Q2 2024 Aviation Report
Miami Investment Banking Firm Cassel Salpeter Issues Aviation Industry Deal Report
South Florida firm publishes Q1 2024 Aviation Deal Report surveying year’s company M&A, deal flow, and market trends
Miami Investment Banking Firm Cassel Salpeter Issues Aviation Industry Deal Report
South Florida firm publishes Q1 2024 Aviation Deal Report surveying year’s company M&A, deal flow, and market trends
Miami Investment Banking Firm Cassel Salpeter Issues Healthcare Industry Deal Report
South Florida firm publishes Q1 2024 Healthcare Deal Report surveying year’s company M&A, deal flow, and market trends
Miami Investment Banking Firm Cassel Salpeter Issues Healthcare Industry Deal Report
South Florida firm publishes Q1 2024 Healthcare Deal Report surveying year’s company M&A, deal flow, and market trends
16th July 2024
By Katishi Maake, Brian Yue, Marlene Star and Manu Rajput
Consumer merger and acquisition volume saw a 46% year-over-year increase in 1H24 to USD 31.95bn, and buyout volumes crept up from 1H23, according to Mergermarket data. As concerns over a recession have waned over the past year, dealmakers have become slightly optimistic but cautiously so.
The top global deal is Macy’s [NYSE:M] pending 91.24% stake sale to Arkhouse Partners and Brigade Capital Management for USD 6.249bn, based on a cash offer price of USD 24 per share, which values Macy’s at USD 12.076bn, including net debt. Arkhouse Partners and Brigade Capital Management reportedly increased their offer to acquire the department store chain earlier this month to USD 24.80 per share, roughly USD 6.9bn, according to the Wall Street Journal.
Other major North American transactions include the USD 4.6bn merger of Primo Water Corporation [NYSE:PRMW, TSX:PRMW] and BlueTrion Brands, and Walmart’s [NYSE:WMT] USD 2.3bn acquisition of television maker Vizio.
The first half of the year saw buyout volumes of USD 1.6bn, compared to USD 1.05bn in 1H23. In May, Brightstar Capital Partners agreed to acquire Nevada-based slot machine maker PlayAGS in a USD 1.1 bn deal that’s expected to close in the latter half of 2025. Deal valuations totaled USD 1.48 bn across 19 deals during 1H24, according to Mergermarket data. Sector advisers hope the increased activity will continue in 2H24, but that will be highly dependent on inflation and how the Federal Reserve acts on interest rates.
Beauty and pet products a bright spot
The consumer sector’s perennial strong areas – pet, beauty and consumer services – continued to perform well in 1H24. Pet and beauty continue to be active as investors see continued growth in the space, according to Richard Kestenbaum, co-founder and partner at Triangle Capital.
“We wind up selling companies that identified a way to make great money and be successful in industries that were often tired,” Kestenbaum says. “It’s both industries that are growing and consolidating but it’s also innovation in existing spaces.”
Conversely, sub-sectors such as durables, apparel, hard goods, furniture, and discretionary items are not performing as well due to tighter consumer budgets, Christopher Petrossian, managing director at Lincoln International says.
Restaurants are likely to see restructuring-driven deals in 2H24 as food and labor costs continue to climb, particularly in California where the minimum wage for restaurants rose to USD 20 per hour in April, says Jim Cassel, chairman and co-founder of Cassel Salpeter & Co. These pricing pressures under already small margins have restaurants looking to sell, Cassel says, adding that potential changes in tax laws around capital gains might also lead to the sale of troubled assets.
In CPG, there’s been a lot of activity redeploying cash and selling assets with the intent of assessing where the market will be over the next decade, Andrew Dickow, managing director at Greenwich Capital Group, says. Unilever’s [LON:ULVR] sale of Ben & Jerry’s is exemplary of this, as the company attempts to transition from food and beverage to consumer products.
Food and beverage – a lack of appetite
The food and beverage sector contributed about USD 9.5bn of deal value on 118 deals announced in 1H24, according to Mergermarket data. The largest deal was a still-pending USD 4.6m merger between Primo Water Corporation [NYSE:PRMW, TSX:PRMW] and BlueTrion Brands.
