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L Squared Sees Active Deal Environment This Summer

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.

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Sonia Chung
Sonia Chung
Sonia Chung joined the Orange County Business Journal in 2021 as their Marketing Creative Director. In her role she creates all visual content as it relates to the marketing needs for the sales and events teams. Her responsibilities include the creation of marketing materials for six annual corporate events, weekly print advertisements, sales flyers in correspondence to the editorial calendar, social media graphics, PowerPoint presentation decks, e-blasts, and maintains the online presence for Orange County Business Journal’s corporate events.
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