan to scale its North American and Nordic operations. | | | | | | | | Graycliff Partners buys Electro-Mechanical Corporation | | | Graycliff Partners has acquired Electro-Mechanical Corporation, a manufacturer of engineered electrical equipment. Founded in 1958, the Virginia-based company provides medium-voltage electric equipment including switchgears, transformers and custom systems for utility and industrial power infrastructure. Graycliff typically targets manufacturing, business services and value-added distribution companies in the lower middle market. | | | | | | | | LLCP lands In-Place Machining Company | | | Levine Leichtman Capital Partners has purchased In-Place Machining Company, a Milwaukee-based provider of field machining, metrology and diamond wire-cutting services. Founded in 1976, In-Place Machining works with the industrial and manufacturing, naval and marine, hydroelectric, metals and aerospace sectors. | | | | | | | | Pharos acquires cataract surgical outfit | | | Pharos Capital has acquired Vantage Outsourcing, an Illinois-based cataract surgical service provider. Vantage provides logistics support services for cataract and other ophthalmologic procedures across more than 20 states. | | | | | | | | RLDatix expands healthcare presence with Allocate acquisition | | | Five Arrows and TA Associates-backed healthcare software developer RLDatix has acquired Allocate Software, a provider of workforce deployment software to the healthcare industry. UK-based Allocate has 1.2 million monthly users and serves over 800 clients. | | | | | | | | Eagle Merchant Partners lands learning franchise Code Ninjas | | | Eagle Merchant Partners has completed its acquisition of Code Ninjas, the operator of a fast-growing coding franchise for children. Founded in 2016, Code Ninjas currently has 345 learning centers in the US, Canada, and the UK. | | | | | |
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| Toast raises $870M in NYSE debut | | | Restaurant-focused tech provider Toast raised about $870 million in its initial public offering after upwardly pricing its shares at $40 apiece. The stock opened on the NYSE at $65.26, a gain of 63%, giving Boston-based Toast an initial market capitalization of over $37 billion, fully diluted. Toast's top venture capital backers include Tiger Global, with a 12.8% pre-IPO stake, Bessemer Venture Partners (12.5%), T. Rowe Price (6%) and TCV (5.5%). | | | | | | | | Aka Brands raises $110M in IPO, falls short of expectations | | | Summit Partners-backed online fashion line Aka Brands reportedly raised $110 million in its IPO. The company priced 10 million shares at $11 apiece, downsizing from its initial plan to offer 13.9 million shares priced between $17 and $19 a share. | | | | | | | | Imperial Capital eyes sale of Keplr Vision | | | Imperial Capital is exploring a sale of eye care specialist Keplr Vision at a potential deal value of $1.8 billion, The Wall Street Journal reported. The Toronto-based PE firm first backed the company in 2017; Keplr currently supports 281 practices across 35 states. | | | | | | | | The Jordan Company set to offload RFJ Auto Partners | | | The Jordan Company has agreed to sell US auto dealer RFJ Auto Partners to Sonic Automotive, a publicly traded auto retailer that's based in North Carolina. Texas-based RFJ currently owns 33 locations in seven states, generating $2.8 billion in annual revenue during 2020. TJC has backed the company since 2014. | | | | | | | | Birch Hill sells reverse-mortgage provider HomeQ | | | | | | |
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