May 24, 2024

πŸ’° Save the date: Axios BFD returns to New York City on the afternoon of Tuesday, Oct. 22.

Top of the Morning

Illustration: Annelise Capossela/Axios

When we think about the hottest startups, it's usually the ones pushing edge technologies and earning "unicorn" status from venture capitalists. But sometimes boring is best.

Driving the news: AuditBoard, a Southern California provider of audit and risk management software, has agreed to be acquired for over $3 billion by European private equity firm Hg.

  • That's more than a 20x multiple on AuditBoard's valuation when it last raised primary funding from VCs β€” a $40 million Series B round in 2018 led by Battery Ventures, which AuditBoard never actually tapped because it was already profitable.

Behind the scenes: The company had planned to go public in 2025 or 2026 with bankers already on board, and was in the process of recruiting another independent director, per sources familiar with the situation.

  • It had regularly eschewed takeover interest from strategic and financial buyers, but Hg came in with an offer so "compelling" that the plans changed.
  • AuditBoard did a limited market check but signed the Hg agreement just four weeks after it was presented.

The intrigue: AuditBoard almost sold much, much earlier.

  • The company had been founded by Daniel Kim and Jay Lee, two best friends from middle school who also served as co-CEOs.
  • By 2020, however, they no longer wanted to run a company and felt the only plausible option was to sell. Some members of the board balked, convincing them to instead launch a search process that settled on Scott Arnold, a serial CEO who at the time was leading Shutterfly's enterprise business.
  • By earlier this year, it was on a $200 million annual run rate.

The bottom line: This deal, on both sides, was ultimately about perseverance and finding value in an unsexy sector.

  • Both Battery and Hg initially identified AuditBoard while seeking software companies that serve CFOs β€” an office where lots of info is still communicated via Excel spreadsheets attached to emails β€” and both struggled to get its attention.
  • Battery initially couldn't figure out who to contact and, when it got a meeting, prepped an entire pitchdeck because it felt it only had one shot.
  • Hg began calling more than two years ago. but couldn't get a sit-down until recently.

The BFD

Illustration: AΓ―da Amer/Axios

Atari (Paris: ALATA) has acquired Intellivision, its gaming console rival in the 1980s.

Why it's the BFD: This was once unimaginable. Like Coke buying Pepsi. Or McDonald's buying Burger King. Or Drake and Kendrick Lamar releasing a collab.

  • Plus the Gen X nostalgia.
  • My parents refused to buy me an Atari, reasoning that a friend down the street had one, but they did rent me one during a school vacation week, and it's still one of the finest weeks of my life.

The bottom line: "Atari has established itself as a retro gaming-focused company, relaunching mini versions of its consoles, supporting the rerelease of its games on modern consoles, acquiring retro gaming developers like Digital Eclipse, and now buying its retro gaming peer." β€” Ash Parrish, The Verge

Venture Capital Deals

🌎 Syre, a Swedish textiles recycler, raised $100m in Series A funding. TPG Rise Climate led, and was joined by Giant Ventures, IMAS Foundation, Volvo Cars, Norrsken, and co-founder H&M Group. axios.link/3QWOdTE

πŸš‘ Atropos Health, a New York clinical decision support startup, raised $33m in Series B funding. Valtruis led, and was joined by Breyer Capital, Emerson Collective, and Presidio Ventures. axios.link/4bv2Bus

β€’ Remark, a New York-based shopping guidance platform, raised $10.3m from Spero Ventures, Stripe, Shine Capital, Neo, Sugar Capital, and Visible Ventures. axios.link/3QTJuSz

🌎 Cowboy Clean Fuels, a startup injecting sugar beet waste into coal seams, is raising $10m in Series B funding from firms like Machan Investments, per Axios Pro. axios.link/3WWbx7A

β€’ Plume Network, a layer-2 blockchain for real-world assets, raised $10m in seed funding. Haun Ventures led, and was joined by Galaxy Digital, Mechanism Capital, and Portal Ventures. plumenetwork.xyz

🌎 Fiberwood, a Finnish sustainable insulation and packaging startup, raised €7.7m from backers like MetsΓ€ Spring and Stephen Industries. fiberwood.com

β€’ Bootloader Studio, a Vietnamese provider of digital pets for Apple Vision Pro, raised $5m in seed funding led by Antler Elevate, per Axios. axios.link/3VfEavu

πŸš‘ OncoveryCare, a Boston-based virtual cancer survivorship care startup, raised $4.5m in seed funding co-led by .406 Ventures and the McKay Institute for Oncology Transformation. oncoverycare.com

