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INDUSTRY UPDATE | Q1 2024

Defense & Government

CCA releases quarterly updates regarding relevant market insights for the Defense and Government Contracting space. Interested in receiving the updates via email? Subscribe here.
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Firm Overview  |  Market Segment News  |  Intelligence Budget   |  Transaction Highlights  |  EBITDA Valuation Multiples | Public Market Data 

Firm Overview

CCA provides customized investment banking and corporate advisory services to middle market companies in the mid-Atlantic region. No matter where you are in your business life cycle, CCA can help you build shareholder value and achieve outcomes that best suit your goals.

$3.4Bn
Aggregate Tx Value

20 years

Average Experience

28

Transactions Closed
Since 2020

84

2022 Valuations and Marketability studies

Corporate Advisory Services

The CCA Corporate Advisory team takes a holistic approach that’s proven to help businesses create sustainable value through the right combination of strategy and execution. Our process is rooted in a structured, proprietary, data-based approach that leverages the most robust analytical tools and methodologies.

We start by assessing the value and marketability of your business—arriving at an objective business valuation that serves as the essential foundation for determining how to enhance that value through strategic initiatives.

Then we use our proprietary framework to evaluate and arrive at the optimal strategic alternatives to help you achieve your goals. If a business succession or exit is in your plans, our team will help you explore the best options to set you on the right path and ensure a smooth transition—so the business is ready when you are.

Investment Banking Services

Whether you’re buying or selling a business, looking to recapitalize, or seeking new capital to fuel your growth, CCA understands the importance of this transaction in the life of your company. You need an investment banking expert you can trust wholeheartedly to guide you through a complex process and achieve a successful outcome.

Clients have trusted CCA as their investment banking advisor for 30+ years. When you choose CCA as your investment banker, your goals become our goals. We take a comprehensive, holistic approach to achieving the most successful transactions, both domestically and across borders—from preparing you to go to market, through the process of negotiating and closing a deal that produces the optimal results.

Market Segment News

Companies serving the Intelligence and Cyber Markets encompass a wide range of offerings with a diverse set of skills and market segments.  From Artificial Intelligence and Machine Learning to Cybersecurity and support for the warfighter, the people that make up these technology companies are actively involved in national security.  Along with these “pointy edge of the sword companies” are support industries in staffing, construction, finance, and legal which serve to support the infrastructure, financial, and legal needs of this community.

ODNI Threat Assessment Released​

In March, the Office of the Director of National Intelligence released the 2024 Annual Threat Assessment of the U.S. Intelligence Community. This report reflects the insights of the Intelligence Community, which is committed every day to providing the nuanced, independent, and unvarnished intelligence that policymakers, warfighters, and domestic law enforcement personnel need to protect American lives and America’s interests anywhere in the world.​

USCYBERCOM Designated Federal Lab​

U.S. Cyber Command has achieved the federal laboratory designation, marking a key step in advancing cyber research and development initiatives. USCYBERCOM disclosed the milestone in a LinkedIn post published in February. As a federal lab, the combatant command could improve its capacity to promote innovation, advance collaboration with industry and academia, and contribute to the development of cybersecurity technologies.​

Form SF-86 Being Replaced​

The Office of Management and Budget has approved the Personnel Vetting Questionnaire, or PVQ, to replace the Standard Form-86 used for federal jobs requiring security clearances and other legacy vetting questionnaires for non-sensitive and public trust positions, Federal News Network reported. The new form was cleared by OMB in November.​

GSA Memo on SDVOSB Status​

The GSA has issued a memorandum requiring GSA contracting officers to verify whether a company is eligible for consideration for a set-aside or sole-source award under the Service-Disabled Veteran-Owned Small Business program.  Starting in 2024, GSA contracting officers should confirm that an entity is certified by the SBA as an SDVOSB within SBA’s Veteran Small Business Certification system.​

Fort Meade Alliance Key Leaders​

The Fort Meade Alliance whose mission is to deliver positive, lasting impact for the people and mission of Ft Meade, hosts a Key Leaders Series on May 16th at the BWI Marriot.  Wendy Noble, Deputy Director of the National Security Agency and Valerie Sheares Ashby, President of UMBC are among the featured speakers discussing what leaders of today should be focused on to best prepare them for meeting the needs of tomorrow’s workforce.​

CYBER GUARD 24​

March marked a significant stride in cybersecurity as U.S. Cyber Command’s Exercise Cyber Guard 2024 convened cyber professionals from across the command for this year’s first large-scale exercise. The goal of Cyber Guard 2024 is to hone defensive capabilities and fortify collective cyber resilience. This year’s Cyber Guard integrated into the Large Scale Global Exercise (LSGE 24) for the first time, signifying a monumental collaboration.​

The Intelligence Community Budget

The United States Intelligence Community is a group of separate United States government intelligence agencies and subordinate organizations that work separately yet together to conduct intelligence activities to support the foreign policy and national security of the United States.
The Intelligence Community Budget in Q4 2023
The National Intelligence Program (NIP) includes all programs.  IC programs are funded through the: (1) NIP, which covers the programs, projects, and activities of the IC oriented toward the strategic requirements of policymakers, and (2) Military Intelligence Program (MIP), which funds defense intelligence activities intended to support tactical military requirements and operations.

