Smart Business Dealmakers

CMU’s Lynn Banaszak: Priorities are shifting, but innovation interest remains strong

Fri, 26 Jun 2020 11:07:58 Z

Despite the uncertainty in today’s economy and M&A market, investors are still very interested in preserving their deal pipelines — continuing to build on the promise of the portfolio of ideas already in development, says Lynn Banaszak, executive director of the Digital Transformation and Innovation Center at Carnegie Mellon University.

“There’s probably a sense that we don’t want to start all kinds of new things in a different development pipeline,” Banaszak says. “But can we apply and input new ideas into the technology pipelines that are already invested in, and can we broaden the focus of things where we already churn and we already have domain expertise and we already have big thinkers and corporate partners convening together?”

Although investors are thinking more broadly about their desired outputs, they’re focused most on protecting their current technology development pipelines to push to a deployable outcome, she says. It’s not the time to start fresh.

While everyone has a level of caution, she sees investors weighing their levels of priority. Technology development is already volatile and time consuming. It’s critical to determine which can be truly realized so it doesn’t die on the vine.

Banaszak spoke with the Smart Business Dealmakers podcast about digitization, innovation and what’s next for businesses. Here are some excerpts from the conversation.

Listen to the full interview

What are you hearing about the current appetite for dealmaking?

I think that what I’m not hearing is a stop or a disinterest in dealmaking.

…The kinds of deals that our partners would be interested in are the kinds of ideas that are around just-in-time solution-making and figuring out how to upgrade strategic risk management, and using this interesting ideation and university design thinking to come up with interesting ways to not just talk about the what’s next in artificial intelligence tools, but to actually build more of those tools.

And so, the dealmaking-type conversation that I’m hearing (is) around telemedicine and tech solutions at large and figuring out how to tangibilize predictive modeling. And certainly, as I mentioned before this idea of contact tracing, and not only being able to see when a crisis like this might be bubbling up by using predictive models but being able to deploy ways that we can use digital transformation to interact with each other more.

More and more the interest in this solution creation and therefore maybe potential dealmaking is not only a direct-to-consumer conversation that we’re having, but a business-to-business conversation that I think we’re having more in this crisis than we’ve had in the past.

Telemedicine and predictive modeling were already on the horizon. Have they become more of necessity?

I think that’s right. Even if people still don’t think it’s an absolute necessity, I think that they realize it is an absolute priority to figure out the level of necessity in the future that we’re going to need for these things.

But also, what the crisis has done for people is in those places where were we tentative about allowing technology to take the lead — having more of a wait-and-see attitude — I think people are now saying, ‘Well, my parents would have never six months ago let someone drop groceries off on their front porch. They would have never let strangers interact with them in these daily operations.’ And now suddenly in very short order, something as simple as that has become a norm — particularly for vulnerable populations.

And so, we’re seeing the same thing. Because the perspective has shifted, I think we now have a bigger appetite or a willingness for doing things in the now, and figuring it out as we go, as opposed to watching and waiting and allowing the thought leaders to figure it out all the way to the end of the game. This idea that we have a willingness to buy into the things that we’ll figure out as we go definitely feeds into this entrepreneurial spirit of the innovators that we see.

This idea of more starting with a clarity of purpose and then matching the technology to get to you to that place.

OverDrive to buy RBmedia assets

Tue, 23 Jun 2020 13:00:00 Z

OverDrive, a Cleveland-based digital reading platform for libraries and schools, is acquiring the assets of RBmedia’s library business, including the RBdigital platform in North America, the United Kingdom and Australia. The terms of the acquisition were not announced.

The acquisition will bring enhanced content and features to the OverDrive platform, enabling it to better serve the needs of libraries around the world, including access to new release Recorded Books audiobooks. Moreover, OverDrive will be exploring the addition of popular RBdigital services like digital magazines from ZINIO to the OverDrive platform.

As the owner of both RBmedia and OverDrive, KKR is uniquely positioned to facilitate this transaction and help bring libraries the best solutions possible.

The terms of the acquisition were not announced.

“Combining the RBdigital library business with OverDrive’s industry-leading technologies will greatly benefit libraries and their readers worldwide,” OverDrive founder and CEO Steve Potash said, in a statement. “We’re proud to enhance our value proposition for libraries by delighting readers with this new content on the award-winning Libby and Sora reading apps.”

