PE firm AE Industrial makes deal for Gryphon with eye toward roll-up

Private equity firm AE Industrial Partners said Thursday has agreed to acquire defense technology services company Gryphon Technologies and plans to combine it with another portfolio business in CDI Government Services.

This transaction brings a pair of additional elements to the ongoing spree of government market transactions of all shapes and sizes beyond just the headline-making megadeals. It is more evidence that private equity is finding plenty to like in the market and also rolling together companies in their portfolios to create larger players in a sector where scale is increasingly prized.

In Gryphon, AE Industrial is buying a company that specializes in defense systems integration, naval architecture, engineering, program management, test and evaluation, cybersecurity and logistics. CDI performs much similar work for defense and homeland security agencies, plus other prime contractors.

Rolling businesses together was how Arlington Capital Partners built up Polaris Alpha, which Parsons Corp. acquired in June for a deeper space and high-end defense technology footprint. Arlington Capital is following the same playbook through its combination of Integrity Applications with Xebec and Dependable Global Solutions.

Kirkland & Ellis LLP was legal adviser and PricewaterhouseCoopers was financial adviser to AE Industrial Partners. Venable LLP served as legal adviser and SunTrust Robinson Humphrey served as financial adviser to Gryphon.