Apr 24, 2007, 05:00 am EDT
Being buried alive can change your view of making money.
Prior to December 2005, Jon B. Kutler fit the profile of the hard-charging investment banker. A Harvard business school grad and founder of a successful aerospace and defense boutique, he had worked on hundreds of deals. Long hours and constant travel were his companions–and fond ones, given the money he made.
One afternoon in December 2005, though, Kutler found himself under six feet of snow, buried by an avalanche on the last run of the day during an Austrian ski vacation. It took 45 seconds for him to pass out and 20 minutes for rescuers to dislodge his head. By the time he reached the hospital, his body temperature was 89 degrees.
“Your life flashes before your eyes,” says Kutler, 50, of those 45 seconds of consciousness trapped beneath the snow. “None of my thoughts related to investment banking.”
So in March 2006, Kutler turned a new chapter. He quit the banking outfit he had started, sold in 2002 to New York’s Jefferies Group, and turned his attention to private equity. He put up $70 million of his own money to found Admiralty Partners.
But in contrast with today’s private equity environment, where big players are raising billions and closing massive deals, Kutler had no intention of building another financial empire. “I rarely travel,” he says, “except for vacations.”
Out too are the long hours at the office. In their place, Kutler says he substituted more time doing charitable work with his wife and more attention to their two teenage kids. A U.S. Naval Academy grad who majored in engineering, he became a trustee of the California Institute of Technology. He also helps oversee the Jet Propulsion Laboratory, NASA’s center for robotic research of the solar system, which Caltech manages.
The scaled-back schedule means less time for scrutinizing deals. With Admiralty, Kutler gets plenty of pitches sent his way but invests in just one or two a year. His targets are usually companies with sales in the range of $25 to $250 million.
A recent success: Seacon Phoenix, a Westerly, R.I., maker of undersea electrical systems for submarines, with $17 million in annual sales. Kutler bought a piece of the company in February 2005 and realized a sevenfold return on his investment when Ametek acquired it in April for $35 million in cash last week.
Yet if Kutler has changed his work habits, his new life reflects a contrarian streak evident throughout his career. In the late ’90s, for example, he was bullish on the defense business when the industry was sagging along with investor interest. Times have changed. “There’s a lot of money chasing aerospace and defense,” says Kutler. “Anybody who has looked at a deal once in this industry thinks they’re an expert.”
The money chase certainly shows up in the valuations among public aerospace and defense companies. Consider the accompanying table, which lists giants like Boeing, Northrop Grumman, General Dynamics and other stocks trading within 3% of their 52-week highs and carrying price-to-sales multiples above five-year averages.
Kutler suspects U.S. defense spending is near a peak. On commercial aerospace, however, he sees room for growth given global demand for aircraft, particularly from Asia and the Middle East.
A recent bet? Last month, Kutler bought the aerospace and defense business of Vertical Circuits. The units, folded into a new company called Trident Space & Defense, makes electronics, such as tracking equipment and rugged semiconductor packaging, for the space industry. Armed with a giant Rolodex of aerospace contacts, Kutler says he’s got a game plan for increasing Trident’s business.
Just don’t expect this avalanche survivor to stay at the office too late carrying that plan out.