The 2014 Mergers and Acquisitions Awards
These were the biggest Dallas-Fort Worth deals of the last year.
In the world of Dallas-Fort Worth mergers and acquisitions, call 2014 the year of the energy deal. Some 26 M&A energy transactions involving at least one North Texas party and worth at least $120 million closed last year, according to a D CEO analysis of Thomson Reuters data. The total value of those energy deals— $28.6 billion—outstripped all other M&A industry sectors last year.
While “energy spending will certainly slow in 2015,” says S. Scott Parel, a partner in the Dallas office of Sidley Austin LLP, another observer notes that private equity firms are still sitting on capital—they call it “dry powder”—that will need to be deployed in the sector. “They will be looking to pick up some bargains if commodity prices remain low,” says Amy R. Curtis, a partner in the Dallas office of Thompson & Knight LLP.
And, those lower commodity prices are benefiting other M&A sectors. Chris Converse, the Dallas-based partner and chairman of Gardere’s securities and corporate governance team, says his firm is seeing a number of manufacturing companies in play. “That’s probably part of a larger nationwide trend in which capital has been flowing back into the U.S. manufacturing sector due to a variety of factors, including lower energy and transportation costs,” says Converse, who’s also a member of Gardere’s private equity industry team.
We are proud to honor the companies and the dealmakers who helped make 2014 such a robust year with our 2015 Mergers and Acquisitions Awards, presented by D CEO and the Association for Corporate Growth. On the following pages, you’ll find profiles of the finalists for these awards. We’ll reveal the winners at an event in May.
Our judges for this year’s program were: Tony Banks, director, business development, Hein & Associates; Michael Ehlert, senior vice president and region manager, Capital One Business Credit Corp.; Robert Kibby, shareholder and section head of corporate securities, Munsch Hardt Kopf & Harr PC; Jeff Noland, founder, chief operating officer, and chief financial officer, DartPoints; and Eric Williams, partner, Haynes and Boone. We appreciate their help.
Future Telecom Acquisition by Tower Arch Capital
In 1999, a pair of North Texas entrepreneurs, Don Riggs and David “Jocko” Helmers, launched a Mesquite construction business for the telecommunications and energy industries called Future Telecom. By 2014, the pair was enjoying enormous success and was ready to cash in some of their chips. Helmers, who was the minority stakeholder, wanted to retire; Riggs, the majority owner, wanted to get his son some equity in the firm and also find a partner who could help grow the company.
After talking with several parties, Riggs and Helmers settled on a Salt Lake City, Utah-based private equity firm, Tower Arch Capital.
After a reorganization of the ownership structure of Future, which had 120 employees, everybody got what they were looking for.
Helmers managed to get a windfall for his stake in the business, and was able to ride off into the sunset. Riggs stayed aboard as Future’s chief executive, while also securing a strong employment agreement and both equity and a leadership position in the company for his son.
Tower Arch, meanwhile, nabbed an investment in a business that has exceeded its performance objectives by more than 20 percent. Future Telecom’s backlog and projections for 2015 alone should support 55 percent growth for a 30-month period, according to officials of Allegiance Capital Corp., the Dallas investment bank that represented Future Telecom in the recapitalization. The Allegiance team on the deal included senior vice presidents Fred McAllister and Brent Earles. “Don Riggs is a clear thinker,” McAllister says. “That makes our job a lot easier.”
Acquisition of Lone Star by General Finance Corp.
An age-old business adage says that during a gold rush, the business to be in is selling picks and shovels.
Out in the Permian Basin, the Lone Star Cos. follows that idea, only for the oil and gas industry. In 2014, the group of private investors who own the six-company group got a $95 million windfall by selling two of those companies, Lone Star Tank Rental LP and KHM Rentals LLC, to California’s General Finance Corp. (Nasdaq: GFN.)
The two businesses rent roughly 1,200 storage tanks for fluids used in hydraulic fracturing in the lucrative Permian and Eagle Ford shales of Texas. They also lease some oilfield equipment to energy companies there as well. (Widely known as “fracking,” hydraulic fracturing is a popular method for extracting oil and natural gas that is locked away in shale rock. It involves breaking apart the rock with a high-pressure combination of water, sand, and chemicals.)
The two tank rental companies that General Finance bought brought in about $45 million in the fiscal year ended Dec. 31, 2013. Trouble was, the Lone Star owners had simply lacked the financial resources to invest in new tanks to meet growing demand, according to John Sloan, vice chairman and partner at Allegiance Capital Corp., the Dallas investment bank that represented them in the General Finance deal.
The Midland group “had put all their financial resources into expanding the business,” Sloan says, “They needed a strong financial partner,” which they found in the California firm.