Horstman Holdings has been acquired by RENK AG. Horstman is a leading solutions provider in the global armor and tracked vehicle mobility markets. As the world’s largest independent supplier of military vehicle suspension systems, Horstman is on the leading edge of both passive and active vehicle suspension technology and is well known for its hydraulic and hydropneumatic suspension systems and complimentary high integrity engineering.
ARC Technologies, Inc., a leading designer and manufacturer of custom RF / EMI and microwave absorbing composite materials for defense, aerospace and industrial applications, has been acquired by Hexcel Corporation (NYSE:HXL). ARC Technologies has a wide range of capabilities for producing RF / EMI and microwave absorbing materials and specializes in combining absorptive metallic filler compounds, including carbon, iron and nickel-coated graphite, with a proprietary blend of polymer resins to generate various matrix materials including structural composites and thermoplastics.
Regional Mfg. Specialists, Inc., d/b/a Agile Magnetics (“Agile”), a leading designer and manufacturer of high reliability custom magnetics, has been acquired by Standex International Corporation (NYSE: SXI, “Standex”). Agile was a portfolio company of Coppermine Capital and Sage Peak Capital.
Headquartered in Concord, New Hampshire, Agile Magnetics manufactures high reliability magnetic components such as custom transformers, specialized inductors and tailor-made electromagnetic coils. The Company’s products are primarily purposed for mission and process critical power supply and conversion applications where the customer has high reliability, survivability and longevity requirements. The Company’s customers are predominantly OEM equipment manufacturers in the semiconductor, industrial, defense, medical, commercial and electronics industries.
Related companies Orbital Systems, Ltd. and Quorum Communications, Inc., leaders in the design and manufacture of ground-based full-motion antenna products for communications applications, have been acquired by Communications & Power Industries (“CPI”).
Headquartered in Irving, Texas, Orbital Systems is a global leader in the design and manufacturing of ground station antenna systems used for Telemetry, Tracking and Control (TT&C), Earth Observation Satellite Direct Broadcast (EOS DB) reception, RADAR, Search & Rescue (SARSAT), and custom tracking applications. Orbital Systems offers antenna positioners and integrated RF subsystems in Ka-, X-, S-, and L- bands with single or multi-band feeds, upconverters, downconverters, HPAs, and control systems.
Also headquartered in Irving, Texas, Quorum Communications provides solutions to the satellite remote sensing market and equipment used to receive and process satellite data such as microwave receivers, demodulators, downconverters and feeds.
Bittware, Inc., a global leading provider of computing systems featuring field-programmable gate arrays (“FPGAs”) deployed in data center compute and network packet processing applications, has been acquired by Molex, LLC, a subsidiary company of Koch Industries.
Headquartered in Concord, New Hampshire, BittWare provides solutions based on FPGA technology from Intel and Xilinx. Many of the world’s leading companies use BittWare FPGA solutions to provide the processing power for demanding applications in data center, military, aerospace, government, instrumentation, test, financial services, broadcast and video. BittWare commercial products turn the latest FPGA device features into reliable board-level solutions, suitable for both development and deployment in integrated servers. The company serves Original Equipment Manufacturer (“OEM”) customers who value the decades of engineering experience BittWare brings to designing custom solutions.
Roynat Equity Partners acquired its equity stake in SKYTRAC in 2012 in support of a management buyout.
SKYTRAC is Kelowna, British Columbia-based developer and manufacturer of full-service data-driven business solutions to the non-scheduled commercial aviation industry. SKYTRAC serves over 6,500 global users with flight following, flight data and communications technology.
The CVCA caught up with Roynat Equity Partners to discuss the details of the deal.
Why did Roynat choose to initially invest in SKYTRAC?
SKYTRAC was a profitable, high margin business operating in a highly regulated sector with very significant barriers to entry. We saw an opportunity to partner with a skilled key executive inside the company (Malachi Nordine, Head Of Operations) to buy the business from the owner-operator, who was looking to retire.
SKYTRAC has a scalable business model supported by strong underlying industry dynamics and continued global growth. We saw that with proper direction and mentoring of the existing management, SKYTRAC would be able to realize its full potential.
The aerospace industry is highly regulated. Government approvals and certifications of equipment and services create strong barriers to entry. SKYTRAC also had key OEM factory positions of their products. This is rare of for a company of that size. The company had a base of predictable monthly cash flow on which to build, with an unusually “sticky” customer and revenue base. SKYTRAC had a highly technically skilled team with advanced in-house R&D capabilities and a proven track record of continuous product innovation. The SKYTRAC employees were/are passionate in their desire to solve customer problems. They are disciplined in their execution and have a strong entrepreneurial culture.
Why did Roynat choose to exit SKYTRAC?
SKYTRAC’s revenue and installation base had grown to the point where the company’s brand was well-regarded throughout the global aerospace sector. We were receiving unsolicited expressions of interest from suitors around the world. The market was telling us it was time to think about crystallizing our investment. The timing of our exit also coincided with our average hold period (five years). We believed that in the hands of the right strategic partner, the company could reach a new level of customer such as large scheduled carriers.
We partnered with a highly reputable investment bank (Philpott, Ball & Werner) who had deep aerospace connections and gave us confidence we could execute on a successful exit. They delivered and ran a very good process for us.
How has SKYTRAC grown because of Roynat’s initial investment?