There will be no change to RBmedia’s publishing businesses which will continue to supply their titles to libraries and direct-to-consumer services worldwide. These brands include Recorded Books, Tantor Media, HighBridge, Kalorama Audio, ChristianAudio, Gildan Media, GraphicAudio, W.F. Howes in the United Kingdom and Wavesound in Australia.

GNC to restructure or be sold

Tue, 23 Jun 2020 12:00:00 Z

GNC Holdings Inc., a Pittsburgh-headquartered global health and wellness brand, and certain of its North American entities, secured lenders and key stakeholders have agreed to pursue a dual-path process that will allow the company to restructure its balance sheet and accelerate its business strategy through Chapter 11 of the U.S. Bankruptcy Code. The company could be restructured or sold.

U.S. and international franchise partners and all corporate operations in Ireland are separate legal entities and are not a part of the filing. GNC and all of its subsidiaries remain open for business.

GNC enters this dual-path process with a signed restructuring support agreement that is executed by more than 92 percent of term lenders and 87 percent of ABL FILO lenders, reaching an agreement on a pre-arranged standalone plan of reorganization.

Additionally, GNC, a significant majority of the supporting secured lenders and Harbin Pharmaceutical Group Holding Co. Ltd., an affiliate of GNC’s largest shareholder, have also agreed in principle for the sale of the company’s business. The term sheet outlines a $760 million purchase price, which would be executed through a court-supervised auction process at which higher and better bids may be presented. If the sale is consummated, it would be implemented instead.

GNC expects to confirm a standalone plan of reorganization or consummate a sale that will enable the business to exit from this process in the fall of this year.

Also, GNC has secured approximately $130 million in additional liquidity through a commitment from certain of its term lenders to provide $100 million in “new money” debtor-in-possession financing, and approximately $30 million from certain modifications to the existing ABL credit agreement.

Over the past year, GNC has been executing a store portfolio optimization strategy to close underperforming stores, while continuing to invest in omnichannel and brand strategies to better meet consumer demand. GNC expects to accelerate the closure of at least 800 to 1,200 stores, which will allow the company to invest in the appropriate areas to evolve for the future, better positioning GNC to meet current and future consumer demand around the world.

WESCO completes Anixter merger

Mon, 22 Jun 2020 12:00:00 Z

WESCO International Inc., a Pittsburgh-headquartered provider of business-to-business distribution, logistics services and supply chain solutions, has completed its merger with Anixter International Inc., creating a global B2B distribution and supply chain solutions company.

Upon completion, Anixter became a wholly owned subsidiary of WESCO International.

Anixter’s shares ceased trading prior to the market open on June 22, 2020, and each share of Anixter common stock has been converted into the right to receive $72.82 in cash (without interest), 0.2397 shares of WESCO common stock, and preferred stock consideration consisting of 0.6356 depositary shares. Total consideration per share of Anixter common stock was about $97.93.

The combined company generated pro forma 2019 revenue of more than $17 billion and is a leading electrical and data communications distributor in North America. The increased scale enables the combined company to accelerate digitization strategies and provides a platform for growth in attractive international markets.

WESCO expects to realize annualized run-rate cost synergies of over $200 million by the end of year three through efficiencies in corporate and regional overhead, optimization of the branch and distribution center network, and productivity in field operations and the supply chain. In addition, WESCO expects incremental sales growth opportunities to result by cross-selling the companies’ complementary product and services offerings to an expanded customer base and capitalizing on the enhanced capabilities across both networks.

WESCO will utilize the strength of the combined company’s cash flows, including significant synergies, to reduce its leverage quickly and expects to be within its long-term target leverage range of 2x to 3.5x within 36 months.

Barclays served as financial adviser to WESCO, and Wachtell, Lipton, Rosen & Katz served as legal adviser.

Centerview Partners LLC served as lead financial advisor and Wells Fargo Securities LLC also served as financial adviser to Anixter, and Sidley Austin LLP served as legal adviser.

Installed Building Products buys Nationwide Gutter

Mon, 22 Jun 2020 11:00:00 Z

Installed Building Products Inc., a Columbus-based national installer of insulation and complementary building products, has acquired Nationwide Gutter LLC, which expands its presence to multifamily and commercial customers throughout Texas and surrounding states.

Founded in 1998, Nationwide Gutter is headquartered outside of Dallas, and provides gutter installation and repair services primarily to multifamily and commercial customers.

