Serving the Nation to Servant Leadership with Patient Growth Capital
Serving the Nation to Servant Leadership
The vision for MAG dates back to Founder & CEO, Joseph Fluet’s deployment to Afghanistan in 2004-2005. As a former U.S. Army aviator and lawyer, Joe was tasked to stand up the first Afghan special operation aviation unit and saw firsthand the critical role that aerial intelligence, surveillance, and reconnaissance (“ISR”) played in the success of a mission. He quickly surrounded himself with well-rounded individuals whom he previously met in the military and post-military to form the core MAG leadership team. Joe invested substantially all his capital at the time into the business and invited his team to become equity partners alongside him.
The team spent much of 2010 leveraging their networks and positioning the business for larger, more lucrative long-term contracts. MAG’s ability to grow and succeed in what was a difficult environment for many defense contractors after the Iraq and Afghanistan surge set them apart from other industry players.
Over the following years, Clairvest built a relationship with the MAG leadership team and showed them how acquisitions could enhance MAG’s strategic position. Management also believed they would be stronger in front of their customers with Clairvest behind them as they had identified several exciting growth opportunities in the contractor owned-contractor-operated aircraft (“COCO”) market. The team saw tremendous growth in the ISR vertical but needed patient capital to execute their strategy. Their vision was to become a full-service, tip to tail ISR solutions provider spanning aircraft, pilots, sensor operators, and logistics.
Patient Capital in Choppy Budget Cycles
Clairvest partnered with MAG in February 2013. In the first year, the U.S. government was under sequestration and EBITDA fell 15%. With patient capital committed at the outset, management confidently invested in their growth ambitions despite the exogenous events. Clairvest worked with management to develop a long-term strategic plan around their desired contracts, capabilities and customers. In addition to strong organic growth and expansion into new service offerings, MAG completed four transformative acquisitions which allowed the company to access more customers and capabilities including an expansion into the unmanned ISR space. Clairvest was instrumental in raising debt financing to complete the transactions and fund the exponential growth in working capital. We also invested additional equity capital in support of the company’s growth. As the company grew exponentially, MAG’s corporate infrastructure also needed to be strengthened and Clairvest shared its lessons learned from decades of scaling businesses.
“I needed a capital partner that was going to let me execute my vision of where MAG should go. Clairvest was here to support me and my team, not to manage us and that made all the difference.” Joe Fluet, CEO of MAG Aerospace
Emerging into a Strategic Mid-Tier Defense Platform
During the life of the investment, MAG methodically grew its customers, diversified its contracts, became a prime contractor and expanded capabilities into non-standard rotary wing training, unmanned ISR services, specialty cargo transport, C4ISR engineering and wildfire surveillance. The Company began with two customers and expanded into 43 different customers at exit. Its contractual assets expanded from two at inception to 60 active task orders. These attributes along with the substantial growth led to the successful sale of MAG to New Mountain Capital in June 2018. Ultimately, Clairvest and CEP IV generated an 8.4x multiple of capital and an IRR of 59% over the 5.5-year investment period.