I'm trying to wrap my head around what the most compelling parts of / headwinds against A&D / gov PE might be, and how to distinguish those factors from industrials writ large. Very few firms have dedicated verticals in this space, and I don't know if there have been any home runs recently that can be studied. Obviously, CG has been struggling overall but I was wondering how much that vertical has been immune or a contributor.
Also wondering in particular how much regulatory risk / trends influence evaluatiing opportunities in the space. Veritas has been known for doing gov stuff, of course, but they don't even have a DC office; same for KKR, which has a lot of their Industrials team also on their "Global Instute" but seems to work mostly out of NYC.
Following
Highlights - Long term, high visibility funded dod programs; underwriteable, regulation driven mro cycles; higher multiples generally than standard industrials
Headwinds - program delays / funding cuts; low margins on direct gov work; constantly fighting insourcing my the Primes/OEMs
Does anyone have a good list of PE firms that have dedicated strategies or groups in the space? Obvi Veritas/ACP/Carlyle are top but who else does a lot of this work? Seems to be a little more opaque than which IB groups are top.
Why do you say those funds are "top?" Because they have large AUMs and because they're WSO prestigious?
Carlyle had to deal with a debt restructuring with Sequa and ultimately exited the investment with less EBITDA than it bought it at. Veritas paid a mouthwatering multiple for Chromalloy and they're now struggling to get FAA approvals on the next engine platform... it's a struggling investment according to their lender...
Every PE firm has a struggling investment in their portfolio (or several) not indicative of a firm being top notch. Veritas has been one of the top performing funds over the last decade (statistically proven, I can track down the source but some academic did a study on private equity performance and they were in the top five). Don’t work there and have no affiliation but don’t conflate having one poor performing investment with being not a good fun especially with the track record of success they have had.
Why is this comment so unnecessarily hostile? ACP is a fine answer and a large-ish fund but it's hardly "WSO prestigious."
In no particular order:
- Veritas
- Arlington Capital Partners
- J.F. Lehman & Co.
- Sagewind Capital
- Enlightenment Capital
- DC Capital Partners
- AE Industrial Partners
- Bluestone Investment Partners
- Godspeed Capital
- Blue Delta Capital Partners
- Capitol Meridian Partners
Considering recruiting at the firms above (good list, thanks). Anything A&D PE specific that I should know? Eg. saw comment above on knowing how a contract waterfall works. Thanks.
Could anyone else opine here
Would stay away from a few of the funds above due to fundraising dynamics and recent issues with portcos. Would also look for funds that recently raised as well
I’d have an understanding of the longer term industry growth drivers. Modernization is the buzz word now driving higher multiples across the board & also making services co’s much more relevant. Big contrast to the 2010s where the general focus was on procurement
Understand the early stage trends vs buyout in ADG, especially in defense there's a lot of new stuff going on thats still early stage.
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