Date: December 8, 2011

Customer Types
Aronson Capital Partners Advises SOTECH, Zu and Bushido on Sale to Ultra Electronics

Aronson Capital Partners (“ACP”) is pleased to announce the acquisition of our clients, Special Operations Technology Inc. (“SOTECH”), Zu Industries Inc. (“Zu”), and Bushido Communications LLC (“Bushido”), by UK-based Ultra Electronics Holdings plc (“Ultra”).  The aggregate purchase price for the companies was $115 million, which together represents Ultra’s largest acquisition to date.  The acquisition of these companies will enhance Ultra’s transatlantic cyber intelligence and security offerings and provide a platform for exploiting growth opportunities with US government agencies that conduct global counter-terrorism and counter-narcotics missions that require comprehensive technical and operational support.

Headquartered in Annapolis Junction, MD, SOTECH offers turnkey communications surveillance systems, integrating proprietary and commercial-off-the-shelf (“COTS”) data analytic and biometric tools to garner actionable intelligence from massive volumes of data extracted from mobile, fixed line, and broadband communications.  Based in Doral, FL near Miami, Zu sells cyber surveillance systems that are built on two proprietary software products that operate on commercial hardware.  The first is ISIS®, an integrated surveillance and intelligence system that processes, stores, filters and retrieves large amounts of data including voice, text, email and metadata captured from communications networks.  The second, is Voice Print Analysis, a voice biometric technology that integrates with ISIS® to help identify conversations of interest based on matching voice samples against a database of audio files.  Bushido delivers satellite communications equipment and connectivity to support international operations.

We believe the transaction illustrates several emerging trends in the government technology M&A market:

  • Increased focus on companies that can integrate COTS-based and proprietary products, which utilize technologies that are approved to sell to a broad market, including US and international defense, law enforcement, and commercial enterprises
  • Growing interest in acquisition targets that provide a platform for pursuing international business opportunities as spending on national security moderates in the United States and the United Kingdom
  • Foreign-based defense contractors pursuit of US-based companies with prime contracts that provide access to government agencies with large, protected budgets
  • Companies with differentiated cyber security and intelligence solutions continue to be a strategic priority for acquirers given the higher growth prospects of these segments

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