HOUSTON — As has become commonplace in the business of fixed base operations these days, Encore FBO LLC popped on the scene in July, 2006 as a new player in the acquisition arena. It announced at last fall’s NBAA Convention that it had established FBO businesses at Dublin, Ireland and Addison, TX. It’s not the typical ‘build a chain’ model, admits president/CEO Dan Bucaro — but that’s the point. He says that Encore grew out of the Trajen experience. A number of reps from the FBO chain and from the company that provided the capital created Encore to go after some opportunities they still see in the marketplace. In fact, Bucaro says it’s a hot market, and a new consolidation tide is building out on the horizon.
Prior to joining Trajen Flight Support, Bucaro, 46, had been educated as an accountant and managed sales in the U.S. and abroad for Goodyear and an auto parts chain. He was lured to Trajen by the investors, he says, to streamline management of the chain and explore new opportunities.
Comments Bucaro, “We were owned by a group called [The] Cap Street [Group], which is here in Houston. They were a traditional equity firm, meaning they had to have some kind of liquidity event in five to seven years. I really thought at Trajen, when I went in, that we had four years. About two years into it, Macquarie approached us and we worked out a deal.
“At Trajen, we didn’t do some of the things that we thought we could. We didn’t have the time to do it.
“So, myself, the CFO David Byers; Ted Hamilton, the head of operations; Don Prescott, the head of our acquisitions; and, Greg Elliott from Cap Street — we formed a new group. And we got a different partner this time, Platform Partners.
“It’s much different, though. It’s not a traditional equity firm. It is basically a group of wealthy individuals that don’t have a liquidity event need in five to seven years.”
Since last fall, Encore has acquired bases in Houston; Sioux Falls, SD; Bullhead City, AZ; Frederick, MD; and a pending operation in Nice, France.
The intent, says Bucaro, is to build a “worldwide” network, dominated by a large U.S. contingent and a strong European presence. Asia also has potential, he says.
Market of opportunity
Bucaro says that the company is in an aggressive acquisition mode. He relates that Encore is actively talking with ten to 12 FBOs, but the potential is there for much more.
“We think that in the U.S. alone you could easily do 50 to 100 locations,” he says. “For us, there are at least 350 locations that we would at least spend the time to look at.
We think in Europe we probably would look at 12 to 15 locations.
“We’re small, but we see ample opportunity throughout the whole world.”
At the same time, jumping into a market that’s hot for sellers is a challenge, admits Bucaro. Expectations, he says, are to be offered six to 12 times earnings. “We’ve walked away from plenty of deals,” he says.
Lease length is the top consideration, says Bucaro, along with having an enforceable set of minimum standards at the airport.
The core philosophy, says Bucaro, is this: provide consistent customer service and safety, at the airports to which business aviation wants to fly. Then allow the local general managers to lead each specifiic operation. What corporate brings to the network is streamlined financials and human resources, says Bucaro — and money to expand the chain.
“It was clear to me, even though I never had an aviation background, what had to drive this business was safety and customer service. Whether they walk into Addison or Paris, they should expect the same kind of service, the same kind of safety.”
It is corporate that sets the direction for safety and service, he says, but it’s the local GM who dictates Encore’s position in that market.
“They have a lot to say on what our pricing is in the market,” says Bucaro. “They have a tremendous amount of input on based customers. Our GMs have to understand their business.