When we last checked in on our government services indices back in October 2013 following Q3 earnings calls, our contractors were fresh off 16 days of sequestration, the budget debate had been postponed for another few months, and the overarching theme across all calls could be summed up in one word: uncertainty. Though this uncertainty surrounding long-term budget cuts has not completely subsided, the January 2014 bipartisan appropriations bill certainly had many executives breathing a (slight) sigh of relief during Q4 2013 earnings calls, released in late January and early February:
“Sequestration is eliminated for fiscal years 2014 and 2015 and replaced with reduced spending levels. The law also removed the across-the-board spending reduction methodology previously in place under sequestration and restored the ability for government agencies to move funds and discreetly allocate resources to higher priority areas, a critical revision that we have been seeking since the Budget Control Act was established back in 2011.”
– Lockheed Martin Corporation
“We are pleased that a fiscal year ’14 budget agreement has been signed… providing some near-term sequestration relief. This averts another disruptive government shutdown and provides our customers at least a near-term planning horizon.”
– The Boeing Company
“The end of sequestration does mean our customers can now allocate funds to the critical programs we support. We know that Cyber and C4ISR are going to see increases in 2014 and 2015.”
– KEYW Corporation
Companies not reporting as of date of publication: EGL, ICFI, LDOS, MANT, NCIT, VSEC, XLS
While cautiously optimistic about the federal budget going into 2014 and beyond, several contractors echoed one harsh Continue reading »
FireEye’s $1.0B acquisition of Mandiant marked the 2nd cyber security transaction in the past four months with a publicly disclosed valuation in excess of 9.0x TTM revenue. However, unlike Sourcefire, which Cisco Systems acquired in October 2013, Mandiant has more extensive ties back to the federal sector and a greater composition of services work (vs. products). Therefore, it is more relevant to take a detailed look into the drivers of this valuation and the implications for the government contracting community.
Mandiant was founded in 2004 and is the undisputed leader in security incident response management. The company received significant publicity in February 2013 after it published a report directly implicating China in recent cyber espionage attacks. However, prior to its publicized reports, the company was recognized across the cyber security community as the “Navy seal team” of cyber security breaches, and had secured equity investments from prominent private equity firms Kleiner Perkins Caufield & Byers and One Equity Partners LLC. Mandiant Continue reading »
2013 M&A Recap
M&A deal volume in the Government Services market dropped by 22% this year as compared to 2012 due to sequestration and budget uncertainty which has resulted in a lack of visibility in a target company’s business for both buyers and sellers. However, signs of a revival in M&A activity have begun to develop in the last couple months of 2013 as the deal count significantly increased compared to the rest of the year. Enhanced revenue visibility and a better understanding of the new environment played key roles in this increase.
In 2012, the market experienced a similar spike in deal volume in the last months of the year. This was primarily driven by the expiration of tax breaks effective January 1, 2013. Unlike 2012, the increase in CY Q4 2013 is expected to continue Continue reading »
November showed signs of a strengthening M&A environment as announced deals in the government services sector totaled eight for the month, which is 60% higher than October and in line with November of last year. The market has continued to see deal volume pick up in the first part of December. Over the last 30 days, ACP has closed two transactions:
ACP Recent Deals:
- The sale of Kimmich Software Systems to Vistronix
- The divestiture of certain Assets from a Tier 1 Defense Contractor to a Confidential Buyer
As shown in the chart on the right, government services deal volume in Q4 is expected to account for more than a third of the government services deals in 2013. Part Continue reading »
Vistronix closed its second acquisition this week, adding Kimmich Software Systems Inc. to expand its work with the U.S. intelligence community.
The acquisition is the second in just two days for Vistronix, which on Wednesday acquired NetCentric Technology, a company with big data, cyber and cloud computing skills.
Terms of the acquisition of Kimmich, which goes by the initials KSSI, were not disclosed.
Vistronix said in a statement that the acquisition of KSSI brings offerings such as cyber operations, signals processing, data analytics, software development and systems engineering.
With this transaction now complete, we are strategically positioned to accelerate Vistronix’s vision to expand our capabilities in the intelligence community and to deliver mission-critical solutions that enable efficient mission operations and ensure the protection of intelligence assets and information,” said Deepak Hathiramani, CEO of Vistronix, in a statement.
KSSI brings with a prime contractor spot on the National Security Agency’s Set-Aside for Small Business contract, known as NSET II. The multiple-award contract is used business, engineering, IT, operations support, and training services, according to an NSA website.
KSSI was founded in 1994 by Jeanne Kimmich Roberts.
The investment bank Aronson Capital Partners served as an advisor to KSSI.
See the original article here: http://washingtontechnology.com/articles/2013/12/06/vistronix-kssi-acquisition.aspx
During the last two weeks of October and first two weeks of November, all major Tier 1 and Mid-Tier Defense and Government Services contractors reported calendar Q3 results. This was good news for our Tier 1 index, who all reported Earnings Per Share (“EPS”) ahead of analyst expectations and raised full year 2013 EPS guidance. The market responded positively to the news, as four of six companies in our index experienced share price increases the day following the release of Q3 results. However, our Mid-Tier index did not fare as well, as over half of the companies lowered either revenue or EPS guidance (or both). Eight of 11 contractors in our Mid-Tier index experienced share price drops following the release of their Q3 earnings.
