Happy Wednesday. Here’s what we’ve got today…

• A look at the first half’s M&A recovery

• Plus, Vista hands over the keys at Pluralsight

Bouncing back:

Data released last week by Pitchbook show signs of a recovery in global M&A activity through the first half of 2024, pushing past lingering headwinds from higher interest rates, valuation gaps, and regulatory scrutiny.

Deal volume through the end of Q2 is tracking 10-15 percent ahead of the same point in 2023 across both deal count and aggregate transaction value—an estimated 21,945 deals worth $1.47 trillion were announced or closed through June.

"We expected 2024 to be a recovery year in M&A given that it almost always rebounds from consecutive annual declines," said Tim Clarke, Lead Analyst for Private Equity at PitchBook. "The recent upturn has been fueled by banks re-entering the market, lending to dealmakers again, and competing with the nonbanks that moved in while they were absent."

This jump in liquidity has provided what amounts to a de facto rate cut for dealmakers, with all-in borrowing costs declining by as much as 100 basis points over the past year in certain pockets of the market. The compression in spreads comes even as most central banks have kept benchmark rates on hold (with the European Central Bank a notable exception).

Private equity activity, which had been more heavily impacted by higher rates, is also on the rebound: sponsors' share of total deal volume jumped to 41 percent in Q2, up from 34 percent in the prior quarter and ending a nearly two-year trend downward.

A notable trend behind the numbers is an uptick in take-privates: Silver Lake topped the table with its $13.0 billion deal for the portion of Endeavor it didn’t already own, and was joined by Permira's $6.9 billion acquisition of Squarespace, Advent International’s $6.3 billion purchase of Nuvei, and Thoma Bravo's $5.3 billion takeover of Darktrace, among a handful of other large deals.

Valuation trends suggest the market may now be on steady ground after the reset over the past two years. The median EV/EBITDA multiple of 9.5x for transactions announced or closed in the first half remained unchanged from the full-year 2023 mark, as did EV/revenue at 1.6x.

A widening gap has emerged between public and private market valuations, however. While transaction multiples have moved sideways (the vast majority of which are private company deals), trading multiples have continued to rise—the S&P 500 median EV/EBITDA multiple jumped by nearly 9 percent over the past 18 months to 14.5x. While far from an exact science, a reversion to the historical public-private valuation spread could mean an upward trend in private valuations through the back half of the year.

• Vista Equity Partners is in talks to cede control of educational software company Pluralsight to lenders including Blue Owl Capital, Ares Management, and BlackRock as part of a debt-for-equity swap.

• Arctos Partners agreed to acquire a majority stake in Hayfin Capital Management, a direct lending-focused asset manager, from British Columbia Investment Management Corporation.

• SK Capital Partners agreed to acquire Parker Hannifin's (NYSE: PH) North America Composites & Fuel Containment Division.

• Canva acquired Leonardo.ai, an Australian generative AI content creation startup.

• American Industrial Partners acquired Veolia North America Regeneration Services, a provider of sulfuric acid and hydrofluoric acid regeneration for refineries, for $620 million.

• AXA IM Prime agreed to acquire a 20 percent stake in Rivage Investment, a Paris-based investment firm focused on European infrastructure direct lending and French public sector financing.

• Bain Capital Insurance invested in 1970 Group, a provider of risk financing solutions.

• Mollitiam Holdings acquired BluRoc, a builder of temporary and permanent access roads and infrastructure, from Platinum Equity.

• CORE Industrial Partners acquired a majority stake in Winky Lux, a NYC-based cosmetics and skincare brand.

• Scantron, backed by Transom Capital Group, acquired C-Net Systems, a Michigan-based IT managed services provider for SMEs.

• SD Worx agreed to acquire F2A, a provider of HR and payroll services.

• Unity Partners invested in Katsam Property Services, a St. Louis-based facility maintenance company.

• Sunland Asphalt, a portfolio company of Huron Capital, acquired Atlanta-based Georgia Paving.

• Acieta, a portfolio company of Angeles Equity Partners, acquired Capital Industries, a Shelbyville, Indiana-based manufacturer of custom robotics systems for material handling and assembly.

