Arcline Investment Management, an $8.9 billion private equity firm, has acquired Hartzell Aviation from Tailwind Technologies. The deal includes Hartzell’s two business units, the propeller business and Hartzell Engine Tech, which makes engine subsystems ranging from turbochargers to engine mounts. “Our family has been blessed to be the stewards of Hartzell Aviation for 37 years. As we look to the future, we believe Arcline fully embraces our core value – Built on Honor – and will bring the skills and resources to build on over a century of excellence and innovation,” said Jim Brown, president of Hartzell Aviation.
Arcline says it will honor the century-plus history of the storied propeller maker and embark on an unspecified growth plan. “As investors exclusively focused on Critical Suppliers to Critical Industries, Hartzell’s portfolio of flight-critical propeller and engine subsystems for a large and long-lived installed base fits perfectly with Arcline’s strategy. We are excited to partner with the Hartzell team to carry on its legacy generated over the past 100 years and facilitate the Company’s next phase of growth,” the company said in a statement.
Just wait until Private equity buys GAMI 100UL. The danger of a private company owning this fuel formula rather than an open industry standard should be self apparent. The FAA understands this and a big reason why the work of EAGLE continues.
Enjoy $10 avgas.
GAMI is private now, so in effect all the equity is already private. That said founders care far more about what they’re building than the leveraged buyout boys. Let’s hope GAMI avoids that fate.
That’s nonsensical. Of course GAMI is a private company. If FAA shuts down the EAGLE standardization process, UL100 is our only option at the pump. GAMO will be a prime target for a private equity firm buyout.
$10 avgas is not the way to go for middle-class Americans involved in GA. There are too many other ways to produce the same horsepower in our most common Lycoming and continental engines. As customers, we need to pressure the manufacturers to reduce the compression ratios and start using these other technologies to make up the power so performance does not have to be changed. One fine example is the 260HP IO-540-V4A5 currently powering the Textron/Pipistrel Panthera. This engine is just fine with the already-certified UL94 Avgas, that could be produced in massive quantities at a reasonable price. Most of the other low-compression Lycoming engines are, also. Another way to avoid $10 avgas is for AVIC/Cirrus to start installing their own already-certified Continental Jet-A engines in their own airframes. This would greatly reduce the demand for 100LL (and Gami UL100) in the U.S. Keep in mind that the entire LightSport/Rotax community has no need for 100 octane.
I haven’t seen anything authoritative that suggests $10 avgas is in our foreseeable future.
Yeah, the “unspecified growth plan” probably is about their profit growth only. Implementation will take the form of cost cutting. Private equity cares about free cash flow/ capital investment and little else.
Absolutely. When a private equity firm buys a company, it means strip the company to maximize profits and minimize costs (reducing quality, of course, which is no concern of theirs) – then sell it for whatever they can get. So all of us aircraft owners should get new props now while they still have quality props in stock. Time to look for another quality prop manufacturer.
I’ve worked closely with three private equity companies and indirectly with many others. Not one works as you described. There are a small number of PE firms that specialize in buying distressed businesses and while you might not like the steps necessary to save or salvage those businesses, they are a necessary and vital part of the economy.
The vast majority of PE firms look to invest in good businesses that have growth potential. They typically invest even more, including investments in quality improvement, to achieve that growth in order to make the business worth more to a future investor.
The one I’m working for (just shy of 17 years now) doesn’t do slash and burn, but over the last 3-4 CEO’s the emphasis has definitely shifted from long term business building to all hail quarterly EBITDA. My division was the undisputed market leader when they bought us and through a decade and a half of bad decision making and short term thinking they’ve now decided to no longer compete in the market. We’re still collecting licenses fees and doing some maintenance but it’s as minimal as they can get away with. I’m a bit jaded. There are good owners out there and I hope Hartzell has found one. I don’t think the majority are in it for the long haul though.
I’m not so sure private equity doesn’t suffer from similar press treatment as piston aviation and oil companies. I’d be interested in a really good study on differences between sole proprietors, family owned, PE firms, public owned, and socialized companies that wasn’t totally biased.
My personal experience has been sole proprietors are actually the worst, but often also the best.
Expect layoffs and big increases in payout to “private equity”, financed by corporate loans. Support for and production of little piston props will end because the bucks are there only for the big boys. Hartzell will collapse under debt to be, at best, bought out for pennies on the present dollar by the Chinese. Capitalism owes no loyalty to principles or customers.
What is the bet that workers will be sacked, that will improve the books significantly for a year, and it will be sold on to another, bigger fund, and then collapse.
Seen it happen often.
Honor? A word unknown in the PE world. Hartzell? Gone in 5 years.
This feels like a gut punch.
If there is hope……hope that this PE firm is not already owned by the Chinese, and pray that it doesn’t sell out to China in the future.
👎Don’t get me going on this one, but it seems that there are no PRC shareholders involved so far.
I certainly hope you are all wrong, but as I read the story, my thoughts mirror everyone’s comments exactly. The only time that I’ve seen a success story in these circumstances is when the buyout is by an industrial manufacturer, and seldom at that.
Never a good thing when a private equity firm buys a major US aviation manufacturer.
Textron seems like a good home for Hartzell if they needed a new one. Why didn’t they acquire Hartzell ? They must be satisfied that the product they are currently purchasing will remain intact.
So, WHERE is the new owner located? And WHERE do their finances originate? That seems to be the real story to this tale.
this will make our parts supply even worse. even now it was impossible to get some products like turbochargers from a Hartzel subsidiary. now with an investment company squeezing the $$$ to get paid back it will be even worse.
Wow, just looking at the price jumps of already overpriced parts. I’m seeing 40-300% increases already. This should be interesting on the tole it takes on GA