Arlington Capital Partners acquired Herndon’s Exostar

For the second time in three years, a local software company has been acquired.

Private equity firm Arlington Capital Partners, based in Chevy Chase, Maryland, acquired Herdon, Virginia software company Exostar. Arlington Capital acquired the company from Thoma Bravo, a software investment company, for an undisclosed amount. The deal is expected to close by the end of the year.

Exostar works on digital transformation initiatives for 200,000 companies in aerospace, defense, healthcare and life sciences. In its current iteration, the company is largely oriented around security and helping businesses collaborate with each other. All 225 of its employees will be retained, as will the leadership team.

Thoma Bravo acquired the company in 2020. Exostar CEO Richard Addi said that the company moved from a project focus to a product orientation, with a priority of transitioning to a commercial enterprise.

“As we look to the opportunity with Arlington Capital Partners, it’s really to take the cornerstone positioning that we’ve now established,” Addi told Technical.ly “Arlington’s thesis is very much around a growth orientation to take a fantastic foundation and let’s more rapidly grow and exploit the opportunity that’s been enabled through the platform — and more rapidly pursue expansion in the highly regulated markets that we operate.”

With the new acquisition, Exostar plans to continue on a growth trajectory. Addi said that Exostar expects to make one to two acquisitions of its own over the next several years. It’s also looking to invest in its product and develop new ones to bring to market.

For its upcoming acquisitions, Addi said that Exostar seeks companies that have great technology but lack scale or customer base. The company is specifically looking for technology providers that work in the emerging technology markets, artificial intelligence and risk management solutions — all made possible by the Arlington Capital acquisition.

“The opportunity that we see with Arlington is to work the inorganic piece, continue the organic growth that we’ve been experiencing, but now augment and complement that with inorganic growth,” Addi said.

For Arlington Capital, this move is the chance to move in on a new opportunity in the security space.

“Exostar is a true industry leader with an expanding market opportunity, especially as the need for digital trust across organizations and geographies continues to grow rapidly and the security of global supply chains is top of mind to business leaders,” said Michael Lustbader, a managing partner at Arlington Capital Partners, in a statement. “We have great respect for what Richard Addi and the entire Exostar team have accomplished and look forward to working alongside them to drive continued success using our collective domain expertise.”