Carving out a single small business line from FTSE 100-listed multinational defense, security and aerospace company, BAE Systems, means your new acquisition comes minus a lot of administrative essentials. That was the situation private equity investor Warren Kanders found himself in two years ago when his firm, Kanders & Company, bought back police equipment-maker Safariland.
The company was established in 1964, when Neale Perkins launched a gun holster business from his garage in Sierra Madre, California, after making custom holsters for his father. He named the company after the African safari trips he and his dad had taken. American Body Armor, a company specializing in bulletproof vests, was born shortly after that: in 1969.
BRINGING IN THE BIG GUNS
Kanders has known Bennett Goodman and Doug Ostrover, two of GSO’s three founders for several years. He approached them for debt for the Safariland carve-out and worked out a package that, he says, made sense for everyone involved.
Since 2012, the company has made six acquisitions, including Canadian bomb suit company Med-Eng, which Safariland bought from Allen Vanguard in October 2013. Colman notes that the company has incredibly strong brand recognition, dubbing it “the Kleenex of bomb suits”.
NOT EVERY BATTLE
Having the weight of Blackstone behind the company helps, but it doesn’t guarantee success in all deals. Safariland bid for UK survival equipment company, Survitec, which was up for sale by private equity firm Warburg Pincus in autumn last year.
IPO ON THE HORIZON
Kanders and Colman both agree the company will be ripe for an initial public offering with just a bit more scale. “Diversified protective gear companies go for very high multiples because they tend to be much less cyclical and have very good cash flows,” Colman says. “The Federal government pays half of the cost for bullet proof vests for a police department, so it’s a very good sticky market.”
PROFIT AND LOSS
Safariland’s motto is “Together, we save lives”. To achieve that aim, the company engages in some grim research.
“The world is not getting any safer and we’re set up well against that,” concludes Kanders.