Investors acquire industrial coatings firm; Valence looks to expand services, footprint
Houston-based Valence Surface Technologies, which provides surface treatments for aerospace and defense components, was acquired by investment companies ATL Partners and British Columbia Investment Management Corp. for an undisclosed amount.
The deal, announced this past week, will help Valence expand its services and geographic footprint.
“We believe there are many opportunities for growth in the company, through both organic initiatives and strategic add-on acquisitions,” Frank Nash, founder and managing partner of ATL, said in a news release, “and we are excited to support the Valence management team as they execute their strategic vision for the company over the coming years.”
Valence, founded in 2013, operates eight facilities throughout the U.S., serving more than 3,000 customers and processing more than 12 million individual parts annually.
UT heads research on solar cells
A team of chemists led by the University of Texas at Austin received nearly $1.3 million in funding to develop a new coating for siliconbased solar cells that could boost efficiency as much as 20 percent and make solar-power generation cheaper.
Efficiency is a problem in silicon-based solar cells, which are used in rooftop solar panels and large-scale solar farms, because the cells convert less than 30 percent of the energy from sunlight into electricity.
The goal of the project is to claw back some of the energy loss by chemically attaching organic dyes to the surface of the silicon cell to reduce heat losses and convert more of that energy into electricity, said Sean Roberts, the project’s principal investigator and an assistant professor of chemistry at UT Austin.
The California-based W.M. Keck Foundation, established by the founder of Superior Oil Co., awarded the researchers a $1 million grant and the University of Texas provided $278,500.
New TMC facility to research robots
The TMC Innovation Institute, home to health care accelerator programs, co-working facilities and startups, announced last week that Switzerland-based robotics company ABB will open a 5,300square-foot research and development facility.
Its non-surgical robots could be programmed to do repetitive, time-consuming tasks, such as measuring medications in the proper dosage and assembling sterile instrument kits used by surgeons.
ABB’s robots operate in food and beverage laboratories worldwide, testing food products for contaminants.
Its new Houston facility will include an automation lab and robot training facilities.
ABB expects 20 people will work there.
This is the latest news for the TMC Innovation Institute, which has assisted more than 250 companies since it launched in 2014.
These companies have received some $900 million in total money raised or committed funding.
Closed steel mill to get new life
A steel mill 50 miles west of Houston is being reopened.
The Bellville Tube Co., shuttered by its previous owner in 2014, is being reopened by a U.S.-based private investment group.
The new ownership, which has not been publicly announced, expects to begin production in the third quarter and to be at full capacity with up to 100 manufacturing jobs in 2020.
Bellville Tube Co. was opened in 1980 by Quanex Corp.
The facility was purchased in 2000 by Lone Star Technologies, which was acquired in 2007 by U.S. Steel Corp.
It was closed in 2014 due to the global trade environment.
Houston-based Andrews Kurth would have celebrated its 117th anniversary this year. Gardere would have turned 110 and Strasburger & Price would have been 70.
The three old-line Texas corporate law firms combined employed nearly 1,000 attorneys at their peak earlier this decade and generated more than $600 million in revenue. They were staples of the Dallas, Houston and Austin business communities and represented some of the largest companies in the state.
As the past-tense verbs indicate, the three no longer exist as independent law firms. Each merged with a larger national law firm in April 2018. Fifteen months later, leaders at all three say their marriages have gone better than they expected.
“By nearly all measurements, all three law firms are better off today, post their mergers, than they were before the mergers,” legal industry consultant Kent Zimmermann said.
Andrews Kurth, Gardere and Strasburger counted banks, insurance providers, oil and gas companies and commercial real estate owners and developers as clients. For decades, lawyers joined these firms right out of law school and never left. Then, it all changed.
Tort reform hurt litigation, especially insurance defense work. Large, deep-pocketed national law firms invaded Texas and raided the ranks of these and other firms, stealing the finest lawyers who had the best clients and generated the most revenue.
