• Timed exit as other large A&D platforms prepped for sale
• COVID-era investment quadrupled from roughly USD 500m EV
• EBITDA rose over 200% since 2020 through 13 add-ons and organic growth

KKR’s acquisition of aerospace and defense platform Novaria couldn’t have come at a less opportune time.

KKR acquired Novaria in February 2020. “Then COVID hits,” Josh Weisenbeck, a partner with KKR and head of the PE group’s industrials team, told Mergermarket. “COVID had a devastating effect on aircraft production,” he added, noting that production hit historically low levels.

To address these challenges and further diversify the business, KKR pivoted Novaria’s M&A strategy more to defense than aerospace in the early years of the holding period, he said.

Under KKR, the Fort Worth, Texas-based precision aerospace components maker completed 13 add-on acquisitions, of which 12 were proprietary, he said. Through M&A and organic growth, the company saw its EBITDA rise more than 200% during KKR’s ownership.

“We were the first truly institutional capital, as opposed to [former owner] Rosewood, which represented a single-family,” Weisenbeck said. Terms of KKR’s Novaria acquisition were not disclosed, but Mergermarket reported at the time that Novaria sold for around 14x its EBITDA of USD 40m to USD 45m, implying a valuation of at least USD 560m. That would indicate that the company’s valuation quadrupled over the holding period.

In terms of timing the Novaria exit, KKR was aware of other financial sponsors prepping to exit large aerospace and defense (A&D) platforms.

TriMas Aerospace was one. The company ended up selling to Takeoff Buyer Inc., an affiliate of Tinicum LP for USD 1.45bn, with a minority investment from Blackstone. “Our deal was signed shortly after,” said Weisenbeck.

Market commentators also indicated Consolidated Aerospace Manufacturing was likely to come to market in the coming months, he added, noting that if it were to do so, it “could be a potential strategic fit for Novaria.” Mergermarket reported on 12 November that the sales of TriMas and Novaria put CAM in the spotlight as a potential target.

“It’s an exciting time for aerospace. We felt like it was the right time in the fifth year of our journey, and that we’d accomplished a lot,” Weisenbeck said.

On 12 November, Mergermarket reported that the Novaria sale process came together quickly, with Arcline preempting the effort in the second round. Veritas Capital was also around the business, the report said.

Weisenbeck confirmed Mergermarket’s report that Arcline preempted the auction process for Novaria. He declined to comment on the valuation but did say there were strategic bidders.

“Arcline had the best price and Novaria management felt PE was a compelling ownership model,” he said.

More consolidation ahead

“Bryan and Novaria’s management team have a very strong pipeline of acquisitions,” Weisenbeck added, noting that KKR provided support around the investment filtering process, operational approaches and integration. “There is a long runway for proprietary family-owned acquisitions, which often come at more attractive valuations than banked larger deals.”

KKR signed a deal to acquire Novaria from Rosewood, a family office, on 6 December 2019 and the deal closed in February 2020.

Novaria’s CEO, Bryan Perkins, was formerly with Parker Hannifin, Weisenbeck said, and wanted to continue Novaria’s strategy of rolling up family-owned sellers of highly engineered and specialty parts to OEMs in the space. “Bryan’s goal was to build a more customer centric business,” Weisenbeck said.

The targets were makers of lower volume, high mix parts, but not the types of manufacturers that compete with TransDigm, which is more aftermarket focused, he said.

Novaria’s two biggest acquisitions under KKR were Hohman Plating, a defense-focused business providing electroplating and coatings for parts in April 2022; and Anillo Industries, a manufacturer of washers, shims and other commercial aircraft parts, in February 2024, when add-ons had resumed in commercial aerospace, he said.

In addition to making acquisitions and drastically increasing Novaria’s profitability, Weisenbeck said KKR improved the company’s safety record, employee engagement and share ownership.

Under KKR, Novaria added to its defense capabilities, but commercial aerospace remains the more significant part of the business, he said. In future, acquisitions might skew more toward commercial aerospace because that was the original focus of the business, he said.

Novaria’s main competitors are Howmet, Precision Castparts, a unit of Berkshire Hathaway; and France-based LISI, he said.

Looking ahead, A&D is set to remain a focus. KKR took Circor, a manufacturer of valves, actuators and pumps with a significant A&D offering, private in 2023. In 2024, KKR made a minority investment in OHB a provider of satellites and space systems, in Germany. More recently, a KKR affiliate announced the pending acquisition of Spectris PLC for GBP 4.8bn (USD 6.4bn).

“We find the aerospace and defense market exciting with mission-critical products,” said Weisenbeck.