Arlington Capital Partners agreed to acquire secure communications firm Exostar from Thoma Bravo. Terms remain undisclosed, though the transaction is expected to close by year-end.
Exostar
Virginia-based Exostar provides cloud-based communications solutions to highly regulated industries like aerospace, defense, and life sciences. Its core focus is a suite of products facilitating collaborative workflows and information sharing via secure networks that protect sensitive data from cyber threats.
The business serves 200,000 clients globally, including Boeing, Merck, and Raytheon.
On-Theme for Arlington
The deal fits squarely within Arlington's "regulated industries" mandate, a core focus of which has been D.C. area defense contractors.
It also comes shortly after Arlington's formation of Eqlipse Technologies in early 2023, a combination of five cybersecurity and business intelligence companies focused on national security agencies. While Exostar's corporate end market (and separate Arlington deal team) make it less likely to slot into the Eqlipse organization, it's clear that Arlington continues to see runway in its cybersecurity thesis.
Exostar is likely one of the earliest investments in Arlington's recently raised sixth fund, which had brought in around $3 billion as of Q1 2023 (against a $3.5 billion target).
Thoma Bravo's Exit
It's a relatively quick turnaround from Thoma Bravo's mid-2020 acquisition of Exostar, pegged at around $100 million by the Wall Street Journal.
A definitive read on outcome is difficult absent deal information, though Exostar's client count grew more than 30% over the hold. Viewed in conjunction with the timeline, it's reasonable to assume this was a solid exit for the software-focused firm.
Advisors
Arlington's advisors included Shea & Company and Gibson, Dunn & Crutcher, while Thoma Bravo brought in Aeris Partners and Kirkland & Ellis.