A buyout of Ottawa-based MDS Aero Support by senior management will mean a seamless transition for customers and staff, according to company executives.
The $42-million aircraft engine testing facility built by MDS Aero in Thompson, Man. (image supplied)
By Jacob Serebrin
“It’s business as usual,” said John Jastremski, the company’s senior vice-president for business development and one of the executives leading the buyout. He said the company would continue to have the same values under the new ownership.
MDS designs, supplies and supports testing facilities for gas turbine engines, including those found on airplanes.
According to Mr. Jastremski that means their customers aren’t just buying a product.
“It’s such a capital investment that you’re buying a partnership for 10 or 15 years,” he said. “To go to our customers with new management would have impeded our trajectory.”
The buyout by Mr. Jastremski and two other executives has been in the works for some time, said Kevin Fitzgerald, the company’s CEO. Mr. Fitzgerald, who led a previous management buyout, is expected to stay on as CEO for the next 18 to 24 months.
“It wasn’t a surprise. It was a planned event,” he said.
According to Mr. Fitzgerald, selling the company to management will make the transition easier and help the company maintain its growth-rate.
“We wanted to do that and keep this business around for a long time,” he said.
Selling to management wasn’t the only option he considered.
“We actually looked at all the alternatives,” said Mr. Fitzgerald
“We’ve always been privately held,” he said. “That recipe has worked very well for us. The owners come to work every day.”
Mr. Fitzgerald said he considered selling the company to a strategic buyer or a financial investor but neither option seemed right for the company.
“It’s not easy to find a strategic buyer in the niche we’re in,” he said. A financial investor’s goals might not line up with those of the company’s management, he added.
Mr. Fitzgerald declined to say how much the transaction was worth, only saying that it was “significant.” The deal was funded through debt financing from commercial banks.
According to Mr. Jastremski, the company’s strategy going forward is to continue diversifying the company’s business while increasing its focus on testing engines for use in marine and industrial applications.
The company has also “increased its emphasis on service and support,” he said.
But the company still plans to maintain its focus on airplane engines.
“We’ve been involved in the development of every engine on every major airplane developed over the past 10 years,” said Mr. Jastremski. “It’s an exciting place to be.”
In addition to Mr. Jastremski, Simon Arbuthnot, the company’s chief operating officer and Wayne Penney, the company’s chief financial officer are also involved in the buyout deal.