Derek Coppinger, the newly appointed chief executive of Raptor Scientific LLC, is pursuing an aggressive rollup strategy of small to midsize companies to consolidate the testing and measurement sector of the aerospace and defense industry for his recently formed company’s owners, Newport Beach-based investment firm L Squared Capital Partners.
Coppinger, whose selection as the company’s first CEO was announced earlier this month, said some acquisitions may be possible within three months.
“We’ve identified over 60 possible targets in the industry,” he told the Business Journal last week. “We’re actively reaching out to all of those through a number of formats.”
Discussions are taking place daily, Coppinger said. He expects the number of target companies to increase, and said that additional deals could be announced in the next quarter or so.
“The fragmented aerospace and defense testing and measurement market is ripe for consolidation and presents a significant opportunity for growth through M&A,” said Coppinger.
He added that the testing and measurement area for the sector is “pretty large.”
For example, with military aircraft such as the F-35 and F-22 fighters, “all of those aircraft need to be tested to ensure that all the components on them, everything from communications to their landing gears to their altimeters to their engines and so forth” are working properly.
Testing spans various stages, including research and development, manufacturing, pre-flight and aircraft return.
“They’re always making sure that all of those components on the aircraft are performing the way they are meant to perform,” said Coppinger, adding missile defense as another example of systems to be checked.
$60 Million
Raptor Scientific was formed last year and in September completed its first acquisition, Berlin, Conn.-based Space Electronics.
The Connecticut location is currently listed as the Raptor headquarters; Coppinger said a decision on the firm’s ultimate headquarters site will be made later.
Space Electronics provides electronic circuit testers that are used by aerospace and defense original equipment manufacturers. Terms of the acquisition weren’t released.
L Squared has set aside $60 million for Raptor’s first batch of acquisitions, but Coppinger expects the amount will go up.
“It depends on the targets,” Coppinger said. “Ultimately, we’ll have to see what we find for opportunities and how large they are and if we need to bring any more funding to the table.”
He said target companies are “all over the country,” as well as some in Europe.
L Squared equity investments can run $20 million or more, and the investment firm typically invests in firms with between $10 million and $100 million in revenue, according to the firm’s website.
Coppinger said L Squared owns 100% of Raptor Scientific, which he referred to as a “holding company” that will be acquiring more firms.
Short-Term Goals
“We have partners that are helping to support us,” according to Coppinger, a native of Ireland who now lives north of Boston in the town of Newburyport and spends much of his time on business travel. “Everybody is constantly updating each other through emails or phone calls.”
“We are pleased to have Derek join the Raptor Scientific team and feel his background is a great fit to lead our aggressive M&A strategy,” said Sean Barrette, partner at L Squared and Raptor Scientific board of directors member in announcing Coppinger’s appointment on Jan. 14.
Coppinger previously served as vice president at Newcastle Systems Inc. of Haverhill, Mass., while his résumé has also included the post of chief operating officer of National Technical Systems in Calabasas.
Coppinger holds a master’s degree in engineering and management of manufacturing systems from Cranfield University in the U.K.
Other Interests
David Pritchard, associate professor/aerospace researcher at State University of New York’s Empire State College in Buffalo, questioned how far the initial $60 million would take Raptor toward industry consolidation.
“What do you bring to the table? I got $60 million and I’m looking at 60 companies. You’ll be lucky to buy two or three companies with $60 million,” Pritchard said. “It doesn’t excite me.”
Without knowing the specifics of the target companies and the final amount available for investment, Pritchard said Raptor’s industry consolidation plans may turn out to be “pie-in-the-sky stuff.”
Aerospace and defense isn’t the only area of interest for L Squared’s investment. The company said it has more than $550 million of committed capital to invest.
Among its other current investments are Kanopy of San Francisco, a streaming video platform for schools and libraries, as well as United Scope of Irvine, a provider of microscopes and related accessories sold mostly online.
