- Details
- By Chez Oxendine
- Native Contracting
Kava Equity Partners, a private investment group created by the Southern Ute Indian Tribe, acquired Overland Park, Kan.-based environmental remediation services provider and general contractor Arrowhead Contracting.
The acquisition, announced last week, marks Kava’s first acquisition since its formation in 2023. The tribe created Kava to find acquisition and investment opportunities for its parent company, the Southern Ute Indian Tribe Growth Fund.
Kava pursued the acquisition due to Arrowhead's track record of projects for federal, commercial, and Native American clients, according to James Dudley, managing director of Kava Equity Partners. Discussions began in spring and led to the purchase after Kava identified alignment between the Southern Ute Indian Tribe's values and Arrowhead's environmental work.
“We found an opportunity to partner with a firm that was so well aligned with the tribe’s values,” Dudley told Tribal Business News. “It was really a unique opportunity and a perfect investment for the portfolio.”
Under the deal, Arrowhead will maintain its existing management team. Holland & Hart LLP and Maynes, Bradford, Shipps & Sheftel, LLP provided legal counsel to Kava Equity Partners on the transaction. CC Capital Advisors served as financial advisor to Arrowhead Contracting. Terms of the acquisition were not disclosed.
Curt Koutelas (Osage Nation), founder and CEO of Arrowhead, said the acquisition was the next step in the company’s growth strategy.
“This investment in Arrowhead provides us with the crucial resources needed to fuel further growth and expansion,” Koutelas said in a statement. “It also enhances our capability to serve our federal and commercial clients.”
Shane Seibel, executive director of the Southern Ute Indian Growth Fund and a tribal member, emphasized the alignment between Arrowhead’s work and Native values.
“As Indigenous people, we understand that everything we have comes from the Earth - we have to leave it all the way we found it, or better. That made Arrowhead the right choice for this acquisition,” Seibel said. “Through this strategic acquisition, Kava intends to leverage its resources to enhance Arrowhead’s operational efficiency and broaden its presence in the environmental remediation and construction sectors.”
Kava plans to leverage Arrowhead’s experience in the federal contracting space, where the environmental services company has worked for three decades. Over the last three years, it has earned more than $30 million in federal contract awards, primarily from the U.S. Environmental Protection Agency (EPA), according to information from market intelligence firm HigherGov. While Arrowhead is self-certified as a Native American-owned business, it is not currently in the Small Business Administration's 8(a) program, having graduated in 2001.
The plan is to continue seeking work on the strength of Arrowhead’s existing experience with environmental remediation and existing partnerships with other Native entities through its general contracting work.
“Environmental remediation is a multi-billion dollar market in and of itself, between federal and commercial,” Dudley said. “There's a lot of opportunity there already. It's not growing 20 percent year over year, but (given) the scale of the problems that remediation addresses, it's not going to shrink.”
Dudley told Tribal Business News the Arrowhead acquisition is emblematic of Kava’s targeted buys going forward. The tribal PE firm seeks “lower-middle market companies” with EBITDA of between $5 million and $30 million. Those aren’t the only opportunities Kava would consider, Dudley said, but they would represent the “majority” of Kava’s future acquisitions.
“As long as they fit with the mission and the goals of Kava, we have some flexibility to look at minority investment deals, or growth-equity deals,” Dudley said. “These are all opportunities we can take advantage of, but we'll certainly be doing less of those.”
Kava also wants to find companies that are already functioning well. The firm has no plans for trying to save failing businesses or flip acquisitions for quick cash, Dudley said. Rather than a 5-7 year timeline for selling acquired businesses, which is typical in many PE deals, Dudley projects an 8-10 year timeline — or even longer if the business aligns particularly well with Kava and the Growth Fund’s long-term goals.
In that same vein, Kava wants to acquire businesses with effective management already in place, and then allow that management to continue doing their work, Dudley said. The goal is to partner with acquired companies rather than taking everything over.
“Our ideal opportunities have that management team that’s well established, that’s operating at a high level, and they’re interested in staying because they see the benefits that partnering with the tribe can bring,” Dudley said.