β€’ HoundDog.ai, an SF health data security and privacy startup, raised $3.1m in seed funding from E14 Fund, Mozilla Ventures, and Ex/ante. hounddog.ai

Private Equity Deals

β€’ Advent International is in talks to invest in Prometheus Group, a Raleigh, N.C., industrial software firm owned by Genstar Capital that could be valued north of $4b, per Bloomberg. axios.link/4atKKCF

β€’ Advent International and GTCR have expressed interest in buying Envestnet (NYSE: ENV), a Berwyn, Pa., wealth management software provider with a $3.9b market cap, per Bloomberg, axios.link/3Kh3oDq

πŸš‘ CVS Health (NYSE: CVS) is seeking a private equity investor to support growth at Oak Street Health, the primary care provider CVS bought last year for $10.6 billion, per Bloomberg. axios.link/3yytKy2

πŸš‘ Goldman Sachs Alternatives acquired Xpress Wellness, a provider of health care services to underserved communities and nursing home residents across Oklahoma, Kansas, and Texas, from Latticework Capital Management. xpwell.com

β€’ KKR will receive unconditional EU approval for its €22b purchase of Telecom Italia's (Milan: TLIT) landline network, per Reuters. axios.link/3QY2JKA

πŸš‘ Med Learning Group, a portfolio company of DW Healthcare Partners, acquired Trumbull, Conn.-based medical education provider Talem Health. talemhealth.com

β€’ Rethink Education invested in Aanaab, a Saudi digital training platform offers K-12 teachers. aanaab.com

β€’ Vitruvian Partners made a growth investment in Aduro Advisors, a Denver fund administrator for VC and PE firms. aduroadvisors.com

Liquidity Events

β€’ Astorg is prepping an auction for French food ingredients maker Solina, which could fetch up to €4b, per Bloomberg. axios.link/3V9KWCG

β€’ DraftKings (Nasdaq: DKNG) completed its $750m cash purchase of lottery ticket app Jackpocket, which had raised nearly $200m from Conductive Ventures, Left Lane Capital, BlueRun Ventures, Telstra Ventures, Raine Group, Greenspring Associates, Circle K Ventures, Tegna Ventures, Gaingels, David Blitzer, Jon Ledecky, and actor Sean Hayes. axios.link/3OLJVNQ

β€’ EQT is considering a minority stake sale for Morristown, N.J., waste management company Reworld, which could be valued at over $8b (including debt), per Bloomberg. axios.link/3WTYbst

πŸš‘ Genmab (Nasdaq: GMAB) completed its $1.8b all-cash purchase of ProfoundBio, a Seattle biotech focused on ovarian cancer that had raised around $250m from Ally Bridge Group, Nextech Invest, T. Rowe Price, Janus Henderson, K2VC, RA Capital Management, HongShan, and OrbiMed. axios.link/3VLwVvW

More M&A

β€’ Big Lou Media, owned by Chris Keating, sold St. Louis alt-weekly newspaper The Riverfront Times to an undisclosed buyer. axios.link/4bLVD3V

β€’ Co-Operative Bank shareholders approved a Β£780m sale to rival British lender Coventry Building Society. axios.link/3wKxR9H

β€’ Jio Financial Services of India plans to pay $4.33b to buy telecom equipment and devices from the retail arm of Reliance Industries. axios.link/3USgnQJ

πŸš‘ Royalty Pharma (Nasdaq: RPRX) agreed to invest $575m into Cytokinetics (Nasdaq: CYTK), a South SF-based developer of muscle treatments that had been widely viewed as a takeover target. axios.link/3Vf3SzS

β€’ Walt Disney Co. (NYSE: DIS) agreed to sell its minority stake in subscription TV broadcaster Tata Play to Tata Group, giving the Indian conglomerate full control after it already acquired Temasek's stake earlier this year. axios.link/3wAMVGY

Fundraising

β€’ Harlem Capital is raising up to $150m for its third VC fund, per an SEC filing.

It's Personnel

β€’ James Gorman will step down as Morgan Stanley's chair at year-end. axios.link/3KeJSap

Final Numbers

The column chart shows a steady increase in the number of annual private equity investment deals in U.S. strategic communication firms from 61 in 2019 to 146 in 2023.
Data: LSEG; Chart: Axios Visuals

Corporate communications firms are cash cows, and private equity firms are grazing on them, Axios' Eleanor Hawkins writes.

The big picture: Capital needs for comms firms are intensifying as client demands expand into culture wars, geopolitical unrest, fragmented media, heightened regulatory scrutiny and the rise of AI.

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