Inflexion created Halo in 2017 by merging UK-based ProLabs with AddOn in California, with the ambitious growth journey that followed transforming the business into the global leader in third-party optical transceivers. The four-year partnership saw profits grow nearly 10x and investors in Inflexion funds generate a >6x money multiple when the business was sold to Amphenol in 2021.

The amount of data in the world is growing exponentially, as is the speed people want that data. This is as true now as it was five years ago, when Inflexion identified it as an investment thesis and set out to drive a solution. At the time, the global transceiver market was expanding rapidly as accelerating demand for voice and data services catalysed the roll-out of faster and higher capacity networks. Supported by significant infrastructure investment, the market for these devices was estimated to be worth over $6 billion.

Inflexion’s search for a differentiated player in the fibre-optic value chain ultimately led them to create a global networks business by combining two highly complementary companies: ProLabs, a small business in the West of England with a strong client base of blue-chip telecoms and financial services businesses in the US and Europe, with AddOn Computer Peripherals, a California-based business whose CEO Matt McCormick recalls the magnitude of the transaction: “The merger was truly transformational. We immediately became the only truly global provider of third-party transceivers in a $6 billion market where businesses typically sell in a single region. Overnight we had facilities across the US and Europe.”

Driving value

The first step for the newly created Halo Technology Group was to build best-in-class processes and systems to support its growth ambitions.

We wanted to build the foundations for a global champion, as well as develop the playbook that we could apply and scale in other geographies as the company grew.

Jonathan Ma,

Partner, Inflexion

The team spent two years building those foundations to create a robust model and system to roll out whether in the US, UK, Belgium or Brazil.

The first year post-acquisition was spent professionalising, integrating and fortifying the new Halo business, including on-boarding some strong distribution partnerships in the two locations to create a strong footing to accelerate future acquisitions. Because of the complementary nature of Halo’s constituent parts, the business had a differentiated value proposition that enabled it to cater to the needs of big telcos as well as smaller customers. “Whether a small customer needing two basic transceivers or larger telecoms clients requiring thousands of advanced devices, Halo was able to meet the demand of a broad spectrum of clients, recalls Halo Chair Al Aguirre.

This USP meant Halo was able to consistently and impressively grow its revenue and EBITDA. It shook up the market by investing heavily in overheads and infrastructure to win new clients, ultimately luring big telecoms providers away from big OEMs. “They recognised the value Halo could bring by improving service with better availability and pricing for the customer,” explains Jonathan Ma, Partner at Inflexion who led the deal. This organic growth saw revenue and EBITDA grow 25% and 50% respectively as blue-chips brought their custom to Halo.

Driving faster

This growth was supported by a number of factors. Enhancing Halo’s talent was an important area, with a new CFO and Chief Strategy Officer both appointed in the US early on. Inflexion’s talent team sourced Al as the Chair, based on the West Coast and highly experienced, having done transactional work from every angle: as a transactional attorney doing cap markets and M&A, then investment banking and then as a CFO in a Brazilian telecoms operator. The last decade has seen him involved in numerous companies and sales processes. Says Al: “The experience with Halo was truly incredible. The team was great at creating a lot of value for everyone involved, and it was a terrific experience from beginning to end.”

Other drivers of value acceleration included international expansion. “We pioneered our office in India because of Inflexion, whose in-country expert’s experience, contacts and in-depth understanding of the region was invaluable,” Matt explains. This added more than $10 million of revenue from one telecom client in India in one year alone, while Inflexion’s in-country expert in China helped Halo to build and develop some strong relationships with core suppliers there.

As Halo’s brand grew so did its firepower, enabling it to become the global platform aggregator. Three further acquisitions took place in the space of just seven months in 2021, all sourced, negotiated and executed by Inflexion: Skylane Optics in Belgium and Brazil; Solid Optics in the Netherlands and the US; and Aria Technologies in the US and China to expand Halo’s product offering into optical cabling. Halo had become so cash-generative since inception that these acquisitions – larger in aggregate value than the initial Halo platform had been – were funded without additional equity from Inflexion, thereby allowing management to avoid dilution.

Halo’s journey with Inflexion was bookended with acquisitions, and at the end of 2021 Amphenol Corporation, one of the world’s largest providers of electrical, electronic and fiber optic connectors and interconnect systems, purchased Halo for $715 million. Ultimately the leadership team saw Halo’s EBITDA grow nearly 10x in four years. “We built a global leader in a fast-growing industry, and it is reflected in the successful sale. It will now continue to grow taking advantage of long-term market dynamics and continue to expand globally and enjoy more success,” Jonathan says.

Inflexion were a force multiplier: gave us the leverage, reach and expertise we needed to execute on our shared vision. None of it would have happened without Inflexion; they’re the smartest folks you could ever work with and the best business partners.

Matt McCormick,

CEO,

Halo