INDUSTRY UPDATE | Q2 2023
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.
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.
$3.0Bn
Aggregate Tx Value
20 years
Average Experience
25
Transactions Closed
Since 2020
84
2022 Valuations and Marketability studies
Corporate Advisory Services
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
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.
Defensive Hunt Operations
According to the Sixteenth Air Force, as part of CYBERCOM’s Defend Forward strategy, CNMF has worked with several partner nations as part of hunt forward missions. In a recent deployment to Latvia, the US and Canadian teams conducted hunts simultaneously. CNMF has deployed 47 times to 22 countries and conducted hunt operations on over 70 networks around the world.
Best Practices for Remote Access
Legitimate remote access software is being used by cyber actors to access victims’ systems, blend in with regular network activities, and evade detection. NSA, the Cybersecurity and Infrastructure Security Agency (CISA) and other organizations have authored a guide that provides an overview of activities associated with the malicious use of remote access software.
NGA Awards a $947M IDIQ
The NGA awarded a new $947 million contract designed to provide support to its total lifecycle acquisition management, strategic financial management and strategic business management activities. Activities under the CLOVER contract include services supporting programs and projects of significant scope and influence across the NGA enterprise.
ODNI Releases Threat Assessment
This annual report of worldwide threats to the national security of the United States responds to Section 617 of the FY21 Intelligence Authorization Act. This report reflects the collective insights of the Intelligence Community (IC), which is committed every day to providing the nuanced, independent, and unvarnished intelligence to protect American lives and America’s interests anywhere in the world.
AF Cyber Direct Commissioning
The Air Force is revolutionizing how it recruits and commissions the next generation of cyber professionals. The AF is utilizing the Cyber Direct Commissioning Program to address current manning requirements in the cyber workforce. Leveraging this authority allows the Air Force to fulfill critical technical skills desired by various missions throughout the service.
Cyber Command’s Info Sharing
U.S. Cyber Command is expanding its program that enables it to exchange cyber threat intelligence with industry partners to support national security efforts. The program was launched by the command’s Cyber National Mission Force as a two-way information-sharing initiative to get a better picture of the threat landscape and enhance government and commercial systems’ defenses against cyberattacks.
The Intelligence Community Budget
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.
Recent Transaction Highlights
Target:
Acquiror
- Announced: May 16, 2023
- Sector: Cyber
- Description:iNovex, a provider of software development solutions focused on cybersecurity, Signals Intelligence (SIGINT), data analysis, and robotic process automation for the Intelligence Community, announced that it has reached a deal with INNOPLEX, a high-performance software engineering, cybersecurity, and SIGINT business that will bring the two businesses together. iNovex is a portfolio company of Enlightenment Capital.
Target:
- Announced: April 27, 2023
- Sector: Intel & Cyber
- Description: Lentech, Inc, a small, disadvantaged business with diverse and deep experience in Information Technology (IT), cloud solutions, cyber security, space systems engineering, operations, and technical services for the Department of Defense, NASA, and Federal Civilian Agencies, has acquired the assets of Eclipse Engineering, LLC, a high impact provider of software and IT solutions to the Intelligence Community (IC) and Department of Defense (DoD).
Target:
Acquiror
- Announced: April 24, 2023
- Sector: Cyber
- Description: ZeroFox (Nasdaq: ZFOX), an enterprise software-as-a-service leader in external cybersecurity, announced that it has completed the acquisition of LookingGlass Cyber Solutions, Inc., a leader in external attack surface management and global threat intelligence. “This acquisition strengthens our position in the external cybersecurity market and expands our platform’s attack surface intelligence capabilities”, says James C. Foster, the chairman and CEO of ZeroFox.
Target:
Acquiror
- Announced: April 20, 2023
- Sector: Cyber
- Description:Engineering Solutions LLC (ESi) and Meadowgate Technologies LLC announced they are combining to create a market leader in hybrid technology solutions and professional services for the national security community. The new company will be led by Meadowgate CEO Tom Lash, a former national security leader at AWS’ Federal Division, who joined Meadowgate earlier this year. He is spearheading a strategy to build a business aligned with growing customer demand for the unique operational agility and security that advanced hybrid solutions can deliver.
Target:
Acquiror
- Announced: June 18, 2023
- Sector: Cyber
- Description:Exacom, a leading provider of mission-critical communication recording solutions, announced that it has acquired SecuLore Solutions, a company specializing in cybersecurity solutions for public safety, critical infrastructure, and local governments. As a result of the acquisition, Exacom adds security services to its portfolio to ensure public safety customers are protected from cyber-attacks through monitoring and proactive recommendations.
Target:
Acquiror
- Announced: June 1, 2023
- Sector: Cyber & Intel
- Description: iNovex, a provider of software development solutions focused on cybersecurity, Signals Intelligence, data analysis, and robotic process automation for the Intelligence Community, announced that it has reached a deal to acquire Secure Innovations, a leading cybersecurity business serving the Intelligence Community and Department of Defense. Secure Innovations is primarily focused on Defensive Cyber Operations, Systems Security Engineering, Security Automation, Cybersecurity Solutions, Information Security Training, and Vulnerability Assessment and Penetration Testing. iNovex is a portfolio company of Enlightenment Capital.
Target:
Acquiror
- Announced: May 29, 2023
- Sector: Cyber
- Description: SilverEdge Government Solutions (“SilverEdge”), a leading cybersecurity, software, and intelligence solutions platform serving the U.S. Defense and Intelligence Communities, announced the acquisition of Gardetto Engineering, LLC (“Gardetto”), an engineering services company specializing in digital design, hardware design, and systems engineering. SilverEdge is a portfolio company of Godspeed Capital.
Acquiror
- Announced: May 24, 2023
- Sector: Cyber
- Description: Agile Defense, an end-to-end provider of large-scale, digital transformations solutions to the Department of Defense (DoD) and other national security customers, announced that it has acquired XOR Security, an innovative provider of cybersecurity operations, cybersecurity engineering, and virtual security operation center offerings that protect enterprise systems used by the Federal Government and commercial customers. Agile now boasts an employee base of approximately 1,000 cleared personnel. Agile Defense is a portfolio company of Enlightenment Capital.
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.
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 06/30/2023
CCA Government Services Indices Stock Performance
- Despite growing demand due to the war in Ukraine and tensions rising in Taiwan, many defense companies are struggling to meet demand amid labor shortages.
- Government contractors are constrained by supply chain issues as small suppliers are squeezed by inflationary pressure, although there has been some easing.
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.
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:
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.
Tim Brasel
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:
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:
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.
Heather Brake
Director
Heather has provided corporate advisory services to countless companies. She specializes in developing complex financial models that help business owners see how changes in variables can impact their company finances.
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