Source Talks is a series where we discuss deal origination with PE and M&A pros, in collaboration with David M. Toll.
In this episode David speaks with Firdaus Pohowalla, Managing Director at Cascadia Capital, about trends in automation and technology that are creating opportunities for Private Equity firms.
Machine generated transcript below:
David: Tell me about Cascadia and your role there.
Firdaus: Cascadia Capital was founded 20 years ago by Michael Butler and Kevin Cable here in Seattle, initially as a tech focused investment bank. And over the last 20 years, the firm has grown to have a national footprint across all of the key end markets and industry verticals that we see growth in in the middle market.
My role is to have two hats. One is I lead the coverage of industrials here at Cascadia. So that’s a fairly broad mandate. And we focus that on a handful of core subsectors specialty manufacturing, building products, distribution companies, industrial services companies and transportation and logistics. So that’s my my first hat. And my second hat is I co-lead our robotics, automation and artificial intelligence practice, which we just launched last week.
David: Tell me about some of the trends within automation, robotics, artificial intelligence that are creating opportunities for transactions for private equity firms.
Firdaus: Each firm will have its own focus areas. But where we see short term opportunities are in areas like industrial inspection, where the combination of imaging and A.I. is really creating the ability to deploy very complex and very sophisticated inspection solutions in manufacturing environments.
The warehouse and fulfillment environment, like we just discussed, is another significant opportunity and one where we’re seeing a lot of growth, although that’s probably a couple of years down the road in terms of commercial viability as the autonomous deployment of robots and unstructured environments. So that really entails full scale disintermediation of existing supply chains and existing manufacturing environments, service environments.
David: So I wonder if you would bring one or two of these trends home with with a recent example of a transaction involving a private equity firm.
Firdaus: We ran a process for a company this year called Lucedale Technologies Lusardi and is the world’s leading manufacturer of deep learning enabled inspection systems for the forest products space. And while forest products itself is not the largest sector and certainly not the one where there’s a tremendous amount of dynamic activity, the solution of trying to identify defects within a log that’s moving at forty five hundred feet per second through a scanning machine requires a significant incorporation of both software and hardware technologies.
We took that out to a mix of private equity and strategic firms. We had a lot of interest from both. And ultimately there was a strategic that in this instance came in and paid a high value for the technology because of an instant ability to incorporate that within its existing products portfolio and deliver that out to the market.