A private equity fund that is the majority-owner of an Atlanta mortgage-services provider turned to Debevoise & Plimpton for counsel on an agreement to sell the Atlanta company to an Australian firm.

QBE Insurance Group Ltd. agreed to acquire ZC Sterling Corp. for $575 million. The acquisition was announced at the same time that QBE said it was also buying two U.S. underwriting agencies and one in Europe, according to Bloomberg News.

ZC Sterling is owned Stone Point Capital LLC. Atlanta-based ZC Sterling provides outsourced services to the mortgage industry, such as managing lender-placed hazard insurance programs. QBE, of Sydney, Australia, sells general insurance and reinsurance in more than three dozen countries.

Debevoise partner Robert Quaintance was lead adviser to Stone Point Capital, according to the law firm. Edwards Angell Palmer & Dodge advised QBE.

Stone Point Capital, of Greenwich, Conn., invests in financial services and insurance companies. Other companies in Stone Point Capital’s portfolio include Atlantic Capital Bank of Atlanta, and personal lines insurance agency Lane McVicker LLC, which has an office in Alpharetta.

Alston & Bird partner Rosemarie Thurston [photo, right] is advising a broker-dealer that’s managing the initial public offering of a newly formed business development company.

Thurston’s client, FS² Capital Partners LLC of Orlando, Fla., is the broker-dealer for FS Investment Corp. FS Investment Corp. was established earlier this year, under the terms of the Investment Company Act of 1940, as a business development company. A BDC is a fund that provides individual investors the opportunity to invest in private equity and private debt offerings.

Some BDCs, such as Apollo Investment Corp. and BlackRock Kelso Capital Corp., are publicly traded. However, FS Investments Corp.’s shares will not be publicly traded, the company said. FS Investment Corp.’s offering will be the first “non-listed” public offering by a BDC, according to FS Investment Corp.’s legal counsel, Sutherland partners Steven Boehm and Cynthia Krus in Washington.

FS Investment Corp., based in Philadelphia, said in regulatory filings that it plans to offer equity and debt investments in small and medium-sized, privately owned U.S. companies.

FS² Capital Partners is affiliated with FS Investment Corp. FS Investment Corp. was formerly known as Franklin Square Investment Corp.

A court-reporting and legal-technology company founded in Atlanta just got a lot bigger—both in the size of its workforce and in the size of its capital accounts.

In a series of transactions, Accel-KKR acquired an equity stake in Alexander Gallo Holdings LLC of Atlanta. Subsequently, Gallo Holdings acquired Hobart West Group Inc. of Florham Park, N.J. Terms were not disclosed for either of the deals.

The Accel-KKR investment allowed Gallo Holdings to acquire Hobart West, company founder Alex Gallo said. Hobart West had operations in more than 20 states, boosting Gallo Holdings’ total number of offices to more than 60. Gallo will remain president and chief executive of the combined company.

Gallo Holdings’ offerings include court reporting, legal video, trial presentation and staffing professionals. It operates under several trade names, including Brown & Gallo and Jack Daniel Court Reporting.

Accel-KKR is a joint venture that focuses on technology companies and involves two of the most influential investment firms. Kohlberg Kravis Roberts & Co. of New York, also known as KKR, is one of the world’s biggest private equity funds with more than $50 billion under management. Accel Partners of Palo Alto, Calif., is a venture capital fund that has invested in Facebook, Real Networks and UUNet.

Gallo Holdings becomes Accel-KKR’s 12th company in its portfolio, including current and past investments. Accel-KKR’s other investments have included CRS Retail Systems and iTradeNetwork.

Powell Goldstein partner Stuart Johnson and associate Hannah Crockett were Gallo Holdings’ local counsel on the transactions, Gallo said. Johnson declined to comment on the deal.

The New York law firm Wollmuth Maher & Deutsch was legal adviser to Gallo Holdings on the merger agreement, Gallo said. Kirkland & Ellis advised Gallo Holdings on issues related to the financing of the deal. Andrews Kurth advised Accel-KKR. Hunton & Williams lawyers in Richmond, Va., were counsel to Hobart West.

