Stout provided buy-side financial due diligence and valuation services in connection with the acquisition of Midwest Air Traffic Control Service, Inc. (“Midwest ATC” or the “Company”) through a newly formed employee stock ownership plan (“ESOP”) in August 2026.

Founded in 1978 and headquartered in Overland Park, Kansas, Midwest ATC is a provider of outsourced air traffic control and aviation support services, supporting more than 100 facilities worldwide. The Company serves the Federal Aviation Administration (“FAA”), Department of Defense, and other government and commercial customers, with nearly 600 employees, including a unionized workforce of air traffic controllers.

Our financial due diligence engagement included the preparation of a comprehensive quality-of-earnings (QoE) databook, net working capital analyses, and net debt procedures, with a particular emphasis on government contracting, contract-level profitability, and revenue recognition. These analyses provided insights into the Company’s historical financial performance and normalized earnings profile, supporting the buyer and transaction advisors throughout the acquisition process.

As part of the QoE analysis, we performed extensive contract-level procedures to evaluate the financial impact of Midwest ATC’s transition to newly awarded FAA contracts. Our work included analyzing changes in contract structures, labor rate modifications, reimbursement timing, staffing requirements, and operational inefficiencies impacting reported gross margins. We also developed a comprehensive margin normalization analysis using management’s expected margins at completion, providing greater visibility into sustainable contract profitability and temporary revenue and labor cost timing differences.

Our diligence also addressed government contracting considerations, including FAA Level of Effort requirements, potential contractual bill-backs, labor utilization, and the impact of contract modifications on accounts receivable and unbilled revenue. We performed detailed net working capital procedures to normalize payroll accruals, assess government receivable collection cycles, and quantify the balance sheet implications of contract-related QoE adjustments. Additionally, we supported purchase agreement negotiations, working capital peg considerations, closing statement mechanics, and financing-related EBITDA analyses.

In addition to financial due diligence, we provided valuation services in connection with the ESOP transaction, drawing on our multidisciplinary expertise to support the transaction’s financial and valuation considerations.