Primus Aerospace Acquires Raloid Corporation

LAKEWOOD, Colo. – June 28, 2022 – Primus Aerospace (“Primus”), a provider of highly complex, machined components and assembly solutions to the aerospace, defense, and space industry, sponsored by Angeles Equity Partners, LLC (“Angeles”), today announced the acquisition of Raloid Corporation (“Raloid”). Raloid machines critical components for several strategic defense programs. With the addition of Raloid, Primus further strengthens its position as a Tier 1 supplier in the defense industry. Raloid will continue to operate under its existing brand name.

“We are proud to add Raloid to the Primus platform. Raloid’s legacy of performance and capabilities make it an ideal addition to Primus,” said Nick McGrath, CFO of Primus Aerospace.

“The addition of Raloid represents a key step forward in our effort to become the leading Tier 1 supplier of critical machined components and subassemblies to the U.S. defense industry,” added Kyle Brengel, COO of Primus Aerospace.

Raloid offers value-added services, including precision component manufacturing, chemical plating, assembly and integration, non-destructive testing, and complete build-to-print program management.  The company’s proficiency with exotic and hard metals has enabled it to manufacture high-complexity, tight-tolerance components and subassemblies for Raytheon, Lockheed Martin, and other leading defense contractors.

“The Raloid team is excited to join Primus. Our combined capabilities will yield great results for our customers and our nation’s military,” said Suzanne Daniels, President of Raloid. “I am confident that Raloid will help position Primus Aerospace for accelerated growth in support of our nation’s highest defense priorities.”

Simpson Thacher & Bartlett LLP served as legal advisor for Primus. The financial terms of the transaction were not disclosed.

About Raloid Corporation

Raloid Corporation is a precision component manufacturer headquartered in Reisterstown, Maryland. Since 1964, Raloid has been machining components and subassemblies for aerospace, defense, and space platforms. Raloid is a sought-after supplier for government, aerospace, and defense companies who rely on timely delivery and precision parts. Raloid meets all International Organization for Standardization (ISO) and International Traffic in Arms Regulations (ITAR) requirements. Raloid was recognized by Aerospace & Defense Review as a Top Defense Manufacturing Solutions Provider in 2021. Learn more online at http://www.raloid.com

About Primus Aerospace

Founded in 1998, Primus Aerospace produces complex machined components and integrated assemblies for the aerospace national defense and space sectors. Primus works directly with OEMs and Tier 1 aerospace, defense, and space companies to develop and implement manufacturing solutions for machined metal parts, with a special emphasis on complexity. Advanced manufacturing capabilities include wire EDM, 5-axis complex machining, electrical discharge machining, heat treatments, helium leak checking, and waterjet cutting for traditional and exotic materials used in hypersonic and space programs.  Learn more online at https://primusaero.com/

About Angeles Equity Partners, LLC

Angeles Equity Partners, LLC is a specialist lower middle-market private equity investment firm with a consistent approach to transforming underperforming industrial businesses. The Angeles skill set drives the firm’s investment philosophy and, in its view, can help businesses reach their full potential.  Learn more online at www.angelesequity.com.

If you would like more information, please email info@angelesequity.com.  This is not an offer or solicitation to sell securities.

Media contact:

Michelle Barry

Chameleon Collective for Angeles Equity Partners

michelle.barry@chameleon.co

+1 (603) 809-2748

Selling your machine shop

Mergers and acquisitions for machine shops

Secure your company’s legacy. You spent decades building your company. Don’t let the hard days and long nights be only for the history books. Selling your machine shop allows the legacy of your machine shop to continue into the future.  Trying to figure out if you should sell your machine shop or just close it down?  Learn more below.

Current trajectory of “mom & pop” machine shops

The ~17,000 machine shops (NAICS 332710) in the United States form the basis of many advanced manufacturing industries (e.g., defense, space, aerospace, medical, semiconductor). These shops are primarily owned and run by their founders, many of which were formed during the 1960’s (space race and nuclear competition).  With aging owners and unclear or uninterested family successors, many machine shops are just closing their doors (especially following the recent difficulties including COVID-19 work force challenges and Boeing 737MAX production pauses).  California, Ohio, and Texas have the highest number of machine shops in the United States.

What factors should founders / owners of machine shops think about before deciding to sell?

• Selling price tradeoff
• Ease of transaction
• Employees
• Customer relationships & contracts
• Age of your equipment & facility

Advantages of selling vs closing your shop

• Profit from the hard work you expended winning and delivering parts for long term defense programs
• America needs your production. With the many machine shops that closed during the pandemic, our country needs your production of machined components.
• Keep your manufacturing team together – your workforce has spent years helping your shop succeed, continue to give them opportunities to work together by keeping the shop open.
• Selling your machine shop will require a great deal of work during the sale process, but this final phase of owning the business will allow you to reap the maximum value for your hard work.

