Janes Capital Partners Inc.’s recent momentum might look sudden, but it’s the latest leg in a steady run that has seen “one good transaction after another” over the past 15 years or so.
The Irvine-based company is strictly focused on the aerospace and defense niche. It advises on mergers and acquisitions—largely on the sell side—for private business owners, public companies and private equity firms. It also provides valuations and recapitalization services.
Janes Capital ranked No. 130 on this week’s Business Journal list of the fastest-growing private companies with headquarters in Orange County (see list, starting on page 50). The list measures the two-year percentage growth of a company’s revenue, looking at the 12-month periods through June 2011 and June 2013. Janes Capital had $7.1 million in the latest 12-month span, up 42% from two years prior.
“We’ve had a fair amount of success, frankly, in recent years,” said Stephen Perry, cofounder and a managing partner. “It’s really all the hard work that’s been done over 15 years. We’ve had successes over those years, too, but I think a lot of really good things are happening right now. There’s that expression, ‘The first million is always the hardest to get.’ The next million is easier. As we get our momentum going, it gets easier and easier.”
The company now stands among top mergers and acquisitions advisers in the aerospace and defense industry. It’s grown to a group of nine professionals and has a track record of completing more than 50 deals, which combine for a value of roughly $5 billion. The figures include six deals that were closed last year for a total value of about $475 million.
“The average deals have doubled over the last three years,” Perry said, while noting that the number of deals is not necessarily linear year-over-year. The spike in 2012 also was due to involved parties’ efforts to complete transactions ahead of anticipated tax-rate increases in 2013.
Recent high-profile deals have gotten Janes Capital some limelight from industry organizations, including an award last year from M&A Atlas Awards for the firm’s role in advising on the $165 million sale of Sacramento-based Composite Engineering Inc. to Kratos Defense & Security Solutions Inc. in San Diego.
Smaller Start
Janes Capital had smaller beginnings.
“We started with about six business cards … a desk and a phone, and a lot of naiveté on my part,” Perry said, recalling the firm’s founding in 1997, when he, with a background in investment banking and corporate finance, joined David Janes to work on a handful of deals involving aerospace and defense companies. Janes at the time had divested his interests in California Manufacturing Enterprises, an aircraft parts manufacturing company he cofounded in 1977 and led as chief executive. He retired as an admiral from the U.S. Navy in 1994 after 36 years of service.
Aerospace and Defense
The duo behind Janes Capital stuck to the aerospace and defense niche, growing their client base and deal opportunities, trucking along through major external challenges—such as the Sept. 11 terrorist attacks and the severe acute respiratory syndrome, better known as SARS—that not only slowed down commercial aerospace businesses but also dampened mergers and acquisitions activities.
Perry said he credits the firm’s sharp focus on the aerospace and defense sector for much of its growth and stability.
“Why that’s so important is because the relationship we have to develop with a business owner can take five, 10, even 15 years to develop,” he said. “It’s an incredibly long sales cycle, and relationships really do matter, so the focus is important. It’s imperative to know exactly who to call. That focus gives us access at the highest levels, which is what our customers expect of us.”
Broader Reach
Janes Capital also expanded its reach overseas.
“We used to just be focused on clients in the local marketplace, but we’re … going all over the world now,” Perry said. “Opportunities are certainly emerging nationally, and aligned with that, internationally, from the perspective that larger firms have overseas facilities. We need to be in touch with European, Brazilian, Japanese, and Korean businesses. It truly is a highly globalized business today. If you flash back 30, 40 years ago, it was basically a U.S. supplier selling parts to a U.S. [manufacturer], selling parts to a U.S. airline, flown by U.S. passengers within the U.S. That has changed.”
More Growth
The firm is looking to grow its international reach even further as it readies to join M&A International Inc., a global organization that connects some 600 investment bankers from investment firms in 40 countries.
Members of the alliance have collectively closed more than $65 billion worth of deals in the past five years.
“We’ve been invited to join, and we’ve been talking to them for years to really strengthen their aerospace vertical,” Perry said. “With this new change, we’ll have technically affiliates in 40 different countries. It will give us more scale as we get bigger and bigger opportunities. It’s a real honor to have that.”
Perry said there’s still plenty of aerospace and defense work in Southern California, despite the “misnomer … that everything about aerospace left the area” in the 1970s.
OC
“There are hundreds of [such businesses] here,” he said. “Our bread and butter is Southern California. And certainly, probably from the beginning of our genesis, if you will, OC has got the lion’s share. We’re here, we live here, we love it here. We’re certainly anchored here. This is the foundation where we grew.”
The firm maintains strong OC ties, including through Chairman Janes, who made a donation to Chapman University last year to help fund the school’s new financial trading center. The facility, named Janes Financial Center, opened early this year, and is used as a classroom and a lab for undergraduate and graduate programs at Chapman’s Argyros School of Business and Economics.
Janes is vice chairman of the board of trustees at the university and chairman of the board of regents at Brandman University in Irvine, part of the Chapman system. He also is national chairman for Employer Support of the Guard and Reserve, an office of the U.S. Department of Defense.