The sector has continued to see significant declines in deal volume compared to pre-pandemic levels.
The macro outlook for food and beverage M&A has been weak since 2021, with deal volume continuing to drop due to a decline in VC funding and the creation of new startups, according to Michael Zakkour, managing director at SellSide Group.
“There were probably too many [startups] at one point, and this is just a natural correction where deal flow is lower because there just simply aren’t as many potential new targets coming online,” Zakkour says.
Consumer preferences are shifting towards discretionary spending on experiences over products, which Zakkour notes could lead to a resurgence in deal flow for health and wellness products and quick service restaurants offering unique experiences.
The continued low number of PE and VC exits in food and beverage compared to pre-pandemic levels is due to increasing consumer acquisition costs and how crowded the sector is, Zakkour says. However, that could change in the next 1 or 2 years as investors better understand how data in e-commerce affects the products brought to market and put on shelves, he adds.
A wait-and-see game with the economy
Consumer M&A activity in 2HQ2 will be largely defined by the larger macroeconomic trends affecting consumer spending and borrowing for transactions.
While there is plenty of available debt for deal, particularly on the private debt side, high interest rates have made it difficult for buyers to borrow funds, Petrossian says. Once the Federal Reserve begins to cut rates, more capital will be available, leading to more M&A activity, he says.
Inflation is also a mitigating factor for deals getting done, Petrossian says. One private equity firm told him that 70% of its 2023 deals that came to market failed due to concerns surrounding inflation and consumer spending and sentiment.
Lincoln International’s approach has been to sit and wait on its backlog of consumer deals until market conditions improve, he says. The firm will reassess its pipeline after Labor Day in case it wants to close deals before the end of the year. Alternatively, it may wait until 1Q25 after the Federal Reserve cuts interest rates and the presidential election is decided, Petrossian says. “Forecasting this year’s fourth quarter and being in the middle of a deal and missing your budget is not a good thing to process,” Petrossian says. “At a certain point, it might make sense to
close Q4, see what it looks like, and go in on a deal early next year.”
A recession, in theory, would be devastating to consumer M&A activity, but Triangle Capital’s Kestenbaum says that’s much less of a concern now compared to inflationary pressures. “The market hates surprises and it wants to see good news, and it wants to be told good news is coming,” he adds.
By Katishi Maake, Brian Yue and Marlene Star, with analytics by Manu Rajput
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Thinking of doing a continuation fund? Let us help with the fairness or valuation opinion.
Cassel Salpeter is a market leader in providing fairness opinions and valuation opinions, including providing various fairness opinions and valuations in connection with a continuation fund. Our advisory services team provides high quality and defendable deliverables to executives, boards, committee members, PE funds and their GPs, to fund advisory committees, owners and other interested parties in a variety of contexts and situations and have issued over 225 fairness or solvency opinions on transactions ranging from simple acquisitions, related party transactions, and sales to highly complex transactions. In addition, our team has completed over 675 valuation assignments covering a broad range of valuation services and requirements.
What was once seen as a path for tradability for an underperforming or difficult-to-exit portfolio company because of poor timing, has now become an increasingly attractive way to manage and extend the profitability of a fund’s best performing portfolio companies, while giving the LPs a liquidity opportunity.
A continuation fund is an alternative to a more traditional exit which involves a private equity fund selling one or more portfolio companies to a newly formed continuation fund that is formed for the purpose of acquiring or retaining these companies to be managed by the same sponsor. This trend is attributable to several factors, including the slowdown in the M&A and IPO market (reducing traditional exit opportunities), lower valuations, and the rise in the average holding period of portfolio companies in the United States, which has increased to 6.4 years, up materially from 5.1 years in 2021, according to PitchBook.
A continuation fund can provide a liquidity event for the limited partner investors in the original fund, but also offers the ability to not sell at what the GP might believe is an inopportune time. The formation of a continuation fund enables sponsors to keep well performing investments with additional valuation potential, while providing time for underperforming investments to stabilize or increase in value before an exit and gives the limited partners the opportunity to either roll over their equity or the option to sell their interest.
