Subsidiary acquisitions provide growth: Alaska Native Corporation investment considerations.

• Author: Slaten, Russ
• Position: ALASKA NATIVE CORPORATIONS

Alaska Native Corporations (ANCs) make up the highest-grossing revenues among companies based in the Last Frontier and owned by Alaskans. ANCs encompassed twenty-two of the Top 49ers in the October 2013 issue of Alaska Business Monthly. The twenty-two corporations collectively grossed over $11.6 billion in 2012, providing more than seventeen thousand jobs in Alaska and nearly sixty thousand jobs worldwide.

Arctic Slope Regional Corporation (ASRC), along with its subsidiaries, is the largest Alaskan-owned company, employing more than ten thousand people worldwide. ASRC has most recently seen a growth in its numbers after the acquisition of Little Red Services, Inc., a service company on the North Slope, in May. Even as Little Red Services becomes part of ASRC, it still operates separate from ASRC's organically grown company, ASRC Energy Services, in order to protect the brand and management structure.

Dave Gillespie, CEO of Aleut Corporation, says Aleut Corp. tries not to disrupt an organization more than necessary when acquiring a new subsidiary. And in order to find the right companies, Gillespie has a few considerations.

"We have three rules. First, we look for businesses that are related to, but are different than, what we already have so that one plus one equals three. Second, we look for businesses that are the same, but have different customers. And third, we look for businesses that have nothing to do with anything, but are too good to pass up. An example of this is Patrick Mechanical in Fairbanks," Gillespie says.

Fairbanks-based Patrick Mechanical, one of eight Aleut Corporation subsidiaries, is a mechanical contracting firm with several projects spanning the Fairbanks North Star Borough.

SBA Programs

Eleven of the eighteen Bering Straits' wholly owned subsidiaries participate in or have graduated from the US Small Business Administration 8(a) Program. Two subsidiaries participate in the Small Business Association HUBZone Program. The 8(a) Business Development Program--common amongst ANCs as a starting point for subsidiaries--is a program geared toward helping socially and economically disadvantaged firms with becoming competitive in the federal contracting market. The HUBZone Program, or the Historically Underutilized Business Zone Program, provides federal contracting opportunities for economically distressed communities based on various census data.

"A significant amount of Bering Straits' gross revenue is derived from government contract work. It's over 90 percent," says Bering Straits Native Corporation President and CEO Gail Schubert.

The two most recently created Bering Straits subsidiaries are Global Management Services and Global Technical Services, displaying ongoing success...