A company getting ready to put itself up for sale often clears its deck of businesses and other assets that aren’t central to its core business strategy. The thought is that a leaner, meaner company is more attractive to a potential acquirer.

It’s unknown whether that was the case with SunTrust Banks Inc., which in September pared a non-core asset. SunTrust has been rumored for months to be ripe for a takeover. Last month, Ladenburg Thalmann & Co. banking industry analyst Richard Bove suggested that SunTrust merge with BB&T or Regions Financial.

In the September deal, SunTrust sold its Fleet One business to a private equity group for undisclosed terms. King & Spalding partner Bill Baxley advised SunTrust on the sale.

Fleet One, of Nashville, Tenn., is engaged in the business of providing fuel charge cards and management services to companies that operate fleets of trucks and other vehicles. SunTrust picked up Fleet One in 2004 as part of its acquisition National Commerce Financial Corp. of Memphis, Tenn.

SunTrust hasn’t said whether it’s looking for a buyer. SunTrust is participating in the U.S. Treasury Department’s program of making equity investments in banks. Treasury is acquiring $3.5 billion in preferred shares in SunTrust, which has said it plans to use the money to expand lending and possibly acquire other banks.

Pepper Hamilton advised one of Fleet One’s buyers, Philadelphia private-equity fund LLR Partners Inc. Kirkland & Ellis advised the other buyer, FTVentures of San Francisco. Fleet One’s management also participated in the buyout.

Before this fall’s stock market crash, mergers-and-acquisitions activity remained steady among private equity firms that focus on middle-market and small-market companies. Although the giant private equity firms—think Blackstone Group and KKR & Co.—may have slowed their activity this summer, midsized players like Arcapita Bank of Bahrain, and Navigation Capital Partners and VVS Capital, both of Atlanta, continued to swing deals. Arcapita acquired CEPL, a European warehouse logistics service in August, while Navigation and VVS teamed up in May to purchase Brown Trucking Co.

Now even that segment of the M&A world has dried up. King & Spalding partner Ray Baltz [left] in Atlanta, who is co-chair of the law firm’s private equity practice group, discusses the factors that have forced private equity firms to sit on billions of dollars of capital, with nowhere to place the money. The conversation has been edited for brevity and clarity.

Private equity firms have raised billions of dollars in capital, and it’s waiting to be invested. Are private equity firms sitting on the sidelines, waiting to make acquisitions, until the market normalizes?

Private equity firms continue to look for attractive investment opportunities. That’s what their organizations are set up to do. A large part of what’s going on is that there are not very many attractive business being put on the market for sale in this environment. If you are a business that is at all tied to the credit markets or to the housing industry, you are in a nuclear winter. Now is not the right time to put yourself up for sale, unless it’s a truly distressed sale. And there are some private equity firms that look at nothing but companies in distressed situations.

Even for healthy businesses, now is not the time to sell either. If you operate in an otherwise stable industry (not housing and not tied to the credit markets), and your business hasn’t declined at the same rate as valuations on Wall Street have declined, it’s still not time to put your business up for sale.

If you are a private equity firm or a buyout group, it’s not that you are unwilling to buy, it’s that there aren’t a lot of businesses on the market available to buy.

I also think sellers are being advised, perhaps incorrectly, by some investment bankers or financial advisers that because there is no leveraged financing available, if you put yourself up for sale, the private equity firms won’t participate in a sale process and you won’t get fair value.

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Three Morris, Manning & Martin lawyers advised apparel maker Boxercraft Inc. on a recapitalization.

MMM partners Sandy Smith and Bernard Coleman and associate Natasha Bell were counsel to Boxercraft, Smith said. Miller & Martin partner Jonathan Kent advised private equity fund River Associates Investments LLC of Chattanooga, Tenn., which provided the new financing. VRA Partners LLC of Atlanta was Boxercraft’s financial advisor. Terms of the recapitalization weren’t disclosed.

Boxercraft, of Atlanta, makes boxers, shorts, pants and shirts targeted to children and teenagers.