What does Primus look for in an acquired machine shop

• $15M annual revenue
• Production on stable or growing defense platforms (e.g., F-35, F-22, Javelin, GMLRS, FMU-139)
• Well maintained & modern CNC machines
• AS9100 certification
• Dedicated & educated work force
• Well developed and implemented QMS

Advantages of working with Primus to sell your aerospace & defense machine shop

• Experienced leadership team – our executives know machine shops and what makes a build to print manufacturer successful. Trust your legacy to experience instead of the transaction being a first machine shop for a search fund or private equity fund. Much of our leadership team are military veterans and are ultra passionate about providing material support to war fighters.
• Dedicated M&A team – in most transactions the most important aspects are speed and certainty of close. Our team of experienced Mergers and Acquisition professionals combined with outside resources will make the transaction as easy as possible. They understand the nuances of BTP machine shops and won’t be surprised by the nuances of a machine shop.
• Access to capital – Primus’s equity backers and debt financing provide plenty of capital for the sale of your company as well as for all growth needs.
• Machine shop specific resources – from a dedicated NPI team (process engineering, CNC programming, Qa support) to machinist-specific career paths & education, brining your machine shop into the Primus network will secure the future and promote growth.
• Backing of an industrial-focused Private Equity fund, with access to capital, debt financing, and experts across many fields.

Production work with aluminum bar stock

Achieving high rate production of machined components requires raw materials that can keep pace with manufacturing.  Primus Aerospace utilizes aluminum bar stock to supply CNC lathes for aerospace and defense production.  Our purchasing, material handling, and operations teams are very familiar with the processes necessary to ensure steady production.

Example raw materials used for production CNC machined parts

• 7055 Aluminum Alloy – 7055 Aluminum (A7055) is a high strength heat-treatable aluminum alloy that it primarily used in aerospace & defense applications.  It is primarily used for high stress parts and was originally formulated by Alcoa.
• 7075 Aluminum Alloy – 7075 Aluminum (A7075) is an aerospace alloy that is used in applications requiring high specific strength.  It was first developed by the Japanese during World War II for use in the Mitsubishi A6M Zero Fighter.
• 17-4 Stainless Steel – 17-4 steel (SAE 630) is a chromium-nickel-copper steel alloy that is generally used in high strength and corrosion resistive applications for aerospace, nuclear, and chemical processing applications.
• Invar – Invar (FeNi36 or 64FeNi) is a high-nickel iron alloy that is used in applications where minimal thermal expansion is needed. The alloy was invented by Swiss physicist Charles-Édouard Guillaume.  It is often used in precision instruments, optical applications, and telescopes.

Materials supply chain prepares raw materials for machining

• Raw component mines – raw inputs to the metal are sourced from mines around the world.  For example, to produce aluminum, mines must extract and refine the minerals (e.g., corundum) to produce bauxite.
• Raw component refining – Once the minerals are mined, they are then refined through mechanical and chemical processes into standardized chemistries.  Many metal inputs require multiple refining and purification steps.  For aluminum, the processes finally result in alumina.
• Smelting mill – Inputs are heated to smelting temperatures in large furnaces to achieve chemically standard alloys (e.g., 6061 Aluminum) and are finished into ingots or billets.  For the rest of the manufacturing value chain, the material will remain chemically the same.
• Finishing mill – This step moves the standardized allow billet into it’s final shape and finish.  For bar stock, the ingots will be heated and pressed through an extrusion mold to achieve the form needed for the CNC lathes.   While many options exist for softer aluminum alloys, only specialty mills are capable of extruding harder 7000-series aluminum.
• Distributor – Metals distributors act as intermediaries for end users who need smaller quantities than the mills are willing to produce.  These distributors may stock metals to service short term demand (“spot purchase”) as well as coordinate the longer term delivery for on-going production.  In many cases, the distributor may also perform value added services to further prepare the metal for CNC machining (see next bullet).
• Intermediate processes (e.g., heat treating, precision grinding) – specialty bar stock often requires intermediate processing to prepare the raw material for CNC machining on a mill turn lathe or swiss screw machine.  These processes will often harden the metal or tighten the tolerances around the extruded metal shape to within 0.001″.

Materials are processed prior to moving to CNC machine

• 

  Receive – all incoming raw materials are received in accordance with Primus Aerospace’s Quality Management System.  This ensures that only the proper materials are received and that they are entered into our ERP correctly (against a previously placed PO).  Material certifications (“certs” are collected at this time.

• Inspect – Primus’s quality inspectors match up shipping documentation and certifications with the actual raw material.  Additionally, they will perform any non-destructive material testing that is required by the work order.
• Saw Cut – Bar stock from the supplying mill generally comes in 12 foot bars.  While this length works great on our Swiss screw machines, our larger mill turn lathes need shorter bars to fit into their automated bar feeders.  We utilize a CNC saw to cut the long raw material bars into shorter sections.  For example, Primus will take a 12-foot section of aluminum bar stock and cut it into three 4 foot bars for use on a mill turn part.
• Issue to job & stage – once the material is prepared, it will be loaded on a job-specific cart and issued to the work order for production.  This ensures that the material is not used for any other application and includes a printed page showing where the material is headed.