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Oct 17, 2023

Austin M&A news: Telco Data, Elevate Brands, Nextira, Marsh McLennan do deals

Check out the details on six recent mergers and acquisitions impacting the

Check out the details on six recent mergers and acquisitions impacting the Austin area.

After more than 20 years handling the network cabling needs of other Central Texas businesses, Telco Data LLC has a new owner.

Founder Stacy Tallent sold the company to Aaron Parker, who used to work in mergers and acquisitions and wanted to become a business owner. The deal closed May 11 but is only being announced June 5.

In Telco, Parker got a business that generates annual revenue in the seven figures and has recently seen growth rates in the double digits. The company, which employs 18 to 20, installs cabling for fiber, audio-visual and security systems, in addition to handling other kinds of communication technology, and has a customer base of about 10,000, from small business up to the enterprise level.

A purchase price was not disclosed. Parker said he financed it himself and aims to grow organically and steadily.

"It was really about coming up with a transaction that enables existing employees to be able to stay in place," said Parker, noting the acquisition took about three months. "There was no investor capital. Our slogan is 'people over profits,' and we're really committed to delivering on that."

Tallent, who started Telco in 2001, said he was selling to spend more time with family and pursue other goals. He's expected to aid with the ownership transition through the end of the year and the two men note they aim to maintain a high level of reliability and customer satisfaction.

Tallent said business has been robust, with large projects like the Samsung plant rising in Taylor drawing other companies to the region to support them.

"That's really been an economic boon for Telco Data," he said. "Due to our quality delivery and relationships and long-standing history with the commercial real estate world ... we're just the go-to and best of breed in our industry. So as a result, we've really seen some phenomenal organic growth. It just looks like it's continuing to trend on upward in that direction. We're very bullish on the future here in Austin."

Sam Domino with Beacon helped broker the M&A deal while David Bremer with Colliers International is Telco's commercial real estate broker.

— Will Anderson

Summit Hotel Properties Inc. said June 5 it purchased Residence Inn Scottsdale North, a 120-room hotel in a suburb of Phoenix, for $29 million in a joint venture with GIC.

The deal closed June 1 and gives Summit (NYSE: INN) a third Marriott-branded property in a wealthy enclave of Arizona's biggest metro — the Residence Inn is next to TPC Scottsdale, the annual site of the PGA Tour WM Open golf tournament. Summit also owns the adjacent Courtyard and Springhill Suites hotels.

Summit said it expects a capitalization rate of 8% to 8.5% on 2023 net operating income for the hotel. It owns 51% of the joint venture that bought Residence Inn, a stake it funded with the recent sale of a portfolio of four hotels in Illinois and Minnesota.

Summit also this week provided an update on that latter deal — it generated $28.1 million from the sale of two Hyatt Place hotels in the Chicago area and from a Hilton Garden Inn in Minneapolis and a Holiday Inn Express & Suites in Minnetonka, southwest of the Minnesota's largest city.

And Summit said June 5 a deal to sell an Atlanta Residence Inn and a Courtyard in Kansas City for a combined $50.5 million has been terminated.

Summit, which went public in 2011, is led by President and CEO Jonathan Stanner. It owns 100 hotels, including 57 wholly owned, across 24 states with a total 14,987 rooms.

— Will Anderson

An Austin- and New York-based startup that acquires and manages Amazon e-commerce businesses is being acquired by a German company that also specializes in aggregating emerging digital storefronts. Elevate Brands, which began shifting its corporate headquarters from New York to Austin in 2021, is being bought for an undisclosed price by Berlin-based SellerX, according to a June 1 announcement. The transaction is expected to close by the end of June.

The deal marks a period of rapid growth for Elevate, legally known as Recom Brands LLC. The company was founded in New York in 2017 by CEO Ryan Gnesin and James Lucien, who is now an Elevate board member and co-founder and CEO at Equanimity in Massachusetts. It raised its first round of funding in February 2021, before adding two additional tranches that year. That brought its total funding to $250 million.

