Smartest guys in the room — Private Equity engagements in the space industry

Update 03/01/2023 15:15 CET — added Maxar, transactions of AE Industrial partners, conclusion and a note at the end.

When the news broke about Maxar’s takeover by Advent International, it seemed to me the role of Private Equity funds in the space industries is underappreciated — and certainly a topic to dig deeper into. I try to offer a background on how private equity funds function, a statistical overview of the transactions I’m aware of and finally a strategic commentary on the more recent transactions.

I don’t have the ambition to completely exhaust the topics — but I believe to have brought a decent overview. All statistical claims are summarized in the sheet. I’m not proud to have the article overfocused on the US market — tho I’m only loosely aware of PE engagements in the space industry in other regions around the world.

How private equity makes money?

Most importantly, Private Equity focuses on businesses which produce cash. That is also the major divider between PE and venture capital — the second major distinction would be acquiring majority stakes with also allows for operationally improving the said businesses. Regular cash flows produced by a business can create magic. So in fact, any business producing stable cash flow purchased by a PE group can return the investment. In addition, PE purchases companies with a combination of debt and equity, which (assuming acceptable interest rates) further increases the return on the investment. The debt part increases leverage and those transactions are thus called LBOs (Leveraged Buyouts), with funds generally looking to distribute returns to their investors within a 5–7 years horizon.

Those are the basic pillars of Private Equity and have more to do with financial engineering than operational expertise. Private Equity is necessarily transactional. Indeed, this constant cycle of buying and selling determines the ways further increase the returns — buying low and selling high.

There are several strategies PE companies employ to acquire assets at low prices.

• Public to private takeovers — when a firm believes companies are improperly valued in public markets
• Distressed assets — if private companies face a challenge or are already in bankruptcy, Private Equity can acquire the assets from creditors at a discounted price.
• Corporate divisions — within restructuring, corporates often decide to liquidate certain divisions. With a high motivation of a corporate to sell and usually limited market desire to acquire, PE groups often step in.

Even without any operational improvements, PE groups often merge several businesses in one vertical into a single company. When further sold or IPOed, bigger companies in one area tend to trade at a higher multiple, due to lower risk and thus a lower cost capital.

Operational improvements

Apart from the purely financial ways to maximize shareholder value, Private Equity groups are known to be very active on company boards or replace the existing management directly. That contributes to

• Sales improvements — topline growth
• Operational improvements — decreasing cost (or increasing spending efficiency), which improves the topline
• Another popular strategy is buy and build — purchasing a platform company and developing it via a set of acquisitions — either horizontal as mentioned above or vertical integration (which, in limited cases, can again lead to trading at higher multiples). Implications of roll-up strategies would make up for many HBR case studies — the key term here is “synergy”. Every time an acquisition happens — a number of commentaries argue whether the benefits of the transactions surpass its costs. For a transaction to happen, the best belief of the management must be a positive answer and that is what buy and build strategy is about.

There are last two further reasons why PE buyouts work well for companies (and generally better than corporate M&As).

• In the conditions for a transaction, the acquired company’s management is heavily incentivized to do well via performance-based payouts. Often, they are also encouraged to invest their own assets in the company alongside the PE firm. That also means that more often than not, achieving short-term goals and improvements gets a prime.
• Secondly, PE funds are simply better at the craft of acquiring companies. Doing transactions on a serial basis moves the needle in the PE firm’s favour.

To provide a bit more complete picture — there are also notable reasons why the private equity shops may not do so well.

• Increased market efficiency. When the PE industry started becoming more mainstream in the 1980s, markets were fairly inefficient and companies poorly run. On average, companies are better run today. In addition, the immense growth of emerging PE funds occured and so — more companies are now bidding for every opportunity.
• Considering the global macroeconomic climate — the raise of interest rates absolutely, directly, translates into the cost of borrowing in Leveraged Buyouts and thus into the returns. Overall, the downside in terms of loan repayment and limited upside as compared to venture capital adds to the difficulty of this business.
• Lastly, PE transactions are characterized by a high degree of illiquidity. Finding a buyer for a specific business in an off-market who may be willing to pay an adequate price is certainly a source of risk for those transactions. In the following examples, often you will see not ideal transactions getting closed presumably for this very reason.

