Hartford Business Journal

HARTFORDBUSINESS.COM | FEBRUARY 5, 2024 21 Funding your business's full potential. Grow your business with the help of our experienced commercial lending professionals. Contact our commercial lending officers at liberty-bank.com/commercial-lending Member FDIC Equal Housing Lender. All loans are subject to credit and underwriting approval. at one point, making and selling Ovation guitars and other musical instruments (Charles Kaman was a guitar enthusiast). Today, Kaman makes a variety of proprietary parts and components for the aerospace, defense, medical and industrial markets. Its engineered products division, for example, makes aircraft bear- ings and springs, while its precision products unit focuses on heli- copter work. It also makes medical device components. In the last few decades, Kaman was perhaps best known for its heavy-lift K-MAX manned helicopter, which has been used by the U.S. military. However, the company has been undergoing a major strategic shift, part of what CEO and Chairman Ian Walsh called a five-year tran- sition plan, which hasn't come without challenges. Kaman has missed financial targets in recent years, and cut some staff. It previously announced plans to close a manufacturing plant in Orlando, Florida. The restructuring includes winding down a long-established joint fuze program, which, at its peak, accounted for one-third of Kaman's annual profit. The company lost out on a U.S. military contract to make the next generation of fuzes, which allow pilots to program weapons while in flight. Kaman is also discontinuing produc- tion of K-Max helicopters due to lack- luster sales and limited profitability. Instead, it's focusing on the devel- opment of the KARGO UAV, an unmanned aerial vehicle that can lift loads of up to 800 pounds. Walsh told the Hartford Business Journal in December 2022 that the UAV has potential across a plethora of U.S. military and commercial markets. "Strategically, what we've done is get out of the older programs that were relatively unprofitable, to win more profitable and complicated programs that have higher margins," Walsh said at the time. "We really feel our strength and our future is going to be in the unmanned space." Kaman's future parent company, Arcline, said it has $8.9 billion in cumulative capital commitments with offices in New York, Nashville and San Francisco. The company's port- folio includes a half-dozen aerospace and defense companies, but none in Connecticut. DiPentima said the acquisition could help grow Kaman's local employment levels and revenue, since large private equity firms like Arcline have access to capital that can fund expansions and research and development. However, private equity firms are also known to look for ways to cut costs, potentially in areas like back-office operations. Kaman employed just over 1,000 people in Connecticut as of 2022, according to HBJ's Book of Lists. In its 2022 annual report, the company reported 3,063 total employees, 73% of whom were in the U.S. DiPentima said he expects to see a more flexible and "nimble" Kaman that reacts quicker to industry changes and trends, without having to answer to shareholders and public company regulators. "Talking to (Kaman CEO Walsh) and the team over there, I think this is a great acquisition and transaction for Connecticut," DiPentima said. "Arcline is really a high-growth-ori- ented group, so I think that's going to spur a lot of investment into the Kaman facilities here in Connecticut." Lavoie said private capital could also help Kaman "significantly shorten the timetables to get new products to market." Representatives from Kaman and Arcline declined to comment for this story. When announcing the deal, Arcline said it will work closely with Walsh and his team "to drive further growth through accelerated invest- ments in both new product develop- ment and strategic acquisitions." Aerospace and defense manufacturer M&A deal activity NO. OF MERGERS AND ACQUISITIONS 2015 600 500 400 300 200 100 0 2016 2017 2018 2019 2020 2021 2022 Source: KPMG "Aerospace & Defense M&A 2023" report; Capital IQ, Dacis, company reports

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