About

Founded in 1991, RAE Systems is a leading provider of advanced chemical and radiation detection devices. RAE’s devices are rapidly deployable connected, intelligent gas detection systems that enable real-time safety and security threat detection.

Insight & Approach

In late 2010, RAE was struggling as a public company under the shadows of a complex and unprofitable joint venture in China and a self-disclosed FCPA violation that had occurred several years earlier.

Vector’s research revealed a strong underlying core gas detection business. We believed that after divesting the non-core Chinese joint venture, RAE would achieve double-digit growth with a market leading product. Furthermore, our outside-in diligence convinced us that the company was well positioned to transform itself from a device manufacturer into a wireless and software-enabled safety solution provider.

We also established a partnership with a leading Chinese private equity firm given 25% of revenue and 75% of employees where in China. We also built a close relationship with RAE’s founders and current CEO and CTO, who controlled more than 30% of the company, providing strong allies in the take-private process. The combination of the strategies above gave us an overwhelming advantage in a competitive process, resulting in a take-private transaction that closed in June 2011.

Vector Value Add

Vector helped the company hire a new COO and a new CFO with significant experience managing global industrial businesses and helped the company execute a sale of its non-core joint venture in China. We also invested heavily in a software strategy to transform RAE from a product company into a recurring safety solution vendor.

Results

RAE’s core business grew profitably at a double digit rate for several years in a row, and is recognized as a pioneer in the gas detection industry with unrivalled technologies. In 2013, RAE was sold to Honeywell International (NYSE:HON) for $340 million.