Statistical summary

Markets

Past case studies for PE engagements in the space industry are relatively limited — which is not surprising given the relative youth of both the modern space industry and private equity. As mentioned in the beginning, potential PE targets are limited to companies producing stable cash inflows in an at least certainly predictable market.

Thus, two industries have historically been popular. Satellite communications operators are known for high barriers to entry. During the process of building and commissioning satellites (or when in a need of replacement), those operators tend to fall into trouble. That constitutes an optimal entry point for PE groups — a somewhat discounted asset, which with a limited (or considerable) investment turns into a cash cow for the remaining lifespan of the satellite. Some PE engagement has also involved satellite communications equipment providers, which are mentioned towards the end of the article.

Another frequent target for PE buyouts are industrial component-manufacturer firms in the space/aerospace/defence markets. Historically, they have been more fragmented and so it is more difficult to talk about specific cases. But as referenced in the beginning — stable revenue from defence/exploration missions, predictable contracts for years and the option to offer the capability in adjacent markets make this type of company attractive to PE.

Sizes

In my database, I have quantified the Total Assets Under Management (AUM). Perhaps a more accurate measure would be to consider assets in the specific funds — which adequately scales down firms rolling many funds (or cross-strategy) funds at once, but causes troubles with reporting. Two dominant categories by fund sizes emerge.

Generalist PE groups with total AUM at around 50B in assets — with specific funds north of 10B. That has been historically a dominant category. Most recently, specialized PE funds with under 6B in AUM emerged, where single funds can range as low as a couple of hundred MUSD. As new players in the space industry emerge — the necessary check size for meaningful transactions decreases, which justified the existence of those smaller funds.

Entering the space industry

As mentioned above, the activity of generalist PE groups in the space industry increases only gradually. The best know PE funds still don’t hold space companies in their portfolio — for a better or worse. On the other hand — the space-open PE groups from the bigger AUM range certainly play the major PE league. The proliferation of PE funds in the space industry is likely to increase as the industry faces a more predictable future, but the market remains disrupted at the same time — which will bring more distressed assets into the game.

Transaction case studies — the way you like it

GeoEye

Perhaps the oldest transaction I’m aware of is the Digital Globe Acquisition of GeoEye. In 2010, Cerberus Capital Management acquired its first stake in GeoEye as the company had to have a secured credit before competing for a US Gov’t contract. Before the winner was announced, confident GeoEye backed by Cerberus actually proposed an acquisition of DigitalGlobe. I was lacking the context on what happened next — so I asked on Twitter. The contract in question is NGA’s NextView which went single source due to budget cuts. As NGA decided to pick DigitalGlobe, GeoEye wasn’t left with many options but to get acquired. I believe the price tag was 900M and DG indeed became Maxar to live and merge another day.

Cerberus is one of the bigger PE funds, with 55B AUM as of 2023. Currently, they specialize the most in distressed assets, but I’m not sure if it is fair to classify the GeoEye transaction in that way — I suppose when in need of credit, Cerberus’s entry into GeoEye may have been at friendly terms, but Cerberus has also shown the willingness to invest into the DG acquisition — which doesn’t fall as a pure distressed asset play. The exit of the position happened in 2014 — so four years fit into the PE time horizon.

Stratolaunch

More recent Cerberus’s deal in the space industry fits better into the distressed asset category. In 2019, followed by the death of Paul Allen and the financial struggles of Stratolaunch — the rocket launch from a plane startup at the time, Cerberus acquired the company. The financials were not officially disclosed — Stratolaunch asked for a 400M price point, but the final price may have been lower. Stratolaunch rehired a range of employees back into the firm — but also changed its positioning. After Cerberus’s entry, Stratolaunch reoriented from satellite launch into hypersonic component testing — a market which is notably less competitive and probably larger in TAM as it includes also aviation and defence customers which horizontal launch probably wouldn’t reach to.

