Recent events leave the space industry ready for further mergers and acquisitions, as acquirers face the challenge of integrating newly acquired companies, and others choose to grow via partnerships rather than acquisitions.
Attendees at the Satellite Innovation 2021 conference in October had diverging views on this.
“Companies that pursue vertical integration will need horizontal partnerships,” such as distribution relationships, Menlo Park, Calif-based telecommunications consulting and research firm TMF Associates President Tim Farrar told Connectivity Business.
Companies that pursue horizontal consolidation will presumably pursue vertical partnerships “such as aligning with a technology provider, terminal manufacturer,” he added.
“Inmarsat sells directly; Iridium (NASDAQ:IRDM) sells indirectly (outside of the U.S. government),” Farrar said.
Germantown, Md.-based consumer satellite broadband provider Hughes Network Systems is investing in a new geostationary satellite, Paul Gaske, executive vice president and general manager for the North American Division, told Connectivity Business. Partnerships include those with OneWeb and Yahsat, for connectivity to Africa and Brazil, he said.
Meanwhile, investors are bullish on the space economy.
“People should be investing in Seraphim Space Investment Trust (LSE:SSIT),” Beth Vaccarezza, manager at Seraphim Accelerator Americas, told Connectivity Business. Seraphim invests throughout the space economy, recently emphasizing orbital services, including in-orbit processing, artificial intelligence, machine learning and de-orbiting, she said. The company specializes in Series A investments, she added.
Vaccarezza touted Seraphim’s partnership with Amazon (NASDAQ:AMZN) for AWS Space Accelerator. “Amazon is not a traditional space company, but it wants to grow its cloud business and grow awareness of the cloud among space players,” she said. It’s part of a pattern of companies outside the space industry setting up partnerships with space economy enterprises.
Hughes Network Systems did not invest in OneWeb because it spent $50 million and got back $250 million in contracts, Jeremy Rose, partner at U.K.-based consultancy COMSYS told Connectivity Business.
It may not be an investment, but it is good business.
As for partnerships, once you grow beyond three, Rose said he is “not keen.”
Investors who are eager to enter the space economy need to avoid the “drive-by due diligence” described by investment firm GH Partners Managing Director Noel Rimalovski at the event.
In the end, the investment community gets what it pays for, Melissa Farrell, Strategic Solutions vice president of commercial programs, told Connectivity Business. Her company works for the investment community, law firms and governments, offering advice ranging from project management and strategic consulting to technical and systems engineering services. Businesses that have done months for due diligence achieve different results from those that spend weeks on it, Farrell noted.