The increase in these fund-level affiliate transactions, which is estimated to have more than doubled as a percentage of overall sponsor-backed exits from 2020 to 2023, from 5% to 12%, according to Jefferies’ Global Secondary Market Review, presents challenges related to potential conflicts of interest. Primarily, private equity firms sit on both sides (buy and sell) of the transaction. As continuation funds have grown in popularity over recent years, the path forward, strategy, legal requirements, and diligence have evolved alongside the growth. Cassel Salpeter can help navigate these nuances.
In 2023, the SEC and ILPA issued new rules and guidance with the purpose of increasing transparency and ensuring processes are in place to limit inherent conflicts of interest. These mitigation methods include a requirement that a fairness or valuation opinion be obtained in connection with GP-led continuation fund transactions.
A fairness opinion is often considered the preferred financial opinion standard because it directly addresses the consideration to be received by a specific selling party (or to be paid by a specific buying party) in a transaction. A valuation opinion is conducted with a similar process and level of rigor as a fairness opinion but affords additional flexibility as to the securities or asset(s) addressed by such valuation conclusions.
Under the new regulations, these opinions are now required to be part of the corporate governance utilized in continuation fund transactions. By standardizing the use of valuation and fairness opinions, these regulations not only bolster investor confidence, but also promote ethical conduct within the industry. These consistent and transparent procedures facilitate the protection for both general and limited partners.
Cassel Salpeter monitors changing regulations and remains current with guidance and best practices recommended and used by the industry. We pride ourselves for understanding and respecting the process and specific needs of each client and situation. We are here to help. Contact our team members if you have any questions or if we can assist you in the process.
Miami Investment Banking Firm Cassel Salpeter Issues Healthcare Industry Deal Report
South Florida firm publishes Q1 2024 Healthcare Deal Report surveying year’s company M&A, deal flow, and market trends
Miami Investment Banking Firm Cassel Salpeter Issues Aviation Industry Deal Report
South Florida firm publishes Q1 2024 Aviation Deal Report surveying year’s company M&A, deal flow, and market trends
ABOUT THIS SERIES
TradeTalks on Market Strategy &Portfolio Management
WITH JILL MALANDRINO
TradeTalks broadcasts live from MarketSite in Times Square, the historic Philadelphia Trading Floor and Global Industry Conferences and Events. Featuring conversations with top industry thought leaders on trends, news and education.
April 30, 2024
Michael Smith, Managing Director at STS Capital Partners, Nicholas Rodriguez, Partner at Winston & Strawn, and Jim Cassel, Co-Founder & Chairman of Cassel Salpeter & Co., join Jill Malandrino on Nasdaq TradeTalks to discuss what’s driving M&A deal activity, despite a challenging economic environment and high interest rates?
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By Ana Mulero
April 22, 2024
In 2023, cell and gene therapy saw an unprecedented surge with seven FDA approvals, and this year, an even greater number of these treatments could reach the market. So far in 2024, the regulator has given the green light to three new CGTs, and at least seven additional cell and gene therapy products are expected to receive approval by year’s end, according to a March report from the Alliance for Regenerative Medicine.
“All signs point to 2024 surpassing 2023 as a landmark year for cell and gene therapy,” David Barrett, CEO of the American Society of Gene & Cell Therapy (ASGCT), told BioSpace.
The first approval this year belonged to Vertex Pharmaceuticals and CRISPR Therapeutics’ Casgevy, which won the FDA’s nod in January for use in transfusion-dependent beta thalassemia. This followed the agency’s December 2023 approval of Casgevy as one of the first two cell-based gene therapies to treat patients with sickle cell disease. It also represented the first FDA approval of a therapy using CRISPR/Cas9 technology. Then, in February, Iovance Biotherapeutics’ Amtagvi was approved as the first one-time cell therapy for a solid tumor and the first tumor-infiltrating lymphocytes therapy, for advanced melanoma patients who have worsened after being treated with certain other therapies failed. Finally, last month, the FDA greenlit Orchard Therapeutics’ Lenmeldy, which entered the U.S. market as the first gene therapy for children with metachromatic leukodystrophy, and the world’s most expensive drug, with a $4.25 million price tag.
