Aviation Aftermarket Services: West Star Aviation

The aviation aftermarket services subsector continues to attract a wide range of investors due to a compelling combination of factors. That’s especially the case for differentiated businesses like West Star Aviation, which generated very robust interest during its recent sale.

Here, we discuss West Star Aviation and the key traits making top aviation aftermarket services companies so appealing to today’s M&A investors.

A Leading Business in an Appealing Space

West Star Aviation offers comprehensive maintenance, repair, and overhaul (MRO) services for the business aviation sector. It can service aircraft manufactured by every major OEM, and it maintains the largest national aircraft on-ground technician network. Its full-service capabilities are closely aligned with mandatory, calendar-driven maintenance events, and the company has earned a reputation for excellent customer service and quality.

“West Star exemplifies the most attractive attributes of differentiated aviation services businesses and the interest they can generate among a compelling set of prospective buyers,” says Chris Smith, a managing director in the Harris Williams Aerospace, Defense & Government Services Group. “We’ve had a front-row seat to West Star’s continued momentum over the last decade. In fact, it’s the third time we've worked with West Star on a successful sale, and its impressive track record continues to stand out.”

Smith adds that the aviation sector is rich with additional opportunities to invest in the enduring growth and highly visible demand that have helped fuel West Star’s success. "Investor interest in the sector stems from persistent demand drivers that underpin the ability to drive sustained outperformance with the right growth playbook,” says Smith. “Aircraft have an array of calendar-driven and cycle-driven scheduled maintenance requirements. These nondeferrable maintenance events, paired with a persistently growing global installed base and a supply-demand imbalance for capable capacity, support highly predictable growth and cash flow.”

David Jones, a director, notes that leading businesses in the aviation services space have powerful characteristics that make them particularly attractive to a broad range of investors. “Certain leaders, like West Star, maintain critical on-airport infrastructure that is extremely difficult to replicate,” he explains. “Leaders have also invested in their capabilities, inventory, and skilled workforces over decades.” Combined, these traits can help aviation services businesses build embedded and loyal customer relationships and strong barriers to entry.

Leaders also tend to have experienced and proven management teams with successful value creation playbooks for both organic and inorganic growth. “Against the backdrop of compelling demand drivers, investors are seeking out platforms with strong executive leadership teams with clear strategic vision for the future of the platform,” says Jones. “Platforms in move-in ready condition—those with professionalized and scalable operations and mechanisms in place to track and report performance and operational improvements over time—have the potential to attract the most aggressive buyer interest.”

These characteristics make the best aviation services companies well-positioned to capitalize on the heightened investor interest in the space, which now extends beyond specialist A&D private equity investors to include infrastructure investors, broader business services investors, strategic buyers, and others.

“Underlying demand drivers are strong, and many aviation services companies have demonstrated success through multiple business models,” says Smith. He says that some platforms are centered on expanding the critical infrastructure they possess, while others have been successful through buy-and-build strategies in this highly fragmented market. “This makes the sector appealing to different investor types, and can create competitive tension when leading businesses, such as West Star Aviation, come to market.”

Smooth Air Ahead

Given its many appealing traits and the multiple ways to succeed, the aviation services subsector offers ongoing opportunities for a broad and diverse set of investors. “We expect a robust set of leading businesses to come to market over the foreseeable future, and buyer interest should be strong,” says Smith. “This is a space that stands out to investors looking for predictable growth linked to strong and steady demand.”

To further discuss the opportunities in aviation aftermarket services, please contact our senior bankers.