Saothair Capital Partners was attracted to the more than 100-year-old GatesAir for its dominant position in the broadcast TV and radio space. “It had a reputation for more than a century as a leader globally in critical infrastructure,” Kevin Madden, managing partner of the Wayne, Pennsylvania-based private equity firm told Mergermarket.

“We felt the business would be around for a long time and fit in with what we look for.”

Madden heard about the business earlier this year when it was seeking either refinancing or a sale with its advisor, GLC Advisors. From there, the process took roughly six months, culminating in a sale to Saothair, announced on 14 October. Terms were not disclosed, but Madden said Saothair took a majority stake, making its first investment from its Fund II, which closed in July on USD 300m.

Established in 2019, Saothair invests exclusively in manufacturing companies and, according to Madden, is end-market agnostic. Platform investments typically have USD 50m to USD 500m in revenue, with equity checks between USD 15m and USD 50m. Instead of chasing emergent technologies that may be riding a high-growth wave, Saothair prefers businesses producing what Madden described as “something that has real, sustainable demand.”

GatesAir, which transmits technology to TV and radio broadcasters, fits the bill. Saothair was attracted by the stability of demand for over-the-air transmission, which is considered a public right, shielding it from digital disruption, in the sponsor’s view. “There is a critical need for over-the-air transmission,” said Madden. “If the apocalypse comes, one way we’ll be able to communicate is through radio waves.”

Meanwhile, there has been a heightened preference for domestic suppliers to lower the risk of overseas supply chain disruptions and avoid tariffs, he said, providing tailwinds for domestic broadcasters. Another boon to the business is ATSC 3.0, a next-generation TV technology with the ability to broadcast with more data. Adoption is not yet mandated, but there is a strong push to do so; 40% of broadcasters already use it in the US, according to Madden. ATSC 3.0 offers improved picture and sound, mobile reception, and enhanced emergency alerts, combining features of traditional broadcasting with internet connectivity. “GatesAir is optimally positioned,” Madden said.

The opportunity for GatesAir is not only domestically, where the company is already the dominant player, but internationally, where there is heavy spending on infrastructure, he added. GatesAir is particularly well positioned in the Middle East, Africa, and South America, he said, and it could accelerate the pace of growth through acquisitions.

The company has made acquisitions in the past, including a subsidiary acquired about seven years ago in Italy. Targets would be in the same space with complementary over-the-air technologies, added Madden.

McGuire Woods advised Saothair. Akin Gump advised the seller. There was no lender.