Atlanta-based Hunton & Williams partner Ron Lieberman is advising a Texas private equity fund on its proposed takeover of highway-bridge construction firm Meadow Valley Corp.

Insight Equity Management Co. has offered to acquire Meadow Valley for $61.3 million. The management of Meadow Valley is participating in the buyout with Insight Equity, according to a news release. The deal is expected to close by the end of the year, pending approval from Meadow Valley’s shareholders.

Lieberman declined to comment on the deal. He is also working with Dallas-based Hunton partner Andrew Lawrence, according to a regulatory filing.

Brownstein Hyatt Farber Schreck is advising Meadow Valley. DLA Piper partner Gregory Hall in Phoenix is advising a special independent committee of Meadow Valley’s board.

Meadow Valley, based in Phoenix, builds concrete highway bridges and overpasses and paves highways and airport runways. It operates primarily in Arizona and Nevada. Insight is located in Southlake, Texas.

The shareholders of a special-purpose acquisition company (SPAC) have rejected a proposed acquisition of Archway Marketing Services Inc., a marketing company owned by an Atlanta private equity fund.

Union Street Acquisition Corp. announced Monday evening that its shareholders rejected a plan to buy Archway for $80.3 million; Union Street shareholders also voted down the proposed acquisition of Razor Business Strategy Consultants LLC in a separate transaction.

Archway is owned by AHL Services Inc. AHL’s primary investor is Cravey, Green & Wahlen, an Atlanta private equity fund. Alston & Bird partner Teri McMahon had been advising Cravey, Green & Wahlen on the proposed sale of Archway.

Union Street said in a regulatory filing that, as a result of the vote, it will begin the “process of liquidating and dissolving itself in accordance with its charter and applicable law. … As a result, [Union Street] expects that the amounts held in its trust account, together with interest … will be returned to the Company’s public stockholders.”

The shareholders of a Virginia special-purpose acquisition company are voting today on whether to approve the purchase of a subsidiary company of a longtime Alston & Bird private-equity client.

In February, Union Street Acquisition Corp. announced it had reached an agreement to acquire Archway Marketing Services Inc. for $80.3 million in cash. Archway is owned by AHL Services Inc. AHL’s primary investor is the Atlanta private equity fund Cravey, Green & Wahlen.

Alston partner Teri McMahon in Atlanta is advising Cravey, Green & Wahlen on the Archway deal. Mintz Levin Cohn Ferris Glovsky and Popeo partner Kenneth Koch in New York is advising Union Street.

McMahon declined to comment on the Archway acquisition agreement or on the pending shareholder vote. As of Monday afternoon, neither Union Street nor AHL Services had announced the results of the shareholders’ vote.

Archway sells outsourced marketing services, such as program budgeting, vendor management, sales portals, inventory management, fulfillment and distribution, customer care and analytics.

Union Street is a special-purpose acquisition company, also known as a SPAC, that’s headquartered in Alexandria, Va. A SPAC is a shell company that sells common stock to the public for the sole purpose of using the proceeds to acquire another company.

Headlines about the newspaper industry of late have been filled with nothing but gloom and doom: Internet sites like Craigslist are peddling classified ads for free, obliterating a key source of newspapers’ revenue. Sales of help-wanted ads are collapsing like a house cards. Newspapers are offering buyouts to scores of journalists.

In one of the most extreme examples, the owners of The Star-Ledger of Newark, N.J., told newsroom employees that if enough didn’t accept their buyout offers, the paper would be sold.

But what about the daily newspaper in the Daily Report’s hometown, the Atlanta Journal-Constitution? The AJC, as the paper is known by locals, isn’t for sale, but most of the other papers owned by its parent company are. Cox Enterprises, the company controlled by Anne Cox Chambers and the children of her late sister, Barbara Cox Anthony, last week said it would auction off more than 20 of its smaller papers.

In a story in Monday's edition of the Daily Report, I report on what corporate lawyers, newspaper industry observers and Wall Street stock analysts believe are the chances that the Cox family might one day put the AJC up for sale. You can read about it here.