A program is primarily NIP if it funds an activity that supports more than one department or agency (such as satellite imagery), or provides a service of common concern for the IC (such as secure communications). The NIP funds the Central Intelligence Agency (CIA) and the Office of the Director of National Intelligence (ODNI) in their entirety, and the strategic intelligence activities associated with departmental IC elements such DOD’s National Security Agency (NSA).

A program is primarily MIP if it funds an activity that addresses a unique DOD requirement. Additionally, MIP funds may be used to “sustain, enhance, or increase capacity/capability of NIP systems.” The DNI and USD (I&S) work together in a number of ways to facilitate the integration of NIP and MIP intelligence efforts. Mutually beneficial programs may receive both NIP and MIP resources.

CCA Serves as the Exclusive Financial Advisor in Q1

SoftTech Solutions, Inc. was acquired by Synergy ECP, backed by Falfurrias Capital.

SoftTech Solutions Acquired by Synergy ECP​

SoftTech Solutions, Inc. (“SoftTech Solutions”) is a custom software development firm that specializes in serving the U.S. Intelligence Community. SoftTech was acquired by Synergy ECP, a provider of software engineering, cybersecurity and systems engineering services, who is backed by Falfurrias Capital, based in Charlotte, North Carolina. With core capabilities in software engineering, big data and cloud computing, and informational retrieval systems, SoftTech employees average nearly 20 years of industry experience and provide on-contract technical leadership in key mission areas. Additionally, SoftTech Solutions engineers are the core contributors to the micro-learning gamification platform, SkillTree, which Intelligence Community customers rely on to train analysts on new and existing applications and tools.​

The Deal Team

The CCA investment banking team on this transaction included Marty O’Neill, Managing Director, Andy Spears, Vice President, and Aidan Olmstead, Senior Analyst. Together, the CCA team advised on transaction strategy, conducted the negotiations and provided strategic advice throughout the engagement.

Recent Government Technology Services Transaction Highlights​

Target:

 

Acquiror

  • Closed: April 1, 2024​​
  • Sector: Gov-Tech​
  • Description: Chesapeake Technology International has purchased Asymmetric Technologies in a transaction that expands its portfolio of products and technology transition and hardware development capabilities to meet edge communications and flight autonomy requirements of Department of Defense and national security customers. CTI will integrate Asymmetric’s IronClad and Whisper systems into its product portfolio as a result of the transaction. CTI is a portfolio company of Bluestone Investment Partners.​

Target:

Acquiror

  • Closed: March 26, 2024 ​
  • Sector: IT Services
  • Description: Park Place Technologies has acquired SDV Solutions, a provider of client-centric data center infrastructure platforms for federal government agencies, for an undisclosed sum as part of efforts to expand its portfolio of managed services, professional services, hardware maintenance and other information technology services for federal clients. Established in 2004, SDV is a Virginia-based service-disabled veteran-owned small business and a multi-original equipment manufacturer focused on providing client-centric data center infrastructure platforms for the federal government.​​

Target:

 

Acquiror

Target:

Acquiror

  • Closed: February 13, 2024​​
  • Sector: Intel & Cyber
  • Description: Sigma Defense LLC, a portfolio company of Sagewind Capital and a leading provider to the U.S Department of Defense, has announced the acquisition of San Diego, CA-based Juno Technologies. Juno Technologies specializes in delivering IT engineering, systems integration, software development, and technical support to the Department of Defense (DoD). This strategic move will enable Sigma Defense to quickly expand their software development, systems integration, engineering, and fleet support capabilities to provide new capabilities to existing customers and reach a broader range of customers across the DoD.​

Target:

 

Acquiror

  • Closed: February 13, 2024​
  • Sector: Gov-Tech​
  • Description: BlueHalo, the company transforming the future of global defense, announced it will acquire Eqlipse Technologies, a leading provider of differentiated products and solutions to the DoD and IC. Bolstered by Eqlipse’s high-end technical talent and suite of innovative products, BlueHalo will deliver enhanced scale and broader capabilities to its customers, accelerating the development and fielding of its advanced defense technologies. The combined entity will have a total employee count of nearly 2,400 across 11 states and annual revenue approaching $1B.​

Target:

Acquiror

  • Closed: February 12, 2024
  • Sector: Intel & Cyber
  • Description: Godspeed Capital Management LP, a lower middle market Defense & Government services, solutions, and technology focused private equity firm, today announced the acquisition of TekMasters and Seaford Consulting by its Intelligence, AI/ML, and Data Analytics platform, Crimson Phoenix. The addition of these two businesses to the platform meaningfully expands Crimson Phoenix’s capabilities and presence with its core Intelligence Community customers, and further advances its strategy to support their critical mission requirements.​

Target:

