Thoma Bravo’s $10.5B Boeing Deal Braces for Turbulence
Plus: Fitch downgrades ‘deteriorating’ global leveraged finance market and we outline portco M&A and exits from last week.
Head in the clouds.
Thoma Bravo is buying a portfolio of digital aviation solutions from Boeing in an all-cash deal valued at $10.55 billion, financed with $6 billion in equity and $4 billion in a private loan from Apollo Global Management.
Here are the companies being bought:
Jeppesen: a provider of aviation navigation services such as digital flight planning and navigation charts, with a wide customer base spanning commercial airlines, business aviation, and military operators. The company makes up the bulk of the deal, with an estimated enterprise value of $8 billion.
ForeFlight: a provider of web-based flight planning applications for general aviation pilots and commercial operators.
AerData: a provider of software solutions for aircraft lease management, engine fleet planning, and records management.
OzRunways: an Australian company offering pilots digitized ways to manage flight data, checklists, weather, navigation, and performance calculations.
The transaction is expected to close by the end of 2025.
Ready for takeoff.
This isn’t Thoma Bravo’s first foray into aviation services. In 2020, the firm acquired Exostar — a company specializing in secure business collaboration platforms for highly regulated industries, including aerospace and defense — for $100 million. Thoma Bravo held the asset until 2023 when it sold it to Arlington Capital Partners for an unknown sum. Arlington typically makes investments between $50 and $500 million.
Thoma Bravo’s main value creation tactic was geographic expansion and organic growth. While under the firm’s ownership, Exostar’s customer base grew from 135,000 organizations to 200,000, while the number of countries it operated in increased from 150 to 175.
Up in the air.
It may be more difficult, however, to implement geographic expansion strategies and stimulate organic growth at the four companies bought from Boeing.
First, the macroeconomic environment has wildly shifted for the aviation sector in just the past few months. Tariffs are hitting the industry hard and recession fears have pushed down demand for nonessential travel. As such, several major airlines cut their guidance last month.
Thoma Bravo did not provide a timely response to request for comment.
PE portcos also saw some full and partial exits last week, as well as some exits-to-be:
GTCR diluted its stake in Ultimus Fund Solutions, an independent fund administrator, in order to welcome Stone Point Capital as a co-investor. The deal values the company at $2 billion.
Another partial exit — Bpifrance invested in Groupe Septeo, a French software company valued at over €3 billion ($3.4 billion). Existing investors included Hg, Téthys Invest, and GIC.
Meanwhile, portco M&A was in full swing:
CVC-backed Ahlsell, a Nordic regional distributor of installation products, bought electronics distributor Rexel’s Finland operations. The business generated €254 million in sales last year, but the sale price was not disclosed.
New Mountain’s Azuria Water Solutions, a water infrastructure services provider, acquired TSW Utility Solutions, AM-Liner East, and C.K. Masonry for an undisclosed amount. All three firms are regional American infrastructure service providers.
Argon & Co, a management consultant backed by Bridgepoint and Ardian, expanded into Germany by merging with Advyce & Company; financial terms were not disclosed.
H.I.G. Capital merged Converge Technology Solutions with Mainline Information Systems, two IT solutions providers, to form Pellera Technologies, with combined 2024 revenues of about $4 billion; transaction terms were not disclosed.
Bain’s Frontline Road Safety acquired PLP Company, a regional competitor in the pavement marking installation space, for an unknown amount.
FoodScience, a pet food company backed by Morgan Stanley Capital Partners, acquired Natural Dog Company for an undisclosed sum.
And there were some key people moves:
Blackstone-backed Jersey Mike’s appointed Charlie Morrison, formerly the chief executive of Wingstop, as CEO, succeeding founder Peter Cancro. Cancro served in the role for over 50 years.
Blink and you might have missed it — Fitch Ratings came out with a shocking report this week, revising its 2025 outlook for the global leveraged finance market from ‘neutral’ to ‘deteriorating’. The key culprits? A weaker economy, trade war uncertainty, and tighter capital markets.
In summary:
The issuance of leveraged loans and high-yield bonds is falling.
Risk premiums are rising, making borrowing more expensive.
Default rates are forecasted to rise to about 5.5 to 6 percent for US leveraged loans in 2025 (2.5 to 3 percent in Europe).
Private credit will benefit from stress in syndicated markets but will likely tighten standards against cyclical or underperforming businesses.
What does this mean for operators?
Debt-financed buyouts (especially large, highly leveraged ones) will become rarer and pricier. Smaller deals and deals with less leverage will likely dominate.
Higher default rates increase risks for portfolio company failures and distressed exits (or, if you’re an optimist, bargain deals for buyers).
Add-on acquisitions will remain popular due to capital constraints.
Holding periods will continue to get longer (even though they’re at their longest).
See you next week!