“I am excited that IBP is now in a position to restart closing transactions from our strong pipeline as economies and our markets rebound across the country,” Chairman and CEO Jeff Edwards stated. “With approximately $5.2 million of annual revenue, Nationwide Gutter expands our presence to multifamily and commercial customers throughout Texas and in surrounding states. On behalf of everyone at IBP, I’d like to welcome the Nationwide Gutter team to our company.”

IBP is one of the nation’s largest new residential insulation installers and is a diversified installer of complementary building products, including waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors and other products for residential and commercial builders located in the continental United States. The company offers its portfolio of services for new and existing single-family and multi-family residential and commercial building projects from its national network of over 180 branch locations.

Group Management Services buys Corporate Business Solutions

Fri, 19 Jun 2020 10:00:00 Z

Richfield, Ohio-based Group Management Services Inc. has acquired Corporate Business Solutions, a Georgia human resources outsourcing provider. The transaction will further extend GMS’ client base outside of Ohio and increase its presence in the Southeast.

The acquisition will add about 70 clients and 3,500 worksite employees to GMS.

CBS was founded more than 20 years ago as a third party 401(k) administrator, developing over time into handling a full array of HRO services.

GMS started in the Cleveland area in 1996, eventually expanding into Columbus and Cincinnati, and now has 10 offices nationwide. GMS provides a suite of comprehensive HR solutions, allowing clients to focus on core business. These services include payroll, human resources, risk management and benefits.

“We’ve been trying to expand our footprint outside of Ohio and have been showing some success in the past five years," GMS President Mike Kahoe stated. “In 2014, we were 99 percent Ohio-based. Today we are 90 percent Ohio-based and this will move us closer to 80 percent, making us a more diverse company.”

GMS plans to continue its expansion and grow organically and through acquisitions moving forward.

Champion ONE merges with Approved Networks

Wed, 17 Jun 2020 10:00:00 Z

Champion ONE, a Cleveland-headquartered designer, marketer and supplier of optical networking components worldwide, has merged with Orange County, California’s Approved Networks and its affiliate, U.S. Critical, which provide programming, testing and distribution of OEM alternative optics.

The combined entity, which will continue to operate under the Champion ONE, Approved and U.S. Critical brands, will be headed by Pete Kirchof, Champion ONE’s executive chairman. Kurt Dunteman, Approved Networks’ co-founder and CEO, will serve as chief revenue officer of the unified company.

The company will feature expanded product offerings and leverage its growing team to service its domestic and international customer base.

Kirchof noted that, “Similar to Champion ONE, Approved Networks has achieved significant growth since its inception, in large part due to its commitment to listening to customers and delivering consistent operational excellence. The decision to merge the companies was based not only on the compelling business synergies, but by the exceptional cultural fit, shared operational ethos, and relentless dedication to customer service.”

Champion ONE is a designer, marketer and supplier of optical networking components worldwide. Founded in 1992, Champion ONE is headquartered in Cleveland, with additional offices in Atlanta, Dallas, Denver, Omaha and Silicon Valley.

Equitrans Midstream, EQM complete merger

Wed, 17 Jun 2020 09:00:00 Z

Equitrans Midstream Corp. and EQM Midstream Partners LP have completed the acquisition of all of the outstanding common units representing limited partner interests in EQM that it did not already own.

In addition, EQM has completed the redemption of $600 million aggregate principal amount of outstanding EQM Series A perpetual convertible preferred units and that all remaining EQM Series A perpetual convertible preferred units were exchanged for ETRN Series A perpetual convertible preferred shares.

“In late 2018, we began our corporate simplification immediately following our launch as a standalone midstream company, and today, Equitrans Midstream emerges as a single C-Corp structure with strong, clear corporate governance and a broader investor base,” Chairman and CEO Thomas F. Karam said, in a statement. “Equitrans is built to be resilient in any environment, highlighted by our long-term firm contracts and our ability to generate significant free cash flow. We are committed to efficiently deploying capital to create and deliver greater value to shareholders, as well as to being among the leading ESG companies in the midstream sector.”

Based in Canonsburg, Pennsylvania, Equitrans Midstream has assets in the Appalachian Basin and is one of the largest natural gas gatherers in the U.S. With a 135-year history in the energy industry, ETRN was launched as a standalone company in 2018 and, through its subsidiaries, has an operational focus on gas gathering systems, transmission and storage systems, and water services assets that support natural gas producers across the Basin.

