Tech-focused private equity firm L Squared Capital Partners in Newport Beach is looking to a “very active deal environment” this summer.
“I would expect you’re going to see us invest in some new platforms this summer and also some add-on acquisitions for our existing portfolio companies,” firm partner Sean Barrette told the Business Journal on May 29.
He sees strong interest and “the M&A markets are open again.”
“We’re hopeful that some of our new deals can be here closer to home.”
L Squared Capital Partners is a private equity investment firm with over $2 billion of equity commitments under management that seeks to make investments for long-term growth.
The firm specializes in investments in education technology, tech-enabled services and software, and industrial technology and services.
Raptor ‘Very Successful’
L Squared said on May 28 it had agreed to sell its portfolio company Raptor Scientific to aircraft components maker TransDigm Group Inc. (NYSE: TDG) of Cleveland for $655 million in cash.
“It’s a very strong return of capital for our Fund 2 investors,” according to Barrette. “It’s a very successful investment for us.”
The Raptor Scientific transaction is subject to customary closing conditions and the receipt of regulatory approval.
Raptor Scientific was founded by L Squared with the goal of investing in the aerospace and defense test and measurement market.
“It will be a return of capital to those investors,” Barrette said.
Under the L Squared ownership, Raptor Scientific grew revenue from about $9 million to approximately $90 million. It employs about 170 people.
The pending sale marks the ninth overall exit since L Squared’s formation in 2014 and second in the last 45 days.
$840M Raised
L Squared Capital Partners said in November it had raised $840 million in its fourth fund. It has over $2 billion of equity commitments under management.
In February, the firm said it had formed BTX Precision to continue accelerated consolidation in the North American precision components sector.
L Squared started the consolidation with the acquisition of ERA Industries of Elk Grove Village, Ill., followed by the acquisitions of Gen-El-Mec Associates Inc. of Oxford, Conn., and i3DMFG of Redmond, Ore.
L Squared invests in “well run, growth-oriented businesses with high operating margins,” Partner Randall Hunt previously said. Its target investments typically are companies with revenue between $15 million and $100 million, with annual growth of 15% or more and EBITDA (earnings before interest, taxes, depreciation and amortization) of $3 million to $25 million.
L Squared typically invests $30 million to $100 million in equity for companies in its portfolio, according to its website.