Looking forward, the FDA has upcoming PDUFA dates for several more novel CGTs, including a traditional in vivo gene therapy delivered via viral vector, a couple of gene-corrected cell therapies in which a patient’s cells are modified by gene therapy outside of the body and then reinfused, and a new CAR-T.
Two Q1 reports, from ASGCT and the Alliance for Regenerative Medicine, highlight some of these regulatory actions as potential catalysts for the sector, with approvals poised to propel the CGT space. The ASGCT report includes a list of noteworthy events in Q1 2024, while ARM’s report makes the case that 2024 could be a banner year for cell therapy.
Here, BioSpace reviews five products under regulatory review that were highlighted by both organizations.
Pfizer’s Beqvez
Indication: Hemophilia B
Therapy type: In vivo gene therapy
Action date: April 27
Later this month, the FDA will rule on Pfizer’s gene therapy for hemophilia B, Beqvez. This engineered version of the factor IX coagulation gene carried by an adeno-associated virus is administered via a single infusion.
Beqvez has been approved by Health Canada to treat adults with hemophilia B based on positive data from the Phase III BENEGENE-2 study, which showed a significant reduction in bleeding rate and infusion frequency.
The Big Picture
An FDA approval would put Pfizer in competition with CSL Behring, whose gene therapy Hemgenix, which is also administered via a single intravenous infusion, became the first FDA-approved gene therapy for hemophilia B in November 2022. Pricing details for Beqvez are not yet available, but Hemgenix costs $3.5 million per dose. Chris Boshoff, Pfizer’s chief oncology officer, told BioSpace the company aims to leverage its experience to ensure smooth market entry and efficient delivery to eligible patients.
Abeona Therapeutics’ pz-cel
Indication: Recessive dystrophic epidermolysis bullosa
Therapy type: Gene-corrected cell therapy
Action date: May 25
Next up is Abeona Therapeutics’ pz-cel, which delivers a functional collagen-producing COL7A1 gene into a patient’s own skin cells using a retroviral vector, for the treatment of patients with recessive dystrophic epidermolysis bullosa (RDEB). RDEB, a rare connective tissue disorder, causes severe skin wounds, pain and life-threatening complications stemming from compromised immunity due to a deficiency in the COL7A1 gene, preventing the production of functional type VII collagen.
In November 2023, the FDA granted priority review to pz-cel based on clinical data from the Phase III VIITAL study and long-term results from a Phase I/IIa study, which demonstrated sustained wound healing and pain reduction.
The Big Picture
Ira Leiderman, managing director of healthcare at Cassel Salpeter, underscored the importance of evaluating therapeutic options against the rarity and impact of the disease. A positive decision on Abeona’s pz-cel will help address the high unmet need of RDEB patients and may lead to transformative interventions in this challenging rare genetic disorder, Leiderman told BioSpace.
If approved, pz-cel would follow Krystal Biotech’s Vyjuvek, the first gene therapy approved for recessive or dominant DEB in May 2023. Abeona said in March it is actively preparing for the potential U.S. launch of pz-cel, including discussions with treatment sites and payer engagement.
Rocket Pharmaceuticals’ Kresladi
Indication: Leukocyte adhesion deficiency-1
Therapy type: Ex-vivo vector gene therapy
Action date: June 30
While Rocket Pharmaceuticals initially anticipated a decision on its gene therapy for leukocyte adhesion deficiency-I (LAD-I) by March, the FDA requested more review time and extended the deadline to June 30.
Severe LAD-I, a rare genetic disorder affecting children, is caused by mutations in the ITGB2 gene that lead to life-threatening infections. Without regular bone marrow transplants, survival beyond childhood is rare. Kresladi contains patient-derived hematopoietic stem cells genetically modified with a lentiviral vector to carry functional copies of the ITGB2 gene, crucial for leukocyte adhesion and infection-fighting.