ETRN is the parent company of EQM Midstream Partners LP, a limited partnership formed to own, operate, acquire and develop midstream assets in the Appalachian Basin. As one of the largest gatherers of natural gas in the U.S., EQM provides midstream services to producers, utilities and other customers through its strategically located natural gas transmission, storage and gathering systems, and water services to support energy development and production in the Marcellus and Utica regions. EQM owns approximately 950 miles of FERC-regulated interstate pipelines and also owns and/or operates approximately 1,900 miles of high- and low-pressure gathering lines.

The Pittsburgh Steelers have new minority owners

Mon, 15 Jun 2020 12:00:00 Z

The owners of the Philadelphia 76ers and New Jersey Devils, Josh Harris and David Blitzer, have reportedly acquired small stake of less than 5 percent in the Pittsburgh Steelers, according to Bloomberg News. As part of the ownership group, the two will be passive investors with no input on operations.

No detail on price were available, but Forbes estimates the overall team value as $2.8 billion.

In addition to the 76ers and Devils, the Wall Street PE duo own Newark’s Prudential Center and the Crystal Palace soccer club of the English Premier League.

The Steelers are controlled by the sons of team founder Art Rooney, Bloomberg reports. Other investors include hedge fund manager Rob Citrone, former Illinois Gov. Bruce Rauner and John Stallworth, who played for the team in the 1970s and ’80s.

Carolina Panthers owner and Pittsburgh native David Tepper owned a similar-sized stake to Harris and Blitzer before he purchased the NFL team in 2018 for nearly $2.3 billion.

Peca Labs raises venture funding

Fri, 12 Jun 2020 12:00:00 Z

Peca Labs Inc. recently raised $587,465 of venture funding from undisclosed investors, PitchBook reports. The Pittsburgh company, which spun out of Carnegie Mellon University and has raised $5.69 million through five rounds, is developing synthetic cardiovascular devices intended to improve the treatment of cardiac defects.

The company’s devices consist of a valved shunt that can be used for the treatment of hypoplastic left heart syndrome, enabling pediatric surgeons to avoid multiple open heart surgeries in children over the course of their pediatric years.

The business that was founded in 2012 is led by co-founder and CEO Doug Bernstien.

ChromoCare’s Hugh Cathey: It’s time for careful, creative thinking

Fri, 12 Jun 2020 10:00:30 Z

CEO Hugh Cathey expects his investor-owned genetics company ChromoCare will have to adjust its financing after COVID-19 caused business to decrease 50 percent.

“We’re going to have to restructure our equity base and our debt base to be more in line with the fact that original expectations may not be met,” he says. “That’s going to be a real challenge, and I think a lot of companies are going to be in the same situation.”

Cathey is also concerned as an investor. He’s noticed slower decision-making and an increased focus on synergy dollars with potential acquisitions, such as a 50-person business buying an equal-sized company with the idea of bringing the total number of employees down to 60 or 70.

“That kind of thinking would be standard in large company acquisitions, but in the world I operate in, which is companies that are 50 to 100 employees, it’s painful,” Cathey says. “It’s very painful to think of the fact that you might make a decision to acquire a company that’s going to result in the loss of 20 or 25 jobs, knowing that many of the large companies out there are going to be right-sizing significantly.”

Cathey spoke with the Smart Business Dealmakers podcast about what he’s seeing in today’s market through the lens of both business owner and investor.

Listen to the full interview

How should entrepreneurs be refocusing their attention and priorities during the COVID-19 crisis?

The No. 1 thing is that we always say cash is king, whether it’s my business ChromoCare or whether it’s General Motors. Cash is king. We say that, but we don’t always conduct our businesses that way.

So, I believe that companies are going to be a little more debt adverse. A lot of the debt holders have been very patient, whether it’s landlords or vendors, and I’m not sure that we can expect that to be the case for the long haul. Companies are going to need to start to conserve cash more than ever, so that they have a cushion for payrolls and the other things that can’t be put off during a time like this.

I’ve been able to continue to fund my company out of my pocket, but that certainly has a time limit on it, and I wouldn’t want to have to go through that again. Our focus is going to be on hoarding cash as we move forward, and I think a lot of other companies are going to feel the same way.

Where should those looking to raise capital focus their efforts during the cap raise?

As I said, I think investors are taking a longer time, whether they’re venture capital, private equity, even angel investors. I circulate among all three of those. People are taking a longer time to make decisions about things, and so entrepreneurs who need capital to grow their companies are going to have to get more creative than they have in the past.