The counterargument could be that Stratolaunch showed some hints of this possible repositioning before the transaction, but otherwise, it could be a typical example of value creation in private equity.

Eutelsat

In one rare deal of PE involvement in the space industry in Europe, Eurazeo owned Eutelsat’s shares from 2003 to 2007. This signifies yet another role of PE groups — in cases of complicated corporate structures (which Eutelsat indeed was in the transition from a multigovernmental organisation into a publicly traded entity), PE groups can buy out minority shareholders and reorganise the firm into more streamlined structures. In 2003, Eurazeo purchased about 23% from France Telecom. Today, Eurazeo is a significant European PE player, it was only the second PE deal for the firm at the time. After the IPO in 2004 and in 2005, Eurazeo purchased more shares via open market transactions, before exiting in all together in 2007 into the hands of CDC. CDC could be classified as a French variant of a sovereign wealth fund, which justified the purchase to avoid corporate raiders or attempts of the competition to force buyout Eutelsat.

YahSat

It is probably not fair to include YahSat. Created by Mubadala in 2008, YahSat is one of the most interesting satcom providers outside the big four. Mubadala is not a PE fund — it's the UAE’s sovereign wealth fund (and also bigger by multiples from the biggest PE firms). But I would argue that Mubadala acted in a similar way growth investors would.

Mubadala formed YahSat in 2008 and financed all its Capex to launch satellites, which later led to Thuraya’s acquisition in 2018, strategic investments and finally an IPO in 2021. Currently, YahSat trades at a 4.3B (USD) enterprise value.

Tryo Aerospace

This transaction again falls into the aerospace manufacturing supply-chain category I mentioned in the beginning. A case study on Alantra’s website actually describes the transaction in great detail. As for the actors — Alantra is an alternative asset manager mixed with an investment bank. By AUM, they would belong among the smaller generalist firms, especially if we exclude non-buyout funds. I’m not certain how Tryo Aerospace got formed, but it is a Spain-based company with two distinct major shareholders, two distinct companies and three product divisions under them.

Alantra acquired Tryo in 2011 and focused on operational improvements — appointments of new executives, a stronger emphasis on international markets (via building presence in new countries), acquisitions (buy and build strategy) and operational improvements — mostly cost optimization via centralized purchasing and services available for all holding companies. From the PE playbook shown in the beginning, Alantra made full use of them.

The reinforced holding company indeed split — one division has been sold to a UK radio communications equipment provider. The division of our interest — the aerospace and broadcasting (satcom) division has been sold to Sener, a Spanish space hardware provider as a part of its strategy to focus stronger on the commercial satellite market.

Few other thoughts

That is all for notable transactions in Europe — ESPI Space venture Europe report mentions two transactions in 2021 which could be classified as private equity — but in this case, we are talking more about institutional financing pre-IPO than a PE in the distressed asset or LBO sense.

Europe-based Tikehau Capital expressed an openness to the aerospace market but so far conducted no relevant transactions.

In the US — Acorn Growth Companies is in a similar situation. Having recently raised 0.6B aerospace and defence fund and appointing Jim Bridenstine (former NASA administrator) as a senior advisor — a stronger move into the newspace field is anticipated but has not progressed since.

Weather

Weather, as a part of the application/space-enabled services layer, is not a common vertical for PE buyouts. In perhaps a surprising and not heavily medialized move — the TPG Growth fund (one of the major PE funds globally) invested 100M via into ClimaVision via its environmentally focused Rise platform. ClimaVision emerged from stealth as a weather intelligence platform diverted from EEC — a more traditional weather satellite manufacturer.

Till now, there ClimaVision has not specified the space component — but started gaining revenue in improving the terrestrial weather radar coverage. The space component remains advertised, but ClimaVision will need to find the right niche among the governmental (free) weather data and fields occupied by its emerging competitors.

