Monday, March 14, 2016

Interesting Buyout

Back in late December, Mark Malkowski and Stag Arms LLC ran afoul of the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Stag Arms pled guilty to one felony charge of possession of unregistered machine guns and Malkowski pled guilty to a misdemeanor charge of failing to maintain proper records. The plea agreement required Malkowski to sell the company and is banned from owning or managing a firearms company.

Fast forward to February 29th. White Wolf Capital of Miami, Florida announced that it had acquired Stag Arms LLC from Mr. Malkowski. He will be retained as a consultant by White Wolf. They said that they intended to keep the company operating out of its existing facility in New Britain, Connecticut. Malkowski said the purchase was aligned with his concern for his employees.
Formal sentencing is scheduled for March 29. Considering the criminal charges, the sale and Malkowski's earlier thoughts about moving the company, the outcome is better for New Britain and Central Connecticut than many people might have expected. In the end, it was the employees who kept the company local, Malkowski said.

"We had a lot of offers and we had a lot of people who had a lot of opinions but this one group was the one that aligned with the direction I was going," he said. "You spend sometimes more time with your employees than you do with your family...if not for that I wouldn't be here today."
So a private equity firm buys a gun company. Big deal. We've seen that before. However, to me what makes this interesting are the other companies in White Wolf's portfolio. In addition to Stag Arms, White Wolf owns Ballistic Advantage, Aero Precision USA, and VG6 Precision.

Tacoma, Washington-based Aero Precision is a major higher-end maker of AR components for the OEM market. In recent years, they have moved into making full firearms as well as uppers, lowers, and rails under their own label. Ballistic Advantage is barrel maker specializing in better quality AR barrels and components. They have partnered with Aero Precision on barrels. Finally, VG6 Precision, which was purchased by Aero Precision last fall, makes muzzle devices for both the AK and AR.

It looks to me like White Wolf is looking to build synergies in the good-to-better quality AR market. It will be interesting to see how they use the OEM capabilities of Aero Precision to work with Stag Arms. For all I know, Stag could have been a customer of Aero Precision for years.

Unlike a lot of buyouts, this one makes sense to me. I wish them luck in a competitive market.


  1. Here some more info: White Wolf Capital records mention one Elie Azar whose Linkedin profile shows as:

    M&A, Due Diligence and Portfolio Oversight
    Cerberus Capital Management
    September 2008 – September 2011 (3 years 1 month)


  2. Cerberus rears it's head again...

  3. Cerberus rears it's head again...

  4. Was Continental Machine Tool, of the same address as Stag, included in the acquisition?
    Stag Arms, formerly, was a subsidiary of CMT (Continental Machine Tool) which was a supplier of components for many other manufacturers in firearms, automotive, and aerospace industries.