Things such as seller financing that might have been 20 percent of a deal in the past are maybe going to have to become 50 percent in the future. If people are able to maintain credit ratings, then they may have to be looking at bank debt. For the most part in entrepreneurial transactions, you don’t think of traditional bank debt as a resource, but it may have to be.

All of these issues may create some new pools of investors. For instance, take a large health system. A lot of the work that I do is in health care-related businesses, but we are hearing some of the large health systems, where they own 10, 15 hospitals in a geographic region, are pulling together internal venture funds. And that is not necessarily a place I would have looked to for capital nine months ago, or even six months ago, but those may be resources now.

Additionally, expanding one’s network among very high-net-worth individuals that have interest in a particular industry sector is an option. I think they are going to be having a lot of deals throw at them, more than they would have in the past, simply because it’s going to be harder for some of us to find private equity financing, if that’s what our pond of opportunities is in. Or, venture capital.

Incline’s LYNX buys FRSTeam

Thu, 11 Jun 2020 09:00:00 Z

Pittsburgh-based private equity firm Incline Equity Partners’ portfolio company, LYNX Franchising has further expanded its commercial services brand offering through the acquisition of FRSTeam, which has its corporate headquarters in Hayward, California. FRSTeam focuses on disaster recovery, specializing in damage from smoke, fire, water and mold.

Based in Atlanta, LYNX is a multi-brand franchise platform with B2B services. The company provides commercial customers cleaning services, virtual and office space services and now restoration services.

“We are proud to provide a robust platform that supports the growing needs of our franchisees,” Incline Senior Partner Justin Bertram said, in a statement. “We are building the premier B2B services franchising platform to help small business owners and entrepreneurs successfully operate and grow their businesses. We will continue to add brands with consistent demand and attractive growth potential that can be fueled through our platform.”

Incline, which invests in manufacturing, distribution and business services companies, generally seeks growing companies with enterprise values of $25 million to $450 million. Incline’s typical investment types are ownership transitions for privately held businesses, buyouts and corporate divestitures within the U.S. and Canada.

Nationwide invests in Planck

Wed, 10 Jun 2020 12:00:00 Z

Nationwide recently made a venture capital investment in Planck, which has created an artificial intelligence-driven data platform for commercial insurance. The funding comes from Nationwide’s $100 million venture capital investment fund.

The New York City-based startup raised $16 million in total for the Series B round that was led by Team8 Capital, according to TechCrunch. The startup’s existing investors — Viola FinTech, Arbor Ventures and Eight Roads —participated, while Nationwide and Hannover Digital Investments joined as strategic investors.

Founded in 2016, Planck seeks to streamline the commercial producing processes – providing real-time data insights for small-and-medium business segments across the U.S.

“After assessing several companies in the marketplace, we quickly determined Planck’s AI platform provides faster and more consistent data for commercial insurers like Nationwide,” stated Erik Ross, leader of Nationwide’s venture capital and mergers and acquisitions teams. “We’re impressed with the founding team’s experience building value for insuretech companies and look forward to supporting Planck’s growth.”

Nationwide’s venture capital team has made several recent investments, including Deep Sentinel, Vesta Healthcare, KINETIC, Upstream Security, Socotra, Betterview, Nexar, BlueVine, blooom, Insurify, Next Insurance, Matic and Sure.

Chemtron buys Vexor Technology

Wed, 10 Jun 2020 12:00:00 Z

Chemtron Corp., a portfolio company of Kinderhook Industries LLC, has acquired Vexor Technology LLC, a regional provider of non-hazardous waste processing services and alternative energy solutions. Vexor represents the first add-on acquisition for Chemtron and Kinderhook’s 46th environmental services transaction. Financial terms of the transaction were not disclosed.

Avon-based Chemtron provides hazardous and non-hazardous waste management, including a diverse range of disposal solutions to hazardous and non-hazardous waste generators.

“We are excited to welcome the employees of Vexor onto the Chemtron team” Chemtron CEO Rob Swords said, in a statement. “Chemtron provides a diverse range of end-to-end sustainability focused waste disposal solutions to our customers. The combination with Vexor expands our presence further into the non-hazardous alternative energy solutions market and will make us a top choice for waste generators.”

Founded in 1999 and headquartered in Medina, Vexor provides waste processing services for non-hazardous liquid and solid waste along with alternative energy solutions for waste generators through its proprietary engineered fuel.