In November 2023, the FDA accepted Rocket’s BLA for Kresladi with priority review, following positive efficacy and safety data from a global Phase I/II study, in which all nine LAD-I patients were alive 12 to 24 months post-infusion. Significant reductions in infection rates were observed compared to pre-treatment levels, along with the resolution of LAD-I–related skin lesions and restoration of wound healing capabilities.
Kresladi also holds the FDA’s Regenerative Medicine Advanced Therapy, Rare Pediatric, Fast Track and Orphan Drug designations.
The Big Picture
This marks Rocket’s inaugural product filing and is a notable advancement for patients, offering an alternative to bone marrow transplant, which carries significant risks and may not be readily accessible. Rocket is enhancing its commercial infrastructure in preparation for a potential product launch, including center initiation, channel strategies, education and payer engagement.
Rocket CEO Gaurav Shah told BioSpace the FDA is reallocating reviewers to focus on rare diseases and complex biologics, necessitating changes and a transition period. Shah noted that the delayed decision, based on the FDA’s request for clarity on chemistry, manufacturing and controls information submitted by Rocket, is common among CGTs and does not raise significant concerns beyond ensuring the regulator has sufficient resources for the approval process.
Adaptimmune’s afami-cel
Indication: Advanced synovial sarcoma
Therapy type: T cell receptor therapy
Action date: August 4
Adaptimmune is gearing up for the potential launch of its inaugural product in the sarcoma franchise, afami-cel, intended for treating advanced synovial sarcoma, with a PDUFA date set for August 4. Afami-cel received FDA priority review in January.
Synovial sarcoma, which makes up 5% to 10% of soft tissue sarcomas, typically affects individuals under 30, with a five-year survival rate of 20% for metastatic cases. Recurrence is frequent, necessitating multiple lines of therapy and potential exhaustion of treatment options. Afami-cel is a single-dose engineered T cell receptor therapy targeting MAGE-A4-posititive tumor cells. The therapy’s clinical data from the SPEARHEAD-1 trial revealed that about 39% of patients experienced clinical responses, with a median response duration of around 12 months. Median overall survival was about 17 months, contrasting with historical data of less than 12 months for those who received two or more prior lines of therapy. Some 70% of responders to afami-cel were alive two years post-treatment.
The FDA granted afami-cel Orphan Drug Designation for the treatment of soft tissue sarcomas and Regenerative Medicine Advanced Therapy designation.
The Big Picture
If approved, afami-cel would become the first approved engineered T cell therapy for this type of cancer. In November 2023, the Investigational New Drug (IND) for another T cell therapy, lete-cel, was transferred from GSK to Adaptimmune for the pivotal IGNYTE-ESO clinical trial, following an interim analysis showing a 40% response rate in synovial sarcoma or myxoid/round cell liposarcoma patients.
Adaptimmune CEO Adrian Rawcliffe said that the clinical results from the pivotal trial position lete-cel as a complement to afami-cel, potentially allowing the company’s sarcoma franchise to significantly expand its reach. He noted that leveraging the same commercial infrastructure intended for afami-cel could facilitate the efficient delivery of lete-cel to the market. Afami-cel would become the first engineered T cell therapy for a solid tumor. The franchise, including both afami-cel and lete-cel, “is projected to deliver up to $400 million in U.S. peak year sales,” Rawcliffe said in March.
Autolus Therapeutics’ obe-cel
Indication: B cell acute lymphoblastic leukemia
Therapy type: CAR-T cell therapy
Action date: November 16
In accepting Autolus Therapeutics’ BLA for its lead next-generation CAR-T therapy obe-cel for relapsed/refractory adult acute lymphoblastic leukemia (ALL) in January, the FDA set a PDUFA target action date of November 16.
Obe-cel, an investigational CD19 CAR-T cell therapy, is designed to enhance clinical activity and safety compared to existing therapies by incorporating a fast target binding off-rate, minimizing T cell activation. In December 2022, Autolus hailed the Phase II FELIX trial as a success, as interim analysis showcased an overall remission rate of 70% for obe-cel in leukemia patients. CAR-T cell concentration peaked and persisted at 75% in peripheral blood after a median of 166.5 days post-infusion. The trial also demonstrated positive safety findings.