Veritas Capital

Veritas Capital is another major US PE fund — and one of the most experienced in space. Recently, the firm even submitted a bit to acquire Aerojet Rocketdyne but ultimately lost to L3Harris.

I’m broadly trying not to comment on recent transactions — but the CAES rebranding to Frontgrade technologies again received some attention. Private Equity is indeed involved again. In this case, Cobham Limited — a British aerospace component manufacturer, owned by Advent international (!, more on that later) decided to divest the CAES division manufacturing radiation-hardened components for satellites. This specific division has been acquired by Veritas and rebranded earlier this year.

It is not the first space component play for Veritas. In 2014 Veritas purchased solar panels manufacturer SolAero from a photonics manufacturer and as you may have realized, the same SolAero has been acquired by RocketLab last year. As I have mentioned in the beginning PE isn’t only sugar and spice. Judging purely from media reports — Veritas purchased SolAero for 150M in 2014 and reportedly sold to Rocketlab in 2021 for 80M. It should be said there may have been other conditions (performance-based payout from RocketLab or a lower final purchase price in the beginning) and Veritas could have still made money on this transaction, but still, it doesn’t look too good for them.

Karman Missile

It is no secret the US defence primes landscape became extremely consolidated with just five major players. Both venture capitalists and players in Private Equity show their attempts to disrupt this dynamic.

Trive Capital, a Dallas-based PE group established a Karman Missile holding in 2021 via acquisitions of AEC and AMRO. Those are again more traditional manufacturing contractors involved in rockets, missiles and also some satellite-related projects. Trive Capital has a total of 4B AUM and exerts a typical roll-up holding mid-market buyout strategy with a focus on operational improvements for second and third-tier aerospace and defence companies.

Orbcomm

Swinging back to the application side, OrbComm is an IoT connectivity provider mainly for the maritime market. The company has been publicly traded, but faced some challenges over the years — firstly, several times it's commissioned satellites did not work as planned which resulted in revenue loss and the company has been caught in a regulatory battle with Swarm (later acquired by SpaceX) over VHF spectrum rights. Thus, in 2021, the company has been brought back private by GI Equity Partners in an all-cash 1.1B deal with a 51% premium over the price at the announcement date.

This falls again into the strategy of bringing private undervalued public companies with existing revenue streams. In addition, GI equity partners tag this deals as a data infrastructure, which is quite a popular vertical for private equity. In addition — OrbComm has contract with AAC Clyde on developing VDES (anticipated more capable AIS) satellites, which is where I understand the potential upside for the company lies. I know of some incumbents in the VDES landscape but OrbComm comes well-positioned in this emerging market with existing customers and distribution channels.

Maritime connectivity

Marlink

As a former, but still proud Norwegian resident it has been only a question of time till I bring up Marlink. Marlink is a satellite connectivity services provider, again mainly for shipping and offshore industries. Marlink has a really interesting history connected to the early satcom during WWII and has been a part of Airbus. In 2016, Airbus Aerospace & Defense group decided to divest the service provider business to focus more on satellite manufacturing. Apax Equity Partners bought Marlink, improved the health of the business, acquired a major competitor (ITC Global from Panasonic Aviation — which decided to stay by its name and focus on aviation only) and nearing the five-year time scale of Private Equity decided to roll Marlink into the hands of a yet bigger TMT focused PE group Providence Equity Partners.

Globecomm systems

I actually realized the importance of acquiring ITC when reading about another transaction, Wasserstein & Co selling GlobeComm systems to Speedcast. Wasserstein brought formerly Nasdaq-traded GlobeComm private in 2013 at about 340M enterprise value, or 10x EBITDA at the time. In 2016, amid declining oil prices (and thus related maritime and discovery activities), GlobeComm and a number of competitors have been reported to be on sale. That happened in late 2018 when SpeedCast of Australia purchased GlobeComm for 193M USD. The transaction has not been very successful and did not contribute to Speedcast at a declining tendency, which later led to a reorganisation under Centerbridge Partners.

