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Transcript: Maximizing Growth in the Aerospace and Defense Industry

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Tom McFarland: My whole career has been in the aerospace industry. The partner that I am with actually recruited me right out of college. So, working with him is the only job I have ever had.

Stan Fisher: We are an aircraft manufacturing design company, not only in the inside of the airplane but on the outside of the airplane as well.

Tom McFarland: EnCore started a little over a year ago, as a startup. We have two platforms at EnCore. The first is aircraft interiors and that is where our history in aerospace has been. And the second is sort of a growing technology in aerospace, composite structures.

Karl Jonson: Within about three months of us getting going, we were reached out to by Deloitte. There was an opportunity that Deloitte knew of.

Kevin McFarlane: An acquisition opportunity arose and they had the chance to significantly accelerate their entrance into the aerospace segment.

Tom McFarland: We did not look to build our company through acquisition, but this opportunity seemed like a good one.

Kevan Flanigan: DCF is a leading global mid-market investment bank. We are part of a global network of Deloitte organizations that provide strategic advice to clients who are seeking either liquidity or growth in the middle market.

Karl Jonson: One of the reasons we were really pleased with Deloitte is we were really looking to have help with understanding the business, understanding the market space, especially in these turbulent times.

Tom Captain: Many people do not understand that the commercial airline business suffers financially in this age when fuel is the number one cost in airlines. You can imagine that the aircraft manufacturers are being pressed by their customer to produce more efficient, safer, and cheaper aircraft for them. So, the battle cry in that industry is we need more for less. We are moving now towards the next generation of technology, and composites is one those.

Tom McFarland: The airframe manufacturers are typically looking for lighter aircraft and composites offer that opportunity, lighter, stronger, more durable, and this opportunity arose in the composite structures industry - about the right size in Southern California. So, we went after it.

Kevin McFarlane: No one had ever heard of EnCore. Having a multibillion-dollar company take EnCore seriously was challenge number one.

Kevan Flanigan: As part of the global Deloitte organization, we can bring a great deal of subject matter expertise to help along the spectrum of a deal.

Kevin McFarlane: Challenge number two was making sure that you determine what the right value was to place on this asset. Clearly, you want it to be high enough to attract the attention of the seller but reasonable enough such that you did not feel like you are overpaying for what the company really was.

Tom McFarland: They treated it like they were buying the company. They really did. I felt that the Deloitte team was almost spending their own money.

Kevin McFarlane: And then third is just getting the company up to speed. The company and the principals had been through a sell-side transaction, but they had never been through an acquisition before.

Tom McFarland: We actually knew that the Deloitte team from the sale of our previous interior business and thought that they did an outstanding job when they represented us on the sell-side. So, when this opportunity arose on the buy-side, we really didn’t give it a second thought. They were the guys we called immediately.

Kevan Flanigan: One of the areas that is a particular area of emphasis for us at Deloitte is the middle market and serving the middle market. I think one of the interesting things of the EnCore deal is that they bought a great mid-market asset out of a global aerospace and defense business, and when you are buying a carve out, there are a lot of additional issues. You are not buying a turnkey operation, and it is critical that we help them deal with all of the challenges that they inevitably face over time.

Karl Jonson: There is a pulse on the industry that Deloitte just seemed to have a really good handle of that is incredibly valuable to us, and we have all of a sudden in one month a huge investment and then a huge jump in sales that corresponded to it.

Tom McFarland: We are at 50 million dollars of revenue at just about our first anniversary.

Tom Captain: Relationships in business are very important. People want to work with people who they trust that have alignment with their concerns and their issues.

Tom McFarland: Our culture is definitely people-centric both with our employees and our customers.

Stan Fisher: We are all together and we are working in the same room, had the same thoughts, the same meetings, and it is a lot of fun. It is going to be very successful; I feel it.

Kevan Flanigan: I think it is inevitably easier to spend time with folks you want to see successful and you like spending time with, and I think EnCore absolutely checks that box.

Kevin McFarlane: So, I think sky is the limit for EnCore. They hold themselves to a high standard, and they are going to do things better than they did it before, which is the whole point of an encore.

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