View this email online 

The Wire

Dec. 21, 2021

FFL, Two Sigma Impact acquire stake in Community Medical Services

Morning!

 

A reminder: we’re looking for your recommendations for rock star women in private equity, mostly on the deal side (which has been historically male-dominated). Deadline to get in your recs is January 17, for publication in March. Our annual Women in Private Equity project comprises 10 mini-profiles of highly regarded women in the industry and a feature story about some burning topic around the status of women in the industry.

 

Reach me with questions and recs here at [email protected].

 

Deal: FFL Partners and Two Sigma Impact acquired a majority stake in Community Medical Services, which provides treatment for opioid addiction, writes Mary Kathleen Flynn today on the Hub.

 

CMS operates 45 clinics across nine states, and provides about half its services through telemedicine, Flynn writes. Read more here on PE Hub.

 

So many: This year is wrapping up with a bunch of large single-asset deals closing out. CD&R closed what may be the largest-ever single-asset deal, with its process for Belron. By the way, I have some questions about the Belron process, which comprised two parts: one was a traditional M&A stake sale, and one was the secondary, which allows LPs in CD&R’s tenth fund to cash out of their interests in the asset.

 

Generally in single asset deals, existing LPs can either cash out of their stakes in the asset or re-invest their interests in the asset through a continuation fund set up to continue holding the company. “Re-investing” is different from “rolling” their interests and usually does not include allowing existing LPs to keep their status quo economics that they held in the original fund. I’m not clear if the Belron process allowed for a status quo option or a “re-investment” option. I haven’t heard back from spokespeople yet but will update if I hear.

 

The loss of a status quo option in some of the larger GP-led secondaries deals (mostly single-asset offerings) has caused some consternation among LPs. The counter is that existing LPs in these deals have the opportunity to cash out at what has been a strong price (in today’s environment) or re-invest in what GPs will say is a strong and growing company. A status quo option in such cases is not necessary, they argue.

 

What do you think? Hit me up at [email protected].

 

That’s it for me! Reach me with tips n’ gossip, feedback or your thoughts at [email protected] or over on LinkedIn.

 

Read the full wire commentary on PE Hub ...

Also of note (may require subscriptions)

"Thoma Bravo senior partner A.J. Rohde says public technology companies will remain takeover targets in 2022." (WSJ Pro)

"Jordan Co. has amassed about $5 billion for the largest fund in the private-equity firm's nearly 40-year history, gaining more firepower to back midmarket businesses across various sectors." (WSJ Pro)

"Global Infrastructure Management LLC has agreed to pay a $4.5 million penalty to settle Securities and Exchange Commission charges involving fees and expenses it passed on to investors in at least two of its funds." (WSJ Pro)