AEI, Godspeed add on; Searchlight invests in high-speed internet

Good morning, Hubsters. MK Flynn here with the Wire.

Welcome back from Memorial Day weekend. I appreciated the holiday as an opportunity to remember those who protect us and as an opportunity to celebrate the unofficial start of summer.

To borrow a term from baseball, it’s the season of “small ball.”

With dealflow sluggish, private equity firms are paying more attention to add-ons than ever before, and so are we.

This morning, we’re sharing details about portfolio company acquisitions from AE Industrial Partners and Godspeed Capital.

And we’ve got a Deep Dive into Searchlight Capital Partners’ latest foray into high-speed internet.

Let’s start with the add-ons announced today.

Safety first
Altus Fire and Life Safety, backed by AE Industrial Partners, has acquired York, Pennsylvania-based Crime Intervention Alarm, a provider of installation, monitoring, inspection and service for security and surveillance systems, access control and fire systems.

CIA’s offerings include eight brands: Adcock’s Systems, Alarm & Suppression, BK Systems, Croker Fire Drill, Cross-Fire & Security, Fire Systems, Northeast Fire Systems and Crime Intervention Alarm.

“The strategic addition of CIA strengthens our services portfolio with a diverse range of critical security and life safety solutions while also expanding our presence into Pennsylvania and deeper into the mid-Atlantic region,” said John Adams, Altus CEO. “The addition of CIA is an important step for us as it provides Altus with the ability to meet the increasing demand arising from our customers seeking security solutions to enhance our current fire safety offerings.”

Core customers
SilverEdge Government Solutions, backed by Godspeed Capital, has acquired Gardetto Engineering, a Hanover, Maryland-based engineering services provider that specializes in digital design, hardware design and systems engineering.

SilverEdge, based in Columbia, Maryland, provides cybersecurity and other technology to the Defense and Intelligence communities.

“The addition of Gardetto to the SilverEdge platform expands our presence with one of our core intelligence community customers, adds differentiated capabilities that further enhance our offerings, and strengthens our portfolio with another prime unrestricted contract,” Nat Fogg, a partner at Godspeed, said in a statement.

Critical infrastructure
“Before the pandemic, many viewed broadband service as a tool to effectively stream Netflix and other entertainment services,” Darren Glatt, partner and co-head of infrastructure investing at Searchlight Capital Partners, told PE Hub’s Rafael Canton.
“Now, most realize that high-speed broadband is a critical form of infrastructure to facilitate basic everyday functions, such as business communication, education, telehealth, of course, entertainment and streaming, among other purposes. This is a trend on which we as a firm have been focused for a very long time.”

Indeed, Searchlight has demonstrated that high-speed internet is a priority of its investment strategy by making several forays into the market, including its most recent minority investment in Kingman, Arizona-based telecommunications company Wecom, announced earlier in May.

Demand for high-speed internet access is still growing, Glatt told Rafael. Roughly 25 percent of American adults still lack broadband internet service at home, according to the Pew Research Center.

The Biden-⁠Harris Administration also sees broadband as a priority. Earlier this year, the administration funded over $25 billion to an American Rescue Plan to help close the gap in access to high-speed internet.

Last year, Wecom, which has a 60-year history in Arizona, was awarded $10 million in an Arizona Broadband Development grant to bring affordable broadband services to rural Mohave County.

“We identified Arizona as a state that has a great need for investment in high-speed broadband and one in which we could make a difference in closing the digital divide,” Glatt said. “We really rely on a local operator who is familiar with the issues facing consumers and businesses within the state, has a proven track record of building fiber in the state, and wakes up in the morning and goes to sleep at night trying to solve the issue for that state.”

Wecom is far from Searchlight’s first investment in high-speed internet.

In 2021, the New York-based private equity firm invested $425 million in Mattoon, Illinois-based Consolidated Communications. In the same year, the firm invested in Ashburn, Virginia-based All Points Broadband, which provides fiber-to-the-home broadband service in underserved areas of Virginia, Kentucky and the mid-Atlantic.

In 2020, Searchlight, in partnership with Bothell, Washington-based WaveDivision Capital, completed the acquisition of the operations and assets of Frontier Communications in the Northwest, forming Ziply Fiber. Ziply made an add-on acquisition earlier this year, acquiring Ptera, an internet provider serving four counties in Washington and Idaho.

ChatGPT anyone?
At PE Hub, we’d love to hear how you’re looking at generative AI in your dealflow.
Have you started taking advantage of the technology yet in your deal sourcing and/or due diligence? How do you plan to counteract the errors the technology will inevitably make with human intervention?

I’d love to hear your thoughts on how you’ll be using AI in your dealflow.
Email me at mk.flynn@peimedia.com.

I’ll sign off on that note and I’ll be back with more tomorrow.

All the best,

MK