Obe-cel holds the FDA’s Orphan Drug and Regenerative Medicine Advanced Therapy status. Earlier this month, the company;’s obe-cel marketing application was accepted by the European Medicines Agency.
The Big Picture
The potential approval of a second cell therapy for solid tumors this year suggests breakthroughs in treating these cancers may be near, Stephen Majors, a spokesperson for the ARM, told BioSpace. There is an “increasing focus on solid tumors,” a previously elusive area for cell and gene therapy, he said.
A recent $250 million deal granted BioNTech access to obe-cel, with the partner to aid in the launch and development program expansion and receive royalties based on net sales. Autolus expects obe-cel peak sales to exceed $300 million.
Autolus could face competition from Gilead Sciences subsidiary Kite, which in 2021 gained FDA approval for its CAR-T therapy Tecartus, the first such treatment for ALL, achieving a 65% complete remission rate.
Ana Mulero is a freelance writer based in Puerto Rico. She can be reached at anacmulero@outlook.com and @anitamulero on X.
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MIAMI – April 23, 2024 – Cassel Salpeter & Co. (“Cassel Salpeter”), an independent investment banking firm that provides advisory services to middle market and emerging growth companies in the United States and worldwide, represented Healthly LLC (“Healthly”) in securing financing from Corbel Capital Partners. The financing has supported the strategic investment in a restricted Knox-Keene license, two independent physician associations (“IPAs”), medical centers and the continued growth of its business.
Based in Los Angeles, Healthly is a provider empowerment platform, providing a one-stop solution for physicians to assume full risk and succeed in value-based care, driving optimal outcomes for patients, providers and health plans. Healthly’s subsidiary Access Senior Healthcare operates as a restricted health service plan under the Knox-Keene Act, enabling access to full value-based economics, providing a mechanism to sustainably maximize patient outcomes.
“It was great working with Healthly’s Chief Executive Officer Ben Quirk and the rest of the Healthly team,” said Cassel Salpeter Chairman James Cassel, who led the deal. “We were excited to assist with securing funding to support not only their original transaction, but also support their future growth.”
Cassel Salpeter helped Healthly in identifying and evaluating its financing options and assisted throughout the due diligence and closing process. Cassel Salpeter Managing Director Philip Cassel, Director Joseph Smith and Associate Charles Davis assisted with the transaction.
Healthly’s Chief Executive Officer Ben Quirk added, “James and the Cassel Salpeter team were critical to helping us find the right growth partner. Their deep healthcare knowledge and ability to provide counsel and guidance throughout the process were invaluable.”
Healthly’s transaction efforts were assisted by Kyle Quirk, Arwin Soetanto, Erica Badran and Kegan Williams of Healthly with counsel provided by Melissa A. Borrelli of Nossaman LLP and Claire Marblestone and Frederick V. Bryant of Foley & Lardner LLP. Brian Yoon and Graham Gallaher led the Corbel Capital Partners team with counsel provided by Aytan Dahukey, Moorari Shah, Adam Barton, Lynsey Mitchel and Jason Jones of Sheppard Mullin Richter & Hampton LLP.
About Cassel Salpeter & Co.:
Cassel Salpeter & Co. LLC is an independent investment banking firm that provides advice to middle market and emerging growth companies in the United States and worldwide. Together, the firm’s professionals have more than 100 years of experience providing private and public companies with a broad spectrum of investment banking and financial advisory services, including: mergers and acquisitions; equity and debt capital raises; fairness and solvency opinions; valuations; and restructurings, such as 363 sales and plans of reorganization. Cofounded by James Cassel and Scott Salpeter, the firm provides objective, unbiased, results-focused services that clients need to achieve their goals. Personally involved at every stage of all engagements, the firm’s senior partners have forged relationships and completed hundreds of transactions and assignments nationwide. The firm’s headquarters are in Miami. Member FINRA and SIPC. More information is available at www.CasselSalpeter.com
Cassel Salpeter & Co.
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Suite 1900
Miami, FL 33131
(305) 438-7700
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