Innovaero, an Australian privately held complex aeronautical technology development company, is fast-tracking growth through acquisitions towards either a trade sale or an initial public offering (IPO), said founder and Executive Director Mike von Bertouch.
Western Australia-based Innovaero, which has annual turnover of AUD 10m (USD 7.4m), would consider approaches from external advisors pitching targets, however such firms “would need to understand Innovaero has a high-performance team and we don’t just let anybody in,” von Bertouch told Mergermarket.
The opportunities the company will seek and are actively engaged with have the common thread of being organizations it already works with, he said, without elaborating. Innovaero understands these businesses from the ground up and has a good sense of their culture, however, it will still consider engaging with new enterprises from a cold start, the executive said.
“Understanding the culture of the team is the most important part of the DD (due diligence) process,” he said.
Innovaero is looking at several M&A opportunities not only in Australia but also offshore. It has a significant export business to the US, and that has opened doors that it would not have contemplated five years ago, von Bertouch said.
The key criteria in assessing targets comprises of its revenue, with an opportunity to grow; complementary capabilities; and the ability to value-add to or extend each other’s product ranges. There can be more strategic factors as well. For example, the company is currently looking at an offshore opportunity as a partnership for the joint acquisition of a third company, “which is a bit of a renovator’s delight,” the executive said, without elaborating.
Another essential requirement of an M&A deal is that it benefits the entire team, not just the shareholders. Staff exchanges, additional training, upskilling, and creating one-to-one relationships across the teams in a cooperative rather than competitive framework “is personally important to me,” von Bertouch added.
Structural ownership change
The company was solely owned by von Bertouch until early 2020 but now has several employees who are shareholders, and external investors that joined the business at the beginning of its Spookfish project. During the past six months, publicly listed foam and materials company CFOAM [ASX:CFO] also joined the share register, he said.
Spookfish (now EagleView Australia) is a company using a new camera design and system designed by the team at Innovaero. Spookfish makes previously inaccessible, high-resolution aerial imagery available to SMEs alongside governments, large enterprises, and developers which is now used throughout Australia and the US. It was acquired by EagleView for AUD 140m in 2018, as reported.
The move to bring on board investors came about after mid-2019 when von Bertouch engaged an undisclosed corporate consultant group that put together a three to five-year roadmap towards a trade sale or IPO. According to von Bertouch, as growing the firm has required capital, he opted to go down this route as a way to expedite the exit strategy after recognizing that organic growth would mean “letting brilliant (M&A) opportunities slide past”.
Also, the opportunities and challenges the “COVID economy” presented has “catalyzed that morphing” and now Innovaero has accelerated structural change and is “running a little faster than I contemplated 18 months ago”, he said.
The executive did not name specific companies in terms of competitors and peers but noted that Innovaero is unique globally, with origins as an SME in non-aviation technology and product R&D, with Civil Aviation Safety Authority (CASA) approvals in aspects such as design, manufacturing, and operations.
“There are many competitors in specific elements of what we do, and they would be more competitive if competing head-to-head in their respective narrow lane. Still, we have the big advantage of concurrently working across a lot of domains which sets us apart from any other organization globally of less than say 100 staff,” he said.
Innovaero was in 2011 spun out by von Bertouch as an aviation product development business from his general consulting company Structured Design. Structured Design was formed by the entrepreneur in 2006, where its first project was a AUD 15m design, manufacture, and install project for ballistic protection for the Holsworthy Special Forces Training Facility.
Innovaero currently has 25 employees and is looking to fill some new key positions, although he did not comment as to by how much its workforce will grow by and when.
The company has its main office in Kardinya, Western Australia, with key staff located in Melbourne, Sydney, and the Sunshine Coast. With the easing of restrictions such as border closures due to COVID-19, Innovaero expects have a bigger footprint soon in Australia with the most likely locations being the Australian Capital Territory and Queensland, von Bertouch said.
– by Adam Orlando in Perth