BoeCore

Yet another fairly recent transaction is the acquisition of Orbit Logic by BoeCore. BoeCore is a platform acquisition by Enlightenment Capital (a typical member of the small specialist PE funds focused on Aerospace, Defence and Government, with the last fund being somewhere north of 500M). BoeCore, as an intelligence software provider, is acquiring smaller software shops in the field. The acquisition of OrbitLogic is interesting as it is one of the first involvements of Private Equity in mission software and ground segments — which can offer all stable revenues, interesting growth potential via acquisitions and the so popular infrastructure element.

OmniSpace

A lot of confusion can happen on the edge between venture capital and private equity. Often, in what is classified as private equity, VCs write 100M+ checks but limit their minority stake and operational improvements. In some cases (like with Tracker capital getting 51% of propulsion manufacturer Accion Systems) deals are really on the edge between PE and VC.

In the interest of correct naming, maybe it's fair to interchange PE and VC but then extend our vocabulary by correctly naming LBOs, rollup holdings, platform/build and buy strategies and so on.

In a similar transaction on the edge, Fortress Investment Group participated in the 60M investment round into OmniSpace — a hybrid satellite/terrestrial 5G service provider. Given the size of the round relative to the FIG’s holdings, I may overestimate the strategic importance of the transaction. It is not clear what role FIG plays — some answers may be provided in the recent partnership with Ligado and OmniSpace’s spectrum holdings. With this move, FIG can either hold a stake in an emerging D2D player — or step into a lucrative spectrum auction.

GeoST

I have honestly completely missed this transaction — ATL Partners is a specialized PE shop with 2.2B in funds. In 2021, they have acquired Arizona-based GeoST of about 75 people, a developer of space components for thermal, optical sensing and other areas including SSA and laser communications.

While I don’t have a deep view into the company — none of the signals suggest it would be in any form of stress. That said, I do understand what may have prompted it — those small shops often face the challenge of predicting revenue — which can depend just on a few government contracts. Secondly, with a cost of capital — finding a stronger backer could lead to better commercial prospects for the entire product range and connecting into the commercial space value chains.

Friends — it's 3500 words and we are just nearing the grand finale. Those are the four most appreciated players in the space.

AIAC

“Bradford Space is the most capable space company you’ve probably never heard of.” In 2016, American Industrial Acquisition Corporation went branching into the space. AIAC is a generalist industrial PE company — with a range of industry vertical involvements in Packaging, Rail Mining, and “Canadian Timberland” — not limited to the space industry. First, they have acquired Bradford Engineering and two more companies — ECAPS, a Swedish non-toxic propulsion manufacturer that would fit into both playbooks of platform add-on and a special situation and SSC — the former owner tried to exit the position. In 2018 Bradford also acquired DSI which I wrote about in this article. It is worth noting Bradford did not limit itself just to acquisitions and continues to strengthen its product portfolio onwards.

Antarctica Capital

Antarctica Capital is not leaving the industry waves calm. I wrote about Urthecast before — including the article mentioned above. It has been a fairly successful Canadian EO company — to the point it was publicly traded. In 2021, the company run into problems with a combination of Covid, high burn and leadership transition. Within the bankruptcy, the SAR assets have been purchased by Space Alpha insights, whereas optical assets have been acquired by EarthDaily Analytics. As Aravind would note, EarthDaily Analytics is one of the few EO companies where the software and customer need to take a prime and satellites are to complement that vision — in EDA’s case operated by Loft Orbital.

A year later, in 2022, Antarctica Capital announced the purchase of Descartes Labs. The former CEO of the company called the acquisition a firesale, aligned with Antarctica’s fashion and wrote this attention-grabbing, tho maybe a bit onesided, account of what happened.

Antarctica’s space involvement doesn’t end there — they also IPOd the shell corp which later became Satixfy during a SPAC merger.

