DC Advisory advised Southern Research on the sale of its Engineering Division to Kratos Defense & Security Solutions

Background

• Founded in 1941, Southern Research (SR) is an independent, 501(c)(3) non-profit research organization with more than 400 scientists and engineers working across four divisions
• SR’s Engineering Division (SRE) provides applied R&D and engineering services for a variety of critical defense and civilian space technologies
• Kratos Defense & Security Solutions (NASDAQ: KTOS) (Kratos) develops and delivers technology-enabled defense systems. This includes solutions across unmanned systems, missile defense, hypersonic systems and satellite communications

Process

• DC Advisory (DC), led by Chris Oliver, acted as exclusive financial advisor to SR in this transaction
• DC orchestrated a focused and competitive process, targeting a select number of potential partners that understood the strategic value of SRE’s leadership in the developing, modelling, and deployment of advanced materials for extreme environments, as well as proprietary ISR sensors and electromechanical systems

Outcome

• In May 2022, Kratos announced its USD 80M acquisition of SRE. Rebranded as Kratos SRE, it will become a business unit within Kratos’ Defense and Rocket Support Services Division
• The transaction expands Kratos’ capabilities to support the advancement of hypersonic and other leading-edge national security related technologies and programs
• SRE’s team of 140 engineers, technicians, and program support professionals strengthen Kratos’ hypersonic and missile capabilities through their advanced materials testing and evaluation expertise
• This transaction will allow SRE to leverage its materials expertise to support the full program lifecycle, from laboratory to flight testing and beyond
• This transaction bolsters DC’s credentials in the government and defense space

"Chris and the DC Advisory team were instrumental in helping to deliver this transaction. The strategic advice and support provided throughout was invaluable as we navigated this complex process and helped to ensure a great outcome for all.”

“This was a unique transaction and we searched hard for the right partner to help lead us through this complicated process. Chris and his team did a fantastic job helping us through each stage of the transaction, from marketing all the way to close.”