“The team at Vexor is pleased to join the Chemtron group of companies.” says Mario Romero, who will be joining Chemtron as COO post-close. “Our combined customer base will benefit greatly from the expanded range of services and the ability to provide comprehensive waste treatment solutions. We are eager to participate in, and contribute to, Chemtron’s continued growth.”

Brian Surane will also take on the role of vice president of sales for the combined company.

Kirkland & Ellis LLP served as legal counsel to Kinderhook. Financing for the transaction was provided by Comerica Bank.

Kinderhook is a private investment firm, based in New York, that manages over $3.1 billion of committed capital. With more than 235 investments and follow-on acquisitions since inception, Kinderhook’s investment philosophy is to match unique, growth-oriented investment opportunities with financial expertise and its network of operating partners.

Othot raises $1.32M in funds

Wed, 10 Jun 2020 12:00:00 Z

Othot Inc. recently raised $1.32 million of venture funding in the form of convertible debt from undisclosed investors, according to PitchBook. The Pittsburgh developer of cloud-based software designed for predictive analytic services has raised $8.83 million to date.

Founded in 2014, Othot’s cloud-based platform offers business advisory services using predictive analytics, data intelligence and assessments that merge data science with advanced analytics, enabling higher education organizations to discover insights from their data and improve their retention rate.

The company is led by President and CEO Fred Weiss who was appointed to the role in February. Andy Hannah, the founding CEO, is helping the business develop industry partnerships as co-founder, board member and chief partnership officer.

Aware raises $2.2M in venture funding

Wed, 10 Jun 2020 12:00:00 Z

Nullable Inc., dba Aware, recently raised $2.2 million in venture funding in the form of convertible debt from undisclosed investors, bring the Columbus company’s total funds raised to date to $11.1 million through five rounds, PitchBook reports.

Founded in 2014 and formerly knowns as Feedcop, Wiretap, Null Ltd, Aware provides an enterprise social security platform intended to offer security services for enterprise social networks and collaboration tools. The company’s platform provides insight and knowledge into employee sentiment and potentially harmful or inappropriate communication and enforces IT and HR policies in near real-time, offering organizations with human-centric insights to enhance employee engagement and reduce the risk of unsafe behavior on enterprise collaboration tools.

Aware is led by CEO Jeff Schumann, who co-founded the company with Matt Huber, Shawn Domer and James Tsai.

BroadStreet Partners raises $100M in mezzanine financing

Fri, 05 Jun 2020 12:00:00 Z

Penfund, an independent provider of junior capital to North American middle market companies in Toronto, recently completed a $100 million second lien debt and equity co-investment in Columbus-headquartered BroadStreet Partners Inc., a portfolio company of Ontario Teachers’ Pension Plan Board.

Founded in 2000, BroadStreet has grown to become the 14th largest national insurance broker in the U.S. by supporting its partners’ organic and tuck-in acquisition growth strategies. The company’s approach is centered around a co-ownership model, allowing agency leaders to retain significant independence while participating in the benefits of being part of a larger agency network. BroadStreet specializes in offering tailored solutions to small and middle market commercial clients and is active across multiple property and casualty and employee benefits business lines.

“We are delighted to partner with Ontario Teachers’ and support the continued growth of BroadStreet. We believe there is considerable white space remaining for the company to keep executing on its differentiated consolidation strategy while delivering value to insurance carriers and clients,” Penfund Partner Joe Mattina stated.

Performance Dealerships buys Bobby Layman Cadillac GMC

Wed, 03 Jun 2020 12:00:00 Z

The Performance Columbus Family of Dealerships including Honda Marysville, Honda Marysville Motorsports, Toyota Direct and Performance Chrysler Jeep Dodge RAM (Georgesville & Delaware) has acquired Bobby Layman Cadillac GMC of Fairfield County, Ohio.

Performance GMC Columbus and Performance Cadillac Columbus will employee 40 individuals in sales, finance and service positions with plans to expand in the coming months.

“We are excited to open our first location in South Central Ohio and look forward to contributing to business and the local community,” Dealer Principal Bruce Daniels stated. Immediate plans include a partnership focusing on workforce development with the Eastland-Fairfield Career Center and supporting local initiatives through the group’s charitable organization, IMPACT60.

Salon Lofts raises funds

Wed, 03 Jun 2020 09:00:00 Z

Salon Lofts Group LLC, a Columbus-headquartered operator of a beauty parlor chain, recently received $1.06 million of development capital from undisclosed investors, according to PitchBook.

