Yesterday, Thoma Bravo, a private equity investment firm focused on the software and technology-enabled services sector, announced an agreement to acquire regulated industry Cloud platform provider Exostar LLC for an undisclosed sum.

The transaction is subject to customary closing conditions and regulatory approval.

Exostar industry platform

Background

Founded 20 years ago as one of the then termed B2B industry exchanges, Exostar was a joint venture among certain aerospace and defense firms. Other regulated industry firms subsequently joined residing in Life Sciences and healthcare sectors.

In this supply chain industry analyst’s early career, I covered the initial formation of such industry exchanges.

According to the announcement, the investment firm plans to leverage its expertise in enterprise software capabilities for complex industries to further expand platform capabilities, including cybersecurity needs.  Former shareholders, BAE S

ystems, Boeing, Lockheed Martin, Raytheon Technologies, and Rolls-Royce will remain active as valued customers and trusted advisors.

Paul Kaminski, who has served as Exostar’s Board Chairman since inception, indicates in the release: “Exostar has been a successf

ul endeavor for its six joint venture owners over the past two decades. Now, the company has reached a point where a more growth-focused model can allow Exostar to further innovate and expand its capabilities. The expertise, energy and experience Thoma Bravo brings to Exostar should help enable the company to pursue substantial opportunities for growth, while remaining deeply committed to its existing customer base.”

The Acquirer

Thomas Brava has had some history in the areas of both supply chain management focused and B2B platform technology.

The investment firm itself features a 40-year history with $35 billion in investor commitments. The firm indicates that it has pioneered buy and build investment strategies with a philosophy of collaborating with existing management on growth and added value and has acquired more than 200 software and technology companies.

Long time supply chain planning veterans may recall supply chain planning technology provider Manugistics, which was subsequently acquired by the former i2 Technologies. Subsequently, i2 Technologies became part of supply chain planning branded JDA Systems. Thomas Brava funded the Manugistics acquisition in 2006, and subsequently exited JDA in 2009.

In 2010 the firm acquired roadnet technologies, formerly UPS Logistics Technologies, that catered to fleet management and routing. That investment was exited in 2013.

Within the B2B industry exchange area, the firm acquired Elemica, a supply network platform focused on process industry manufacturers in 2016. That investment was exited in 2019.

In 2017, the firm acquired Global Healthcare Exchange (GHX), and industry platform focused on the supply management process needs for healthcare providers and suppliers. That investment remains ongoing.

 

Supply Chain Matters Initial Impressions

Similar to various industry members, the B2B industry platform technology area has undergone a significant amount of changes over 20 years.

The needs for industry business processes to become more digitally transformed not just in the area of identity and trust management, procurement and supply management, but in electronic document creation and exchange, and broader horizontal areas of supply chain management business process support. The B2B technology platform landscape has become far more competitive over the years, with newer players able to leverage the most advanced technologies and broader horizontal supply chain management applications and digital transformation support.

In the specific area of aerospace, defense and life sciences, a confluence of industry developments has made this area far more challenging.

Hints of added platform technology needs were highlighted in our This Week in Supply Chain Tech column of February 28. An announcement of an Exostar working group was expected to focus on a technology modernization roadmap alignment that addressed existing industry business drivers including digital transformation, supply chain cybersecurity, network and application integration interoperability, master data management and supplier qualification and sourcing.

The rise in incidents of computer hacking and the needs for more proactive cyberattack defenses and information security safeguarding across supplier, contractor and customer demand networks are a mandatory requirement, with governments much more concerned about added measures in these areas. This blog has previously highlighted the severe impact that the COVID-19 pandemic is having on the commercial aerospace industry itself, facing potentially multiple years of customer demand and supply network disruption. Similarly, pharmaceutical and life sciences supply networks are now under the looking glass of legislators and regulators for cyber espionage as well as too much global sourcing and supply risk exposure.

Thus, this Exostar acquisition announcement does not surprise us, since a financial resource boost may well be timely for industry participants. That stated, the landscape remains competitive, especially with other B2B industry and supply chain Cloud platform providers knocking on industry player doors. From our lens, the key will be which of these players can provide the ability in integrate multiple B2B Cloud platforms with streaming data and process support.

What should be a concern or area to watch is Thomas Brava’s history of turning over such investments in 2-3-year timeframes. In the case of Exostar, the timing need may be far greater without the addition of more innovative technology and broader digital transformation capabilities.

Bob Ferrari

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