During our ownership, and with buy-in from management, there was a steady change in culture from a hardware-centric manufacturing company to a sales-driven high value-services company. Several key senior management positions were added to help build depth in the organization. The company also achieved industry recognized AS9100 (Aerospace Quality Management System ISO) certification which is a notable accomplishment for a company of SKYTRAC’s size.
The company invested in training of its employees to align with a services model that continued to build on the strong recurring revenue model. The company’s mission statement evolved to “creating customer value through intelligent connectivity.” Several new high value-added services were added to the company’s product portfolio.
The company strategically ceased manufacturing its own hardware in 2014, and seamlessly implemented the outsourcing of this function. This allowed internal resources to be better focused on services. A complete re-branding and re-positioning of the business took place at the same time, which was well received by the aerospace industry. The board of directors was strengthened with deep aerospace experience and contacts, and the sales strategy of the company was completely overhauled. Revenues have almost doubled since 2012, and EBITDA has almost tripled.
What was Roynat’s experience with the management team?
When we made our initial investment, we were well aware of opportunities to deepen the management team around Malachi. As such, we brought in a seasoned aerospace executive (Stephen Sorocky) as interim CEO to lead the strategy and to assist Malachi’s development. We also made investments in finance and accounting (new VP Finance), sales and marketing (VP Sales – new position).
We were very impressed when the management invested their own money into the company. This showed a commitment to succeed and a culture/willingness to work through challenges and difficulties.
In its other core functional areas such as engineering, installation, product design, software management and customer service, SKYTRAC has long benefitted from a loyal and skilled team of lieutenants focused on execution. The company has a strong VP Finance, and its VP Sales is a star who is driving growth to new levels. Malachi has developed strongly over our five-year partnership and is now the leader of the SKYTRAC team in all aspects and is the driving force of the company.
Do you see opportunities to invest in similar companies in the future?
We are of course restricted from investing in highly similar companies due to our non-compete, however, we are actively looking at exciting opportunities in other sectors of the aerospace industry.
Is there anything particularly interesting about this exit that Roynat would like to emphasize?
All of the staff has remained intact, and the business continues to be run from Kelowna, BC. The SKYTRAC brand is maintained and the company now has channels to market with new partnerships. Key management were enticed to invest alongside Roynat at the same valuation and all wrote material cheques. Furthermore, an option pool was established to further incent these key people. This financial arrangement has led to a recent life-changing event for our operating partners through this divestiture.
Malachi is still passionate about the business and he and his management team are working to take SKYTRAC to the next growth stage.
Outside of the financial return, what other significant impact has SKYTRAC made in its community that is worth noting?
SKYTRAC has developed deep roots in the Kelowna area going back more than 25 years. It typically hires its new recruits from the tech schools and universities in the area. SKYTRAC’s annual co-op contingent is by referral only, with engineering professors often personally recommending students to come and work for SKYTRAC. Given that it is well known that meaningful, real engineering work is done at SKYTRAC as a co-op student, there is often a lineup of co-op candidates. SKYTRAC is very involved in the community, and encourages volunteerism through Volinspire.
SkyTrac Systems Ltd. (“SkyTrac”), a leading provider of data-driven solutions and data acquisition systems for the global aviation industry, has been acquired by Drew Marine UK Holdings Ltd. (“Drew Marine”). SkyTrac is a portfolio company of Roynat Capital, the private equity group of Scotia Bank, and Drew Marine is a portfolio company of the Jordan Company. Headquartered in Canada, SkyTrac is a full-service, data-driven solutions provider to the aviation industry. Since 1986, SkyTrac has pioneered the development, evolution and commercialization of flight following, flight data and communications technology. SkyTrac offers a one-stop response for reliable and secure aviation data management solutions that elevate efficiency, safety and drive revenue, from performance trending and business reporting to real-time asset tracking and situational awareness.
AeroAntenna Technology, Inc. (“AeroAntenna”), a leader in the design and production of high performance active antenna systems, has been acquired by HEICO Corporation (NYSE: HEI.A and HEI). Headquartered in Chatsworth, California, AeroAntenna manufacturers antenna systems for critical defense applications, precision guided munitions, commercial aircraft, ground vehicles and other commercial uses. AeroAntenna is a market leader in numerous antenna types and applications including GPS, aircraft navigation and satellite communications. The transaction is HEICO’s largest acquisition in company history. AeroAntenna will become a part of the HEICO Electronic Technologies Group.
Adaptive Methods, Inc., a leading Undersea Warfare (“USW”) systems engineering company, was acquired by L3 Technologies, Inc. (NYSE: LLL). Based in Centreville, Virginia, Adaptive Methods delivers USW and Anti-Submarine Warfare (“ASW”) capabilities for U.S. military customers. It is also developing autonomy and sensor payload solutions for use by Unmanned Undersea Vehicles (“UUVs”). Additionally, the company provides tactical buoy systems for manned and unmanned platforms, as well as ASW sonar processing systems and displays and command and control/theatre ASW systems.
Atlas Devices, LLC (“Atlas”), a leading developer, manufacturer and supplier of rapid access solutions, has been recapitalized by Anvil Capital. Atlas provides innovative solutions that enable rapid access for defense, special forces, security, law enforcement and rescue personnel during difficult missions in maritime, urban, airborne and other environments. Atlas manufacturers the highest performance power ascenders in use today and also offers other specialized access products such as ropes, ladders, poles, hooks, magnetic climbing systems, launchers and related products.