Tech, Vertical SaaS, & Misc. Enterprise

• Rhombus, a cloud-managed physical security provider, raised $45 million in Series C funding led by NightDragon, with participation from Bluestone Equity Partners, Caden Capital, Cota Capital, Tru Arrow Partners, and Uncorrelated Ventures.

• Perchwell, a workflow platform for residential real estate, raised $25 million in Series B funding led by Lux Capital, with participation from Starwood Capital Group, Flex Capital, Stellar MLS, REcolorado MLS, and California Regional MLS.

• Axiad, a passwordless authentication platform, raised $25 million in new funding from Invictus Growth Partners.

• Credo AI, a Palo Alto-based AI governance provider, raised $21 million in new funding led by CrimsoNox Capital, Mozilla Ventures, and FPV Ventures, with participation from Sands Capital, Decibel VC, Booz Allen Hamilton, and AI Fund.

• Lineaje, a software supply chain security startup, raised $20 million in Series A funding co-led by Prosperity7 Ventures, Neotribe Ventures, and Hitachi, with participation from Tenable Ventures, Carahsoft, Wipro Ventures, SecureOctane, and AlumniVentures.

• Sybill, an AI assistant for sales reps, raised $11 million in Series A funding led by Greycroft, with participation from Neotribe Ventures, Powerhouse Ventures, and Uncorrelated Ventures.

• Clutch Security, a Universal Non-Human Identity (NHI) security platform, raised $8.5 million in seed funding led by Lightspeed Venture Partners, with participation from Merlin Ventures and Cyber Club London.

• Hyperbolic, an AI computing provider, raised $7 million in seed funding co-led by Polychain Capital and Lightspeed Faction, with participation from Chapter One, LongHash, Bankless Ventures, Republic Digital, Nomad Capital, CoinSummer Labs, and Third Earth Capital.

Fintech

• Gradient AI, a provider of AI solutions for the insurance industry, raised $56.1 million in Series C funding led by Centana Growth Partners, with participation from MassMutual Ventures, Sandbox Insurtech Ventures, and Forte Ventures.

• Monto, a B2B payments platform, raised $9 million in seed funding led by Scale Venture Partners, with participation from Verissimo Ventures, F2 Venture Capital, Firsthand Alliance, and Room40 Ventures.

Consumer & Media

• Batbox, a baseball-themed simulator and sports bar concept, raised $7.3 million in Series A funding from Emerging Fund and MG Partners.

• Bee AI, a wearable AI assistant, raised $7 million in new funding led by Exor, with participation from Greycroft, New Wave VC, and Banana Capital.

Healthcare

• Flo Health, a women's health app offering cycle tracking and personalized insights, raised $200 million in Series C funding led by General Atlantic.

• AIRNA, a biotech developing RNA editing therapeutics, raised $60 million in Series A funding led by Forbion, with participation from Ono Venture Investment, Alexandria Venture Investments, ARCH Venture Partners, and ND Capital.

• Montara Therapeutics, a biotech developing combination therapeutics for CNS diseases, raised $8 million in seed funding co-led by SV Health Investors' Dementia Discovery Fund and Two Bear Capital, with participation from Dolby Family Ventures and KdT Ventures.

• Noze, a Canadian breath-based diagnostics startup, raised $5 million in equity funding from the Bill & Melinda Gates Foundation.

Industrials, Greentech, & Other

• Unspun, a developer of 3D weaving tech for apparel manufacturing, raised $32 million in Series B funding led by DCVC, with participation from Lowercarbon Capital, E12, Decathlon, and SOSV.

• Graphyte, a biomass sequestration startup, raised $30 million in Series A funding co-led by Prelude Ventures and Carbon Direct Capital, with participation from Breakthrough Energy Ventures and Overture.

• Hidden Harbor Capital Partners raised $800 million for its third buyout fund.

• Amulet Capital Partners raised $1.2 billion for its third healthcare-focused buyout fund.

• Arcmont Asset Management is raising a €12 billion European direct-lending fund.

• Siddhi Capital raised $135 million for its second food and beverage-focused growth equity fund.

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