AE Industrial Partners

I’m wondering what is there more to say about AeroEquity. Have look at the concise 2021 annual report. There, you can find that AEI is a PE group specialized in AD&Gov. There are space-relevant companies — platform acquisition of RedWire and investments in Firefly and Sierra Space.

RedWire

The idea is to acquire multiple smaller space companies into a vertically integrated holding has certainly been on the table — so I don’t think it has been a big surprise when Redwire went on an acquisition spree in 2020. Apart from the covered companies below, RDW acquired the Belgian space branch of QinetiQ only recently in October 2022.

Entry point: I have been speaking with my investor friend about the exit opportunities to holdings like RedWire. He cautioned me that they still do mostly distressed assets and it is far from an optimal exit. I have not been able to verify the claim — and do really think it is possible in an official way as RedWire mostly doesn’t comment on terms of transactions.

As for value creation, the cited report presents RedWire as a platform company to be indeed grown via acquisition. The 2021 Annual report then comments on M&A capabilities as a way to add critical capabilities.

“The Oakman acquisition added to our portfolio three critical capabilities, one, a software development capability to complement our hardware technologies; two, the infrastructure, customers, contracts and expertise to work on classified programs with US National Security customers; and three, an enterprise digital engineering software platform with proven performance for supporting modelling and simulation of hybrid satellite architectures. The additional capabilities provided by these two acquisitions are paramount to our strategy for long-term growth.”

Other than that, as mentioned in the preface for this article, such consolidation should result in 1) lower cost of capital 2) becoming a more stable partner (important for bigger institutional bids) 3) a more favourable multiple given by the size and your favourite synergies. The exit path is also well known to all of you — RedWire went public in November 2021. As a vast majority of space stocks, RDW has performed questionably — which I may not really understand as I believe there is a different revenue base for RedWire than other benchmark space stocks.

The annual report again formulates it in better words.

“This transaction was important in two aspects: one, providing the company with the necessary access to capital to fuel organic and inorganic growth; and two, continuing to position the company as a first-mover industry consolidator with an “equity currency” to attract additional accretive M&A.”

To share another piece of critique — the success of M&A activity mostly relies on the ability to retain people after transactions and integrate the companies well. Some second-hand rumours questioned the added value of synergies in RDW’s case as opposed to being just a shell of unconnected companies. I’m again not able to comment on the claim, but with 8 acquisitions in a year, I can imagine it must be really difficult to align the companies well.

Sierra Space and Firefly

Apart from RedWire, AEI got involved in space in several different ways. I will not cover the Boeing Horizont fund. As for the investment in Sierra Space, that is indeed more of a case of growth equity. Specifically, Sierra Space raised 1.4B at a 4.5B valuation mostly to develop the DreamChaser vehicle and continue with preparations for the space station. AEI can offer some value add and — synergies — via investments in Firefly and Redwire cooperations. Details.

Financially, the investment in Firefly is a bit more interesting. First AEI acquired the stake in Firefly after the previous owner — Max Polyakov via Noosphere Holdings has been forced out for foreign ownership concern. Here it would only make sense to assume AEI acquired the stake at decently favourable terms. This company is also the first transaction where I see growth round after PE involvement — perhaps because the stake has been acquired fairly early. Firefly also went through an interesting development in adding the in-space services and lunar markets into its areas of focus as opposed to only developing a launcher. Details.

Maxar

A lot has been written about the transaction. On 16th of December last year (2022), Advent International — one of the big PE players announced a public to private takeover of Maxar. While Maxar has a long history of M&A activity — I did not see the transaction coming. While I generally think some time has to pass before a sensible commentary on such a major transaction can be might, I see at least a few justifications.

• I’m not an expert on public markets, but Maxar get bought at about 4x of its last reported annual revenues and it certainly could be more.

