Arlington fetches a premium in J&J Worldwide sale, Capstreet buys into heat treatment

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Arlington fetches a premium in J&J Worldwide sale, Capstreet buys into heat treatment

Good morning, Hubsters. Michael Schoeck back with you for the Thursday Wire.

Broadly speaking, business services of all kinds, including industrial services and facilities services, are receiving increased investment from PE firms. Today, we’re seeing this play out in a couple of ways.

First up, Capstreet announced an acquisition this morning.

And I took a deep dive inside a recent exit by Arlington Capital Partners.

And we’ll wrap up with highlights from a Q4 2023 report by KPMG titled, “Better days ahead? M&A trends in private equity,” which looks back on last year and provides a forecast for this year.

Keeping oil warm

In the industrial services sector, Houston-based Capstreet today announced the acquisition of Analytic Stress Relieving, which provides industrial heat treatment services to various industrial companies, including the petrochemical, power generation and refining markets.

For more details on the deal, subscribe to the premium version of the Wire.

Inside the exit

In February, Arlington Capital Partners exited its three-year ownership of J&J Worldwide exited its three-year ownership of J&J Worldwide in a $1.05 billion transactionto CBRE Group in a deal that saw the government facilities service company fetch a double-digit exit multiple, managing partner Michael Lustbader told me earlier this week.

For more background on Arlington Capital, subscribe to the premium version of the Wire.

More deals in store

After a 28.9 percent decline in M&A activity with PE buyers and sellers in 2023, consulting group KPMG expects 2024 deal activity to gain steam to pre-2022 levels. In a Q4 2023 report titled, “Better days ahead? M&A trends in private equity,” KPMG expects “the slowly lifting fog of macroeconomic uncertainty should help boost deal makers’ confidence” this year, buoyed by $2.6 trillion in dry powder from global LP funds.

Upgrade to the premium version of the Wire for more data points.

That’s it for me today. Obey Martin Manayiti will be back tomorrow to wrap up the week with the Friday Wire.

Read the full wire commentary on PE Hub ...

Also of note (may require subscriptions)

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It may be time for infra investors to kick their natural gas habit : Uncertain market conditions, the COP28 agreement and the US’s recent decision to halt LNG exports signal that the lifespan of some of these assets may be shorter than assumed. (Infrastructure Investor)

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ILPA launches quarterly reporting template project: Whatever happens to the SEC rules, the trade group hopes the industry can unite to raise the floor on transparency. (Private Funds CFO)

Real estate secondaries drop to pre-2021 levels from record high: Ares Management data shows deal volume for the asset class fell 21% in 2023 from the record $12.4bn clocked the year prior. (Secondaries Investor)

They said it

“We build our portfolio companies to be ‘strategic must-have assets,’ and selling to strategics is attractive because they buy independent of economic cycles. The sale to CBRE came just before the target was to embark on a two-year period of pursuing accretive add-on acquisitions.”

— Michael Lustbader, managing partner, Arlington Capital Partners on sale of J&J Worldwide