In the early hours of the morning on November 9th, the nation—and much of the world—held its breath as controversial businessman, TV star, and Republican nominee for President took the stage in New York to claim victory in the 2016 presidential election. The markets, which had been dropping rapidly as the results began to pivot away from the seemingly inevitable Clinton victory, regrouped, as stability was restored by way of a concession and a tempered victory speech by President-elect Trump. There was one industry, however, that seemed to be in shock, even fear, of the results.
SILICON VALLEY’S SEARCH FOR A GOLD MINE
Over the past several years, all eyes in Private Equity and Venture Capital have focused on the technology boom in Silicon Valley. Since the advent of mobile applications, Silicon Valley has been a hub for applications revolutionizing the way we live. From some of the most pervasive social media platforms (Instagram, Snapchat), to novel business models reshaping entire industries (Uber, Airbnb), Silicon Valley has become synonymous with disruption. Venture capital firms have played a vital role in this burst of innovation by providing massive capital infusions to support R&D efforts and help companies develop more advanced software infrastructure.
BLACKSTONE ACQUIRES TEAMHEALTH
On October 31st, TeamHealth agreed to be acquired by Blackstone for $43.5 per share. The offer represents a 33% premium since the board announced on October 3rd that it was exploring the possibility of selling the company to a private equity firm. On the day of the announcement, shares of TeamHealth jumped by 15%. Blackstone’s offer placed TeamHealth’s equity value at $3.2 billion.
BLUE APRON WHISKING UP INVESTMENT
As investors know, the food industry in America is an oversaturated market. Companies including grocery stores, fast casual restaurants, and online delivery services compete to win the dinner plate of Americans. With a plethora of dining options, cooking options, and delivery options, companies continuously try to innovate and offer more for less, which has made it incredibly difficult to profit in this industry. That is where innovation adds value. Over the years casual dining has been replaced by fast casual, “organic, healthy” foods have grown in popularity, and companies like Postmates, GrubHub, and app payment methods have made tech increasingly more prevalent in the food industry.
THE TWINKIE REVIVAL
Twinkies have just made their comeback. Gores Holdings, Inc. has just completed its acquisition of Hostess Brands LLC, the makers of Twinkies, Ding Dongs, Ho Hos and other staples of the American culture. This marks the first time Hostess has been publicly traded since 2012. Gores, which has since renamed itself Hostess Brands, Inc. in spirit with its acquisition of Hostess, reported third quarter results in net revenue growth of 24% to $196.2 million and adjusted EBITDA growth of 36.7% YOY to $55.6 million.