There are two issues in the near future that public markets may not respond well to

• Some satellites Maxar is contracted to manufacture are undergoing delays, which results in penalties, not-pretty margins etc.
• Secondly — Legion satellites as a key project require a lot of CAPEX expenditure before the upside can be realized

Under these conditions, Private Equity ownership may offer the right environment for the company to realize these projects. My purely personal opinion is that Maxar should be public, and so I hope for a re-IPO in a few years.

Generally, I think that Maxar will once be a studied strategy case study.

How to appeal to the highest-end satellite imagery consumers — unparalleled resolution and tasking — and so, Maxar is building a Legion (pun intended). Where is the future of EO? In data fusion. And so, Maxar acquired Aurora Insight and made an agreement with Umbra. What other cool thing could Maxar be doing? Have you heard about the industrial metaverse? Let’s do some cool acquisitions (Vricon, Blackshark.ai) and move the needle there.

Conclusion I — is private equity good for the space industry?

My fundamental thesis suggests that a bigger variety of financing tools leads to better outcomes. In the end, they have been invented to better suit the company’s needs — and deliver better returns to the capital holders. As a venture capitalist, exit options are inevitably a topic of discussion — the desired outcome is a state of capital markets where founders, employees and investors don’t need to fear liquidity — and can focus solely on building fundamentally strong companies.

There are indisputable areas where private equity groups can assist space companies. Space is hard. PE funds can bring the capital to secure runway and operational experience to realize the upside we all are working towards. I believe in the value creation you can realize solely by assembling a group of relevant companies together.

At this stage — PE involvement has been mostly limited to distressed assets. No founder/shareholder wants to have a company acquired for a few cents on a dollar. The path to a better appreciation of PE in the space industry leads via demonstrating that value can be created while acquiring at a fair price — as has been the case a couple of times.

Conclusion II — when will PE reach the space sector in Europe?

For one, I need to disclaim there may be many PE engagements I’m not aware of — especially for tier 2/tier 3 suppliers for Airbus/Safran/Thales and related. Due to their size and low need to market themselves, they might have just missed my radar.

Broadly, there have not been many PE acquisitions in the space industry in Europe. Partially — that might be given by the maturity of both our space industry and capital markets. That said, at least in the UK, PE funds play the first league globally.

There are a few more answers I would like to provide

• There have been other common fundraising paths — we have a few industrial holdings (like AAC Clyde), direct exits to the US (NanoAvionics before bought back to Europe by KDA) and often also regional IPOs at what would be a good entry point for PE groups in the US (think Astrocast, Creotech).
• I’m not able to make the comparison — but the European landscape could be more fragmented. PEs are limited by a minimal check size under which transaction costs don’t allow for profits. On the other side — smaller PE funds are limited in fundraising from institutional partners which doesn’t allow for specialized shops. About 50% of US transactions in my small sample are conducted exactly by those specialized shops.
• I spoke about this with my colleague years back. In line with the fragmentation — many relevant companies are still founder-owned, which 1) decreases the general willingness to sell 2) may limit the transferability of the business to new management.

As much as I would like to, I’m not qualified to say anything about M&A in Space in other regions around the world. I will use the coming year to learn, travel, and speak with people and hope to report back on the progress emerging space markets made in a couple of years.

Conclusion III — are we going to see more PE involvement in the space industry

Yes. Judging solely by the dry powder — ATL, Acorn, Trive have more capital to deploy and a designated focus on Aerospace. For generalist funds, I believe — more involvement in the space domains comes through getting familiar with the sector (gradually happening) and sourcing relevant deals (subject to market conditions).

I think many analysts were too quick to predict more M&A activity. As mentioned at the beginning of the article — PEs are attracted to distressed assets but those still need to have some fundamental qualities. I’m not certain some frequently mentioned companies will qualify.

Who tf is Filip

That’s me. I’m Filip. I invest in early-stage space startups and help bigger space companies with their problems at the intersection of finance, and business development strategy. My WhatsApp is public, my emails are public, DMs are open — so feel free to reach out if you have an interesting startup or problem.