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Jan 30, 2013
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The NSA Will Continue to be a Priority Acquisition Market

In recent years, the National Security Agency (“NSA”) market has been an acquisition hot spot, as large contractors attempt to re- position their contract portfolio into the faster growing segments of federal spending. The pace of acquisitions accelerated in early 2010 following the creation of the U.S. Cyber Command (USCYBERCOM), especially once it was confirmed that the sub-unified command would be co-located with both the NSA and recently relocated Defense Information Systems Agency (“DISA”) at Ft. Meade. Well-positioned NSA contractors not only offer an acquirer access to the largest U.S intelligence agency, but an entrée into USCYBERCOM, which is commanded by General Keith Alexander, the Director of the NSA.

On January 27, 2013, the Washington Post published an article stating that in late 2012, the Pentagon approved a major expansion of USCYBERCOM, from 900 personnel to approximately 4,900. In the midst of sequestration risk, a continuing resolution, and debt ceiling headlines, such a significant increase in personnel only highlights the significance of the cyber threat to our nation.

According to the Washington Post, the increased personnel at USCYBERCOM will fall into one of three categories:

  • National Mission Forces – to protect computer systems that undergird electrical grids, power plants, and other critical infrastructure
  • Combat Mission Forces – to help commanders abroad plan and execute attacks (offensive operations)
  • Cyber Protection Forces – to fortify the Defense Departments networks

Because USCYBERCOM is so intertwined with the NSA, we expect this increase to further validate a buyer’s investment thesis on the Fort Meade market. When government personnel increase, contractor dollars typically follow. In the past four years, there have been 26 acquisitions of companies whose primary customer was the NSA. This number peaked in 2011 when there were nine transactions closed, as shown in the below graphic. In 2013 & 2014, we expect that targets focused on the NSA market will
continue to stay at the forefront of strategic buyers’ acquisition criteria.

See the full Washington Post article here; to receive the acquisition detail for the above graphic and corresponding valuation metrics, please contact Aronson Capital Partners 

 

 

 

 

 

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Aronson Capital Partners is a leading financial advisor to government services and technology firms. We exercise our special domain expertise in the Defense, Intelligence, and Federal Civilian markets to achieve exceptional results for our clients. In addition to completing more than 100 transactions in the federal sector, our principals have decades of executive level, hands-on experience in the industry – a key differentiator that leads to success.