The PE backed company was founded in 2003 and is led by Steve Schillinger.

Volkswagen’s $2.6B investment in Argo AI closes

Tue, 02 Jun 2020 12:00:00 Z

Volkswagen AG’s investment in Argo AI has closed, which solidifies the Pittsburgh-headquartered business’s capital position and differentiates it as the only self-driving technology platform company with partnerships and commercial agreements, via Ford and Volkswagen, for deployment across the U.S. and Europe.

The deal announced in July 2019 stated that Volkswagen would invest $2.6 billion in Argo AI by committing $1 billion in funding and contributing its Autonomous Intelligent Driving company, valued at $1.6 billion.

The Munich, Germany-based team, serving as the company’s European headquarters, brings Argo AI’s employee base to more than 1,000 people worldwide.

Munich is Argo AI’s fifth engineering center, building on the teams in Pittsburgh, Detroit, Palo Alto, California, and Cranbury, New Jersey. The company also maintains fleet operations in Miami, Washington, D.C., and Austin.

VentureOhio closes; young professional program continuing

Mon, 01 Jun 2020 12:00:00 Z

VentureOhio’s board has decided to sunset the nonprofit trade association, which advocated for increased capital and greater collaboration. The board made the decision to wind down the organization following CEO Falon Donohue’s departure earlier this year, assessing the impact of COVID-19 and recognizing Ohio’s regional entrepreneurial support organizations are well-positioned to advance VentureOhio’s mission.

“The timing of this transition made sense to us,” VentureOhio Chair Mark Kvamme said, in a release. “VentureOhio has made a significant impact as Ohio venture investment is at an all-time high, its partner organizations are advocating on issues and challenges related to access to capital, and Ohio is much better positioned for success than before VentureOhio was formed in 2013.”

VentureOhio helped shape and connect Ohio’s VC community via its annual Venture Dinner — which attracted top investors, entrepreneurs, policy makers and innovators — as well as its Venture Report, which provided a detailed look at Ohio investment activity highlighting the people and companies elevating Ohio’s economy. VentureOhio’s regional partner organizations will now consider how best to continue these efforts in 2020 and beyond.

While VentureOhio is transitioning, its NextGen program will continue under the name VentureNext as a collaborative program of partner organizations in Cincinnati, Cleveland and Columbus, thorough CincyTech, JumpStart and Rev1 Ventures, respectively.

The program, which provides connections and mentorship opportunities to foster the next generation of investors to support startup activity in the Midwest, consists of more than 100 members representing 75 venture funds with more than $5 billion in assets under management.

ALung closes $18.52M funding round

Mon, 01 Jun 2020 12:00:00 Z

ALung Technologies Inc. recently completed its sixth round of venture funding, which resulted in $18.52 million from Audrey’s Kitchen and other undisclosed investors, PitchBook reports. The transaction included $2.26 million in total new debt. ALung has raised $112.6 million to date.

The Pittsburgh company manufactures an innovative lung assist device designed to provide artificial lung technology for patients with respiratory failure. The company’s device is designed to remove carbon dioxide from and deliver oxygen to a patient’s blood independently of his or her lungs, enabling patients to avoid mechanical ventilator.

Innovatus Imaging assets sold to 626

Fri, 29 May 2020 09:00:00 Z

Delray Beach, Florida-based 626 Holdings LLC, a third-party company in the health care technology management market, has acquired the CR and DR business of Innovatus Imaging, which is headquartered in Pittsburgh. The transaction should provide a national reach to 626’s established radiology service businesses in the eastern U.S.

“Innovatus made this move to better prepare us to grow our core businesses,” Innovatus CEO Dave Johnson stated. “We selected a partner that would take great care of our customers and would be a long-term, successful home for our engineers servicing this market.”

626’s purchase of Walsh Imaging two years ago, ISS in late 2019 and the Innovatus CR-DR business follows its approach to base acquisitions — family fit and customer need. This method has proven to be successful as they were able to double Walsh Imaging’s business within two years and they have already begun to scale the ISS business. 626 plans to do the same with the Innovatus CR-DR business.

Advocate Solutions sold to KSM Consulting

Fri, 29 May 2020 08:30:00 Z

Indianapolis-headquartered consulting firm KSM Consulting has acquired Advocate Solutions, a 25-year-old Columbus consulting firm specializing in public assistance contact centers, modernizing legacy applications and managing technology programs for state and local government agencies, including health and human services. The transaction expands KSMC’s reach.