Elevate currently manages 32 brands. Its investors have included Novel TMT, FJ Labs, Rimeto co-founder Ted Zagat, Mons Investments, Acceleprise.VC, Pandu Sjahrir from Indies Capital, Adam Jacobs from the Iconic and Oracle executive Rob Tarkoff.

Elevate is just starting its integration with SellerX. But the company said its Austin office at Capital Factory will continue to be an important location for the combined company. The company currently has 180 employees with 12 based in Austin.

As part of Elevate's deal, SellerX shareholders are contributing $64 million in new equity funding. These investors include L Catterton, Cherry Ventures, Felix Capital, 83North, Upper90, and TRCM Fund. Meanwhile, BlackRock and Victory Park Capital have increased their credit facility to the company to help it acquire more digital sellers.

The combined company, now called SellerX Group, will be led by SellerX's team in Berlin. Meanwhile, Gnesin will transition from CEO of Elevate to president of SellerX Group, Elevate Chief M&A Officer Jeremy Bell will become the global head of M&A and Chief Growth Officer Rob Bell will take on the role of head of global business development.

Following the acquisition, SellerX Group states that it will have a portfolio of more than 80 Amazon-native private label consumer brands with more than 40,000 products, ranging from home goods to consumables and pet products. This deal is expected to increase its sales to around $429 million.

"Our tremendously talented team is excited to continue expanding our portfolio across numerous distribution channels, including traditional retail partners," Gnesin stated. "The combined business has the technology, expertise, and a wealth of data that will enable us to identify emerging consumer trends, rapidly test and iterate product ideas, and fulfill demand across Europe and North America."

— Brent Wistrom

Insurance brokerage heavyweight Marsh McLennan Agency LLC has grown its Austin presence with the purchase of locally based SOLV Risk Solutions LLC.

The subsidiary of Marsh & McLennan Companies Inc. (NYSE: MMC), focused on insurance and benefits for businesses and individuals, said June 1 it bought Austin-based SOLV, a brokerage and advisement firm, for an undisclosed amount. SOLV's Frank Barbella and four other employees have joined MMA in Austin and Houston.

New York-based Marsh McLennan Agency was already a major insurance broker in Central Texas, and a spokesperson said this deal boosts its local headcount to 150. The company is a broker of business insurance, employee health and benefits, retirement and private client insurance with 170 North American offices and about 9,500 employees.

SOLV, founded in 2016, provides risk management advisory services to businesses, family offices and private equity firms nationwide.

— Will Anderson

Nextira, an Austin-based Amazon Web Services Premier Partner, said June 1 it has been acquired by Accenture in a move to expand its cloud capabilities. Terms of the transaction weren't disclosed. Nextira, founded in 2008, specializes in delivering cloud-native innovation, predictive analytics and immersive experiences to clients using AWS. Its team of nearly 70 employees will join Accenture's AWS Business Group, which has over 20,000 employees.

Nextira, founded in 2008 by CEO Jason Cutrer, was known as Six Nines IT until March this year when it rebranded. The company helps developers access Unreal Engine 5 in the AWS Marketplace, and it supports more than 80 game development applications. Meanwhile, its Studio in the Cloud solution on AWS provides a virtual environment for easy development and rendering of 3D objects. The company doesn't appear to have raised venture funding, according to a search of Crunchbase and SEC filings.

— Brent Wistrom

Austin-based social good software company Bonterra said May 31 it is acquiring Boston-based WeSpire, an employee engagement software company focused on volunteering opportunities and company diversity. Terms of the deal weren't disclosed.

Bonterra was formed in Austin last year when the technology and people behind CyberGrants, EveryAction, Network for Good, Social Solutions and their respective entities combined. The company says it has over 20,000 customers, including over 16,000 nonprofits and over 50% of Fortune 100 companies.

"As a company dedicated to powering social impact, we recognize the critical role of employee engagement in driving positive change," Bonterra CEO Mark Layden stated. "With WeSpire's expertise in this area... we’re excited to continue investing in solutions that empower employees and transform the way impact initiatives are executed."

— Brent Wistrom

For more M&A news, including deals by Setpoint and 360training, go here .