Initially, all three firms were determined to remain independent. Each rejected multiple proposals to merge. Even so, revenue declines continued.
“All three of these firms faced uncertain futures,” Zimmermann said. “They could remain independent and watch their positions in the marketplace continue to deteriorate, or they could do a merger.”
Firm leaders agree. “These were huge and difficult decisions we were making that impacted the lives of hundreds of people and our clients,” said Holly O’Neil, former managing partner at Gardere who negotiated the merger with Milwaukee-headquartered Foley & Lardner.
Stars align
In April 2018, the stars aligned. Within days of each other, the trio of firms did what they once swore they would never do: They merged with larger, out-of-state legal operations.
“True, we rejected many offers over many years to merge,” said former Strasburger Managing Partner Dan Butcher, who helped engineer the deal with Detroit-based Clark Hill. “Making the decision to merge was certainly one of the toughest and most important in the firm’s great history.”
Today, leaders at Foley Gardere, Hunton Andrews Kurth and Clark Hill Strasburger say their year-old combinations have succeded and that their firms are representing more new clients, billing more hours and making more money they did before the mergers.
“We had a great year,” said Hunton AK’s Deputy Managing Partner Robin Russell, whose office is in Houston. “We exceeded our profit budget by 4 percent. We integrated faster than anyone anticipated. We’ve added new clients and expanded relationships with existing clients.”
O’Neil and Butcher echo Russell’s position.
“It has been a whirlwind — can’t believe it has already been more than a year,” O’Neil said. “We are already reaping the fruits of our labor regarding revenues, generating new business and attracting lateral hires. It’s been an exhilarating year.”
Immediate benefits
Foley Gardere reported that lawyers at the firm worked on 125 new matters that billed 15,000 hours and generated more than $10 million during the first 12 months of the combined firms — all of which is directly attributed to the merger.
“We had all the synergies on paper, but you never know until you take action,” O’Neil said. “Legacy Gardere has definitely benefited from the strong organizational structure and larger platform that Foley had in place.”
Andrews Kurth, which has a strong M&A and capital markets practices in Houston and Dallas, represented 207 businesses involved in mergers and acquisitions between 2011 and 2017 that had a combined value of more than $200 billion, according to Mergermarket, a global research firm.
But the firm witnessed declining revenues between 2015 and 2018 and engaged in merger talks with Virginia-based Hunton & Williams, which already had more than 80 lawyers in Texas.
The combined Hunton Andrews Kurth now has 213 lawyers in Texas and more than 850 attorneys worldwide. Total revenue in 2018 hit $748 million — about $183 million of which was generated from the firm’s Texas offices.
Russell, who specializes in corporate restructurings and finance, said that lawyers from legacy AK and legacy Hunton have worked together on more than 700 matters for clients since the merger. For example, lawyers from legacy Andrews Kurth and Hunton worked together in representing private equity firm Stonepeak Infrastructure Partners in its $3.6 billion acquisition of Oryx Midstream this past spring.
“Our capabilities to serve our clients have definitely been enhanced by the merger,” Russell said. “We have a footprint that has been expanded geographically and in terms of expertise. “We have had so much energy and momentum this past year. The challenge is to keep that up and to capture all the opportunities offered by the merger.”
Regional appeal
Strasburger was a firm adamantly opposed to merging with an outside law firm for more than a decade.
Butcher said firm leaders changed their minds during the past few years as more regional law firms started entering the Texas market.
“The regional firms have similar rates, and that made us rethink our feeling that we should look to expand outside of Texas,” Butcher said.
Clark Hill, he said, was the best fit for Strasburger.
“Both legacy Strasburger and legacy Clark Hill have seen an increase in revenue directly as a result of the combination,” Butcher said in an interview in May. “Just today, I had a longtime client ask if we could help them with a Pennsylvania tax issue. Before the merger, we could not have handled it. Now, we can.”
As a result, revenue per lawyer is up nearly 10 percent and the firm is seeing increased interest from lawyers at competing operations.