KSMC will absorb Advocate clients across Michigan, Massachusetts and New York and continue its contact center partnership with Cincinnati Bell Technology Services. The acquisition will add 28 data and technology professionals with experience serving public sector clients to KSMC’s workforce. KSM Consulting will maintain offices in Columbus and Lansing, Michigan.

Founded in 2008, KSMC serves more than 350 public and private sector organizations throughout the United States. KSMC specializes in technology, data analytics and management consulting.

Jay Katarincic shares the methods behind early stage VC investing

Thu, 21 May 2020 13:48:23 Z

With early stage investing, it’s not about hitting every single time in order to have a successful fund, says Jay Katarincic, managing director of venture capital firm Draper Triangle.

If you lose money on several portfolio companies in the fund, you can make that up with the 20 or 30 times your investment you generate on another startup.

“It’s way more an art than a science, and it starts and it ends with the people that you’re investing in,” Katarincic says. “We’re in the people business, and as great as a piece of technology we may find is, and as defensible as it may be, if we don’t have people that can execute, it doesn’t matter.”

An investor has to ask about a company, is it solving a big problem, is it solving it simply, and does it have really great talent?

For more than 20 years, Draper Triangle has been one of the few venture capital firms in the Pittsburgh region. The firm, which is raising its fourth fund, focuses on early stage investing in disruptive technology, leading or co-leading Series A rounds and serving as active board members.

Here are some other insights Katarincic shared at the Smart Business Dealmakers Conference in March.

How do you split your time between looking for new deals versus enhancing or maximizing the value of your portfolio companies?

That’s a great question and it’s probably one of the big mysteries in our business. In that particular, the senior guys spend probably 80 to 90 percent of their time on their existing portfolio.

Everybody thinks that we’re out there looking at deals and doing diligence on new deals, when in reality, I probably spend 90 percent of my time working my existing companies. Right now, I have six companies that I’m on the board of, and a day a week on each of them is not unusual.

When evaluating a team, are you more focused on the CEO or the CFO?

100 percent on the CEO. A lot of our businesses that we invest in don’t have CFOs yet. They have a part-time CFO or a finance person, who’s not going to be the CFO.

When I diligence a company, the first thing I do is rip out the financial staple and throw it back in the folder. I know that I could probably make up the numbers as well as whoever made them up, because they’re all based on assumptions.

How common is it to invest in the technology and the founder, but eventually determine the company needs a different CEO? How do you handle that?

That’s where I think every venture guy should forget about getting their MBA, forget about working in a technology company. They should be a psychologist. At the end of the day, that’s what we spend most of our time doing.

We’ve successfully sold 31 of our businesses, and only in one case was the initial CEO that we invested in been the CEO at the time of the sale.

It’s rare because they’re typically technologists. You walk through all the different stages of a company’s life, and the technology becomes less important as it transitions to a sales and marketing organization. So, the CEO is vitally important at the beginning to be the Pied Piper, but over time, we typically bring in hired guns.

How do you source your deals?

Our main sources of deals is existing CEOs. In the technology startup world, the CEOs have a really strong network. It’s an informal network but a really strong one. A good entrepreneur will talk to another entrepreneur who will talk to another entrepreneur who will get them to us. That’s really our best source.

Our next source is all the advisers — the lawyers, the accountants, the bankers. They’re obviously a terrific source, and we try to be very responsive to them because they’re a big part of our lifeblood.

The last one, and probably the most important one, is just crawling the halls of Carnegie Mellon, University of Pittsburgh, the incubators that are around, and making sure that we are seeing every transaction that’s out there.

How do you whittle down your pipeline to actual transactions?

The quick noes are the easy ones. When it’s out of focus — we have a pretty clear focus where we only invest in certain types of businesses. If it’s out of focus, we can dispose of those pretty quickly. Obviously, it gets harder from there.

Last year, we saw 997 deals and we did three.

What’s the advantage of being one of the few VC firms in town?

We can take our time as we watch these companies, so it can sometimes take us six or nine months from first meeting until we invest. We can be patient and get to know them and watch the business mature.

How should entrepreneurs find you?

Truly the best way for an entrepreneur to find us is go to our website, look and say, “OK. It looks like Jay’s done a bunch of education deals and a bunch of medical tech deals. I have a medical tech company. I should go to him versus one of his other partners who does just robotics deals.”