Acquiror

  • Closed: February 6, 2024​​
  • Sector: Intel & Cyber​
  • Description: Xcelerate Solutions, a leading defense and national security company and portfolio company of McNally Capital, announced it has merged with VMD Corp. Based in Fairfax, Virginia, VMD is a cybersecurity, agile engineering, and critical infrastructure protection firm. The combined company will go to market as Xcelerate Solutions, offering a comprehensive, mission-first portfolio of secure solutions to the federal government. The combined company boasts an experienced team of over 1,000 technology professionals dedicated to delivering a broad spectrum of cybersecurity, enterprise, and infrastructure protection services focused on mission-first delivery. ​

Target:

Acquiror

  • Closed: January 9, 2024
  • Sector: Gov-Tech
  • Description: Applied Insight LLC, a cloud and technology services leader in the government market backed by The Acacia Group, announced the acquisition of Zavda Technologies LLC, a fast-growing, veteran-owned technology and data services company. The strategic move deepens Applied Insight’s footprint in the national security community and provides the Zavda team with wider opportunities for career advancement. It also strengthens Applied Insight’s network and systems engineering and security, data analysis, and software development capabilities to better support the dynamic needs of the intelligence community.​​

EV/EBITDA Public Valuation Multiples

As we monitor the Government Contracting Industry, we have classified some of the largest government contractors into three main industry sub sectors defined below.

Historical TEV/TTM EBITDA Multiples
Multi-Platform Defense Primes
Companies typically involved in the interdisciplinary fields of engineering and engineering management in the delivery of defense related products and services. This includes, but is not limited to weaponry, munitions, electronics and cyber related products and services.

Government Services
Government contractors focused on the delivery of professional services. These services typically augment or support engineering, IT and software development, cyber security project-based initiatives or bolster the Government ability to provide for the national defense.

Defense Technology
Defense prime contractors specialize in the design, construction and support of defense-based products and services. Their work with the Federal Government is typically in a prime contracting relationship as they manage their supply chains and furnish services, supplies or construction to the Government.

Public Market Data

Multi-Platform Defense Primes

Government Services

Defense Technology

Source: S&P Capital IQ Data as of 03/28/2024

CCA Government Services Indices Stock Performance

CCA Government Services & Defense Indices Stock Performance
  • Although Defense companies experienced increases in orders due to the continuing conflict in the Ukraine and the Middle East, they are weighted down by labor and supply chain disruptions.​
  • The S&P 500 Index continues to perform well, partially due to solid earnings reports and a robust jobs market.

How CCA Helps Government Contractors

Strategy &
Corporate Advisory

Chesapeake Corporate Advisors​ provides a framework for business owners to focus on building sustainable value and to explore their succession and exit alternatives. We use our proprietary tools and methodologies to assess the market and maximize value through strategy.

Investment Banking
Services

CCA is a leading investment bank with extensive expertise in mergers, acquisitions, divestitures, and corporate advisory. We use a comprehensive approach to assist clients develop and execute a buy-side, sell-side or recapitalization strategy domestically and in cross-border transactions.

Business Valuations &
Financial Opinions

At CCA, understanding shareholder value is at the center of everything that we do. Our analysis considers the feasibility of mergers, acquisitions, divestitures, ESOPs, management buy-outs and recapitalizations. We provide an objective, assessment of value that is deeply rooted in qualitative and quantitative analysis using our proprietary methodologies.

CCA’s Government Contracting team is a blend of Corporate Advisory, Investment Banking, and Government Contracting Executives.  We have worked with dozens of companies in projects ranging from Sell Side Investment Banking, to Ownership Alternatives, to Valuations to Boards of Directors.

The CCA Government Contracting Team

Charlie Maskell

Managing Partner
Charlie leads the CCA teams dedicated in assisting businesses enhance shareholder value and position themselves to sell to a strategic buyer, recapitalize with a private equity investor transition through an internal transaction.
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Martin O'Neill

Managing Director
CCA clients appreciate that Marty has walked a mile in their shoes, having spent 30 years as a business leader in companies of various industries and sizes before joining CCA as an advisor to middle market businesses. Learn more:
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Michael Zuidema

Managing Director
In leading corporate advisory engagements for our clients, Mike draws on his track record of serving middle-market and privately-held businesses. Mike Zuidema takes an approach that’s proven to achieve results.
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Tim Brasel

Managing Director
Tim leads the day-to-day management and execution of many of the deals CCA transacts for its clients. He’s helped lead and guide the sale and acquisition of numerous middle market companies. Learn more:
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Katie Kieran

Vice President
Katie has advised many middle market business owners on how to create value and optimize the outcome when they’re ready to sell, drawing on her strong analytics, strategic, and financial modeling skills. Learn more:
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Andy Spears

Vice President
From assisting high-growth market leaders through sale processes to advising companies struggling with cash flow issues, Andy has helped a breadth of companies realize their strategic goals for more than a decade.
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Frank Ihle

Frank Ihle

Analyst
Frank supports the CCA corporate advisory team in developing business valuations and conducting strategic assessments that help companies determine how to get where they want to go.
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Aiden Olmstead

Aidan Olmstead

Analyst
An expert in financial modeling, accounting, and business research, Aidan is responsible for preparing financial projections, business valuations, investment memoranda, and marketing materials for clients.
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