Based on calendar Q3 results, it appears continuing sequestration has impacted the Mid-Tier index more significantly than the Continue reading »
Over the past week, the major Tier 1 Defense Contractors all reported Q3 earnings per share (“EPS”) ahead of analyst expectations and raised full year 2013 EPS guidance. The widespread positive performance was one of the few bright spots amongst the contractor community in a month that was dominated by fiscal gridlock and 16 days of partial government shutdown.
Despite $37B of sequestration cuts having gone into effect and potentially impacting performance, a Continue reading »
A year-end investment review with your financial advisor is an important part of the wealth management process. Not only does this annual practice allow you to assess the health of your finances and adjust your financial goals, it also plays a vital role in the management and protection of your wealth.
As part of this process, a best-in-class financial advisor should provide you with your true financial performance versus appropriate benchmarks, discuss the year’s achievements and challenges, and offer you a detailed overview and justification of all fees. He or she should also discuss with you any changes to your personal situation, address any concerns you may have, and help you to develop a constructive plan of action for the coming year.
Unfortunately, not all financial advisors employ this best practice. Less-qualified professionals use Continue reading »
Building Shareholder Value in Today’s Defense and Government Services Market
Please join Aronson Capital Partners on October 31st for a webinar that covers the current state of the defense and government services M&A market and ways for management teams to build shareholder value in advance of an exit. The current budgetary environment has created new challenges and opportunities for government contractors, and our online presentation will focus on strategies to better position your business.
Topics will include:
- A review of current market trends
- Public company performance and valuation metrics
- The current M&A environment and transaction drivers
- Effective strategies to build shareholder value
- Viable exit alternatives for privately held firms
Click HERE to register!
IT Security Requirements for Government Contractors – Part 1
FISMA Compliance Oft Overlooked for Government Contractors - November 13th
Government contractors that house or have access to government data may be subject to Federal Information Security Management Act (FISMA) requirements. In fact, many contractors have FISMA compliance clauses in their contracts but may not understand them or even know they are there. Identifying and understanding contract clauses that require FISMA compliance is a
challenging, but necessary part of effective contract management. Noncompliance may result in fees or fines, loss/termination of the contract, or, worst of all, a security breach in your system(s).
Click HERE for more details and to register.
Affordable Care Act Basics for Government Contractors
Confused by the provisions of the Affordable Care Act? You’re not alone. Many government contractors are concerned about the impact of this new law on their business. Please join us on November 12th for a breakfast briefing on the specific aspects of the ACA that are most relevant to small government contractors. Presenters Mark Flanagan of Aronson LLC and Ronald Sroka from Evolve Consulting Group, Inc. will share their expertise on important topics that include:
- How the ACA affects your business
- Short-term requirements of the Act
- Long-term strategies for making sound business decisions related to healthcare
Click HERE to register!
In today’s government industry of questions and uncertainties, it is important to be aligned with an effective and motivated advisory board to help weather the storms and exceed your goals.
Join Jim Fennel of Aronson’s Government Contract Services Group on November 7th for a presentation by Marissa Levin, CEO of Information Experts, Inc. and author of the popular book Built to SCALE: How Top Companies Create Breakthrough Growth Through Expectional Advisory Boards. Ms. Levin leads business owners through her patent-pending SCALE Model to strategically select, compensate, associate and leverage advisory boards for breakthrough growth. At this informative seminar, she will discuss the necesssary tools and templates to follow this proven process.
The presentation will guide particpants on:
- How to Select who you need to get your business from where it is now to where you want it to be while enabling you to develop exceptional leadership skills
- How to Compensate your advisors (monetary, non-monetary and types of equity-based compensation)
- How to Associate them into your organization with an effective change of management strategy
- How to Leverage your advisors for business development, networking, process development & more
- How to constantly Evaluate and Evolve the board as your organization grows
- How to Exit advisors when they no longer fit
It will also explain the fundamentals, including the differences between a Board of Advisors and Board of Directors, the connection between corporate culture and an advisory board, diversity and boards, and consultants versus advisors.
There will be an opportunity for networking prior to the presentation.
Register today to reserve your spot at this information breakfast presentation; space is limited!
Date: November 7, 2013
Time: 8:00am-8:30am Networking; 8:30am-9:30am Presentation
Location: Aronson LLC – 805 King Farm Blvd., Suite 300, Rockville MD 20850
- Affordable Care Act
- Big Data
- Cloud Computing
- Corporate Restructuring
- Cyber Investment Management Board
- data analytics
- Deficit Reduction
- Emerging Technologies
- federal cybersecurity
- Financial Advisor
- Government Contractor
- Government Services
- Homeland Security Cyber and Physical Infrastructure Protection Act
- Intelligence Community
- IT security
- joint ventures
- Management Consulting
- pre-liquidity planning
- Systems Engineering
- Transaction Structure
- Year-End Review
- Q-4 Earnings Calls : Government Services Index Cautiously Optimistic About 2014
- Key Observations from FireEye’s ~$1.0B Acquisition of Mandiant
- Aronson Capital Partners’ Market Update: M&A Activity: 2013 Summary & 2014 Outlook
- M&A Deal Volume is Picking Up!
- Washington Technology reports: Aronson Capital Partners Advises the sale of KSSI to Vistronix
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