At the end of June, two acquisitions of mid-size intelligence companies were announced by Tier 1 strategic buyers. On the 27th, Boeing announced that it had completed the acquisition of Ventura Solutions, a hardware and software engineering firm with a focus on open source community support. Later that week, Lockheed Martin announced the acquisition of Zeta Associates, a leader in the intelligence collection and processing. Although the timeline of these two transactions was coincidental, they demonstrate an interesting trend in the industry: Tier 1 strategic buyers are once again pursuing access to innovative and propriety technology solutions that they expect to leverage across a broader portfolio of existing Intelligence Community and Department of Defense customers.
Boeing Acquires Ventura Solutions
Ventura Solutions, based in Annapolis Junction, Maryland, is a hardware and software engineering company leading the development of the REDHAWK framework and applications. REDHAWK is a software-defined radio (“SDR”) framework designed to support the development, deployment, and management of real-time software radio applications. Philip McMann of Aronson Capital, who advised Ventura in the sale, said, “The level of interest we Continue reading »
Aronson Capital Partners (ACP) recently announced the acquisition of its client, Ventura Solutions, Inc. by The Boeing Company [NYSE: BA]. Based in Annapolis Junction, Maryland, Ventura Solutions will help Boeing further expand its information and security capabilities.
“We selected Aronson to serve as our M&A advisor based on our past experience with the principals of the firm, their unparalleled track record advising engineering and cyber security firms in the Intelligence Community, and their strong relationships with the most active strategic buyers in our market,” said Rich Shields, Vice President of Ventura Solutions.
Ventura Solutions’ approximately 140 employees deliver advanced software and hardware engineering solutions. As part of the deal, Ventura Solutions will become a part of the Boeing Network & Space Systems business within Boeing Defense, Space & Security. Boeing Defense, Space & Security is one of the Continue reading »
In a sale process, all sellers want to maximize the value of their business, so it is important to have a perspective of
how buyers look at and substantiate a valuation. Buyers look at many factors when calculating the appropriate purchase price in an acquisition. Valuation methodologies such as Discounted Cash Flow analyses (“DCFs”) (a common calculation that determines the present value of projected future cash flows) consider a large number of variables such as projected growth rates, margin performance, and calculated risk factors. These factors are largely subjective, are impacted by a number of company-specific characteristics, and are most often interpreted differently by different prospective acquirers. This method allows the buyer to model various assumptions and business cases
There is also a more simplistic approach for approximating valuation that does not immediately require detailed long-term financial projections and assumptions. A common equation utilized by buyers in the government services Continue reading »
In regards to this acquisition, Mr. Davis stated: “This transaction provides the SI Organization, Inc. with the scale and differentiated service offerings necessary to compete and grow in this market. We anticipate that this consolidation trend will continue.
Read the full press release from The SI Organization HERE.
Executives and business owners of government contractors are constantly evaluating new opportunities that can grow their business and add value to shareholders. To finance these opportunities, business owners have two primary funding options: equity or debt. Each option has different characteristics and a unique impact on the Company’s earnings, taxes, and financial strength. Equity capital is typically a more time consuming and expensive source of funding for smaller private companies. Debt capital is generally the optimal source of funding for future expansion. Debt is a quicker and less expensive option, provides significant tax advantages, and allows shareholders to maintain their ownership levels.
There are two main types of debt: senior debt and mezzanine. Senior debt is the less expensive and more common form of borrowing. Most senior debt lenders expect a company to have the debt collateralized by assets; therefore, a company’s balance sheet capacity typically determines the funding level they can raise. Sometimes, a private Continue reading »
Attend the largest government contracting conference of its kind in the region with ample opportunities to build relationships with top executives from Federal, State and Local agencies, prime contractors, and each other. The 2014 GovConNet Procurement Conference features:
- 74 Speakers
- 25 Breakout Sessions
- 85 Exhibitors
- 23 Federal Agency Departments
- 16 State & Local Agency Departments
- 7 Prime Contractors
Join ACP’s Larry Davis as he moderates the CEO Lessons Learned Panel at 11:00am to hear from a panel of successful entrepreneurs who are growing their businesses in the federal marketplace.
ALSO in attendance, Aronson partner Hope Lane will be moderating a discussion on “The Expanding Cybersecurity Mandate for Federal Contractors,” featuring Aronson IT audit and security expert Jeff Cook at 12:15pm.
Are you considering selling your business? Have you considered the tax issues associated with that sale? A seemingly typical sales negotiation and transaction can go bad if tax implications haven’t been property analyzed up front by a qualified professional. It is extremely difficult – and sometimes impossible – to roll back the clock on a negative outcome. Asking important tax questions beforehand can save you wasted time and effort. For example:
Can the purchasing party actually afford to acquire the business if the deal is not structured as an asset purchase?
How much does the seller need to actually net in cash monies after taxes to feel good about the deal?
Will the selling party be willing to accept part cash with the rest equity?
Can the equity be rolled over tax-free?
Do we have minority owners that are not cashing out and will roll over their equity to be part of the new ownership group?
Complicating all these issues is the reality that the tax code is full of irregular code provisions that quite often do not come to light until the deal is nearly complete. Restructuring and back pedaling to make all parties happy is Continue reading »
Executives and boards of directors of publicly traded government contractors are constantly evaluating capital deployment alternatives in an attempt to balance growth with providing returns to investors. In general, companies have four primary alternatives, including (i) pay down debt; (ii) make acquisitions; (iii) buy back previously issued shares; and (iv) pay dividends. Unless the company is overleveraged, equity research analysts and the investment community view the later three alternatives as the more attractive capital deployment strategies since the current cost of debt is relatively inexpensive. The variety of capital deployment strategies in the industry illustrates several interesting trends in today’s government services M&A market. The exhibits below track historical capital deployment activity across government contracting sub segments over the past five years.
The Tier 1 Contractors on average generated $2.4B of leveraged free cash flow in 2013, but cumulatively only Continue reading »
Government contractors: Feeling like you’re fighting for decreasing dollars? It’s time to #RethinkEverything to compete
With tightening budgets, increased oversight, and higher costs of doing business, government contractors need to rethink all aspects of their business. Aronson’s new white paper, “<RETHINK> Everything: The New Imperative for Federal Government Contractors,” offers insights for government contractors who want to thrive in this new era:
- Acquisition trends and strategies for cost containment
- Revenue diversification and adapting to today’s budget priorities
- M&A trends and liquidity strategies
- Heightened contract compliance enforcement
- Game-changing cybersecurity regulations
- Improving efficiency in back office processes and systems
- Tax strategies for adapting to state sourcing/collection efforts
- Talent management and retention trends
Download this insightful white paper to learn how the larger market trends are already affecting government contracting and what aspiring contractors can do to succeed.
Aronson Capital Partners Advises BIOQUAL, Inc. in its Acquisition of the Preclinical Services Business of Advanced Bioscience Laboratories, Inc.
Aronson Capital Partners (“ACP”) is pleased to announce the acquisition of the Preclinical Services Business of Advanced Bioscience Laboratories, Inc. (ABL) by BIOQUAL, Inc. ACP served as the exclusive financial advisor to BIOQUAL in this transaction.
Aronson Capital Partners is a leading M&A advisor to middle-market defense and government technology solutions providers. ACP provides a full range of M&A and corporate finance advisory services to enable our clients to achieve their growth and liquidity objectives. With our exclusive focus on the Government Services and Technology sector, we are able to provide clients with a unique industry perspective and access to longstanding relationships with the most active strategic buyers
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