Lou Pepper and Steve Townes are both featured in this issue, and both are active players in the acquisition trade. Pepper has built arguably the largest FBO chain in the universe, Atlantic Aviation; Townes, CEO of Ranger Aerospace, has cherry-picked his way, first with ASIG, then Keystone Helicopter, and now his latest venture in Ft. Worth.
I met Townes when he was an executive VP with Stevens Aviation; Pepper when he was VP of marketing at Million Air, which he subsequently headed up prior to becoming the top actor among the consolidation crowd.
Among the outtakes ...
Pepper, who says airports have been pretty accommodating as his venture has touched down at some 68 bases, does have a concern or two ...
“There are particular airports that are issues. They look at the multiples and the prices. We’ve bought some FBOs that have been traded four times in the last two years. An airport looks at that and sees someone has made millions of dollars on this place and we’re just sitting here and allowing them to keep going.
“Occasionally, they say, ‘We want to extract something out of this.’ We’ve seen a bit of that; not a lot.”
And advice to airports?
“The only thing I’d tell airports is to maybe tap the brake a little on expansion. All FBOs are healthy now, and that’s a good thing.”
Meanwhile, Townes, who has had significant success in acquiring, building up, and reselling, hasn’t been inclined to join in the FBO buying frenzy of recent years. To wit ...
“So many people are already picking over it so carefully and overpaying for everything they buy. I admire very much the growth of Atlantic; I know a lot of those people in that arena; I admire Signature very much. I sold a company [ASIG] to them.
“But if you look at the multiples that are being paid now for add-ons to those FBO chains, where they’re paying ten or 12 times earnings for companies that are relatively mundane businesses with relatively modest margins, I couldn’t see going to our institutional investors and saying, let’s go buy an FBO chain.
“There’s an awful lot of really big money jumping into FBOs. Ranger works best when we’re flying under the radar; buying small to medium-sized middle market companies.
“In the last 12 months we have looked hard at more than 40 companies. We have done letter of intent seriousness with about 12; and we’ve acquired three.
“We currently have six active acquisitions in our pipeline; we may not close on any one of them. But that’s going to be the pace of the holding company, that we will have a continuous pipeline of deals to prosecute, and we’ll get a few of them.”
Two aggressive men; two aggressive styles. Meanwhile, a barrel of oil is around $100. Who would have thought?
Thanks for reading.