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May 2006
Market Update
Private Equity – The Fuel of Industry Consolidation
Private equity firms have left an indelible mark on the Defense and Government Technology Services (GTS) markets. The investments made by private equity funds in the industry have spawned many of the premier public companies, including Anteon, SI International and Veridian. Once dominated by the activity of a few giants such as the Carlyle Group, Frontenac, and GTCR Golder Rauner, the number of private equity firms that are active acquirers today has increased dramatically. Private equity funds now account for a significant share of the M&A transactions. In 2005, approximately 20% of the 85 M&A transactions in the GTS market were completed by either private equity funds directly or the platform companies within their portfolios. A wide array of private equity players have emerged as buyers including Arlington Capital, Veritas Capital, The Edgewater Funds, New Mountain Capital, Littlejohn and Company, and Riordan, Lewis and Hayden. While Veritas Capital has been an active acquirer of defense hardware companies since the early 1990s, they recently turned their attention to the large and rapidly growing technical and professional services markets with their recent acquisitions of DynCorp International, McNeil Technologies, The Wornick Company and the assets of MZM, Inc, which they renamed Athena Innovative Solutions.
Real Estate Best Practices: Operating Near Partners and Competitors
Anyone who has sat in traffic along the Toll Road has probably noticed a pattern—many of the area’s security companies are congregated there. Drive deeper into Reston and Herndon or further south into Chantilly, and you’ll find the major defense contractors, either in secure stand-alone facilities or high profile buildings near the amenities. Proceed further in to Tysons and you’ll probably run into your accountant, lawyer or commercial real estate broker. This dynamic has a clear effect on the real estate market—areas (known as submarkets) are becoming more distinct; describing how the market is doing as a whole is becoming less and less productive than focusing on the sum of its parts. However, from the prospective of a technology or government service company, this dynamic is the result of the strategic business decisions made by their peers, and that need to be considered when making their own real estate decisions.
Legal Update
DSS Stops Processing Contractor Security Clearances
Earlier this month, due to a funding shortfall, the Defense Security Service (“DSS”), the agency charged with administering security clearances for the Department of Defense (“DoD”) and several other government agencies, suspended processing contractor requests for both new security clearances and periodic reinvestigations. Under the present system, DSS forwards security clearance requests to the Office of Personnel Management (“OPM”), which conducts the background investigations required in issuing security clearances. DSS funds these background investigations, which can cost as much as $3,700 for a Top Secret clearance. The moratorium is a slight modification of a previous DSS announcement that DSS would not even accept new security clearance requests. Under the recently announced moratorium, DSS will continue to accept security clearance requests, but will not forward them to OPM. DSS did not address whether requests submitted before the moratorium would continue to be processed.
Upcoming NVTC B2G Committee Meetings and Events:
Mark Your Calendars! Register Today.
| Topic: | DoD Mentor-Protégé and Federal Procurement Technical Assistance Programs |
| Speaker: | Wallace Johnson, Director, Mentor-Protégé Program |
| Date: | Wednesday, May 31, 2006 |
| Time: | 8:00 – 9:00 am: 9:00 – 9:30 am:
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| Contact: | Pam Dudley |
| Location: | immixGroup Inc. |
Keep your calendar open to attend our June 27, 2006, event. Confirmed Speaker: Aneesh Chopra, Secretary of Technology, Commonwealth of Virginia, at the Hilton McLean. Click here for registration.
The NVTC B2G Committee and newsletter would not be possible without the support of our sponsors. We would like to showcase the contribution of one of our key sponsors, Aronson Capital Partners, LLC.
Aronson Capital Partners, LLC is a leading investment bank providing mergers and acquisition (M&A), corporate finance, and valuation services to middle-market companies in the defense and government technology services industries. Our team of senior corporate finance professionals has unparalleled industry knowledge and operational insight which has enabled us to achieve exceptional results for our clients. Through our extensive relationships with strategic buyers and private equity groups and with government decision makers, we are able to provide our clients with timely strategic advice and access to active market participants. The Principals of Aronson Capital Partners have completed over 50 M&A transactions and raised over $1.0 billion in capital.
For more information, please visit www.aronsoncapitalpartners.com.
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As a Member Advantage participant, you will enjoy:
- Opportunities to exhibit at NVTC member networking events, golf tournaments and other events throughout the year
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- One 1/4 page, 4-color ad with company logo in one issue of NVTC's The Voice of Technology magazine
- Display of promotional materials at Titans breakfasts
- Complimentary set of NVTC Technology Member list mailing labels.
For more information, contact Robin Randall, Director of Member Relations, at rrandall@nvtc.org.
We welcome relevant B2G articles from NVTC Members that help educate and inform our community. If you would like to submit an article for consideration, please contact Barbara Miller by email: bmiller@sheahedges.com; or by telephone: (703) 287-7818.
We ask only that you follow these simple guidelines:
- Please keep the article directly relative to B2G and/or NVTC – not company self-promoting.
- Submitted articles must appear on your Web site - a web link is printed at the end of each article in the newsletter.
- Please spell check and proof read – especially if using scientific terminology or personal names, etc.
- Submissions accepted only from current members of NVTC.
Platnium Sponsors: LeapFrog Solutions, Inc. | PricewaterhouseCoopers
Gold Sponsor: AH&T Insurance | Aronson Capital Partners, L.L.C. | Synchris
Silver Sponsors: Dickstein Shapiro | immixGroup | Panacea Consulting, Inc. | Venable LLP | Vistronix, Inc.
