INDUSTRY UPDATE | Q2 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.
Firm Overview
CCA provides customized investment banking and corporate advisory services to lower 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
2023 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 war fighter, 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 the various needs of this community.
Army’s New Role in Cyber Command
The U.S. Army has taken on the role of Combatant Command Support Agent for the U.S. Cyber Command, a function that was previously exercised by the U.S. Air Force. The transfer of the role was accompanied by the transition of around 350 Air Force civilian employees to the Army under an effort led by the Army Cyber Command. The CCSA’s workforce is expected to eventually grow to 700 Army civilians.
DARPA-USCYBERCOM Partnership
Under the Constellation program, DARPA and Cyber Command are creating an expedited pathway for delivering cyber technologies from the laboratory to the cyber battlefield. The program encompasses a user-directed, incremental, and iterative pipeline to accelerate the creation, proving, adoption, and delivery of new cyberspace capabilities into the command’s software ecosystem.
CISA – Industry Pledge
The Cybersecurity and Infrastructure Security Agency (CISA) announced voluntary commitments by 68 of the world’s leading software manufacturers to CISA’s Secure by Design pledge to design products with greater security built in. Manufacturers are pledging to work over the next year to demonstrate measurable progress towards CISA’s goals.
Proposed Rule on Non-Competes
The Federal Trade Commission has proposed a new rule for non-competes. The rule, which is set to go into effect in September 2024, would ban new non-competes with all workers, including senior executives after the effective date. Specifically, the final rule provides that it is an unfair method of competition—and therefore a violation of Section 5 of the FTC Act—for employers to enter into non-competes with workers after the effective date.
New Exec Director of Cyber Command
Morgan Adamski, director of the Cybersecurity Collaboration Center at the National Security Agency, has been appointed executive director of U.S. Cyber Command. She assumed her new position in June and will help lead strategic initiatives to advance USCYBERCOM’s talent management, capabilities and partnerships. Adamski is joining USCYBERCOM following a nearly 15-year career at the NSA.
New Overtime Law in Effect
As of July 1, 2024, which is the deadline for the updated U.S. Department of Labor (DOL) overtime rule, employers in various industries face significant uncertainties. This rule change, which raises the salary threshold for overtime eligibility, will impact millions of workers and necessitate major adjustments in workforce management for businesses of all sizes, including nonprofits and faith-based organizations.
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 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 Government Technology Services Transaction Highlights
Target:
Acquiror:
- Closed: May 2, 2024
- Sector: Gov-Tech
- Description: Bcore, a prominent leader in mission-centric solutions for the DoD and the Intelligence Community and a NewSpring Holdings platform company, announced its strategic acquisition of 2 Twelve Solutions. Known for its expertise in rapid prototyping and cutting-edge digital transformation solutions that support the services, 2 Twelve enhances Bcore’s ability to integrate advanced technology with mission-critical objectives. With this strategic acquisition, Bcore reiterates its commitment to maintaining its position at the forefront of national security solutions.
Target:
Acquiror:
- Closed: April 22, 2024
- Sector: Gov-Tech
- Description: Sigma Defense Systems, a portfolio company of Sagewind Capital, has moved to expand its Combined Joint All-Domain Command and Control capabilities with its acquisition of Herndon, Virginia-based electronic warfare systems provider Electronic Warfare Associates (EWA). “The alignment between EWA and Sigma Defense was a natural fit that accelerates our ability to deliver new solutions for our customers,” said President and CEO of Sigma Defense, Matt Jones. The transaction will enable Sigma Defense to broaden its portfolio and offer new approaches designed to address the challenges facing defense and military organizations worldwide.
Target:
Acquiror:
- Closed: April 9, 2024
- Sector: Intel & Cyber
- Description: Enlightenment Capital portfolio company RealmOne has acquired Torin Consulting, a provider of operational support and software development to help intelligence missions succeed. RealmOne specializes in cybersecurity, intelligence collection and analysis, data science and hyperautomation for the Defense Department and the Intelligence Community. The addition of Torin strengthens the company’s position as a large, middle-market technology solution provider supporting the IC and DOD with over $2 billion in recent prime contract awards and nearly 1,000 employees.
Target:
Acquiror:
- Closed: April 5, 2024
- Sector: Gov-Tech
- Description: Epiq Solutions, a portfolio company of The Veritas Capital Vantage Fund, and leading provider of software defined radios and space computing solutions for governments and enterprises, announced the completion of its acquisition of CyberRadio Solutions, a business unit of G3 Technologies providing high-performance radio frequency products including tuners, downconverters, and signal generators supporting the most demanding defense and intelligence applications. CRS will join the Epiq platform and continue operating out of Mount Airy, MD under its current leadership team.
Target:
Acquiror:
- Closed: June 27, 2024
- Sector: Intel & Cyber
- Description: Madison Dearborn Partners (“MDP”), a leading private equity investment firm based in Chicago, which has raised aggregate capital of more than $31 billion since 1992, announced that funds affiliated with MDP have made a strategic investment in Omni Federal. Omni is a founder-led, high-growth provider of innovative and intuitive mission and enterprise software solutions to the U.S. Department of Defense (DoD) and Intelligence Community (IC). Members of Omni’s management team will retain a significant ownership position in and continue to lead the Company.
Target:
Acquiror:
- Closed: June 20, 2024
- Sector: Intel & Cyber
- Description: Columbia, Maryland-based Synergy ECP has acquired SPYROS Information & Technology Consulting in a transaction that expands its cybersecurity service offerings for customer agencies within the intelligence community and Department of Defense. SPYROS provides capabilities in critical infrastructure resilience, signals intelligence, computer network operations and 5G technologies, among other areas. Synergy ECP received support from Falfurrias Capital Partners, a Charlotte, North Carolina-based private equity firm, in the acquisition, which came three months after Synergy purchased SoftTech Solutions.
Target:
Acquiror:
- Closed: June 10, 2024
- Sector: Intel & Cyber
- Description: Clarity Innovations, a portfolio company of Capitol Meridian Partners, has merged with Chameleon Consulting Group to form an entity focused on delivering cyberspace products and services to defense and intelligence customers. Wes Daniels, co-founder and CEO of Clarity, will continue as CEO of the combined company and Chameleon’s co-founders Tim Berzins and Byron Williams will remain senior executives. Washington, D.C.-based investment firm Capitol Meridian, its affiliates and members of both management teams funded the transaction.
Target:
Acquiror:
- Closed: June 10, 2024
- Sector: Gov-Tech
- Description: Booz Allen Hamilton (NYSE: BAH) announced that it has acquired PAR Government Systems Corporation (PGSC), a wholly owned subsidiary of PAR Technology Corporation (NYSE: PAR). The acquisition will combine PGSC’s edge technologies with Booz Allen’s deep mission expertise and digital battlespace solutions to accelerate and transform warfighter technology on the front lines. As a leading defense technology provider for the Department of Defense, Booz Allen combines deep mission expertise with advanced technology to accelerate results across the warfighting lifecycle.
EV/EBITDA Public Valuation Multiples
We monitor the Government Contracting Industry and 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’s 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 06/28/2024
CCA Government Services Indices Stock Performance
- Defense companies are experiencing operational execution issues, dampening stock price performance.
- Outperformance of the S&P 500 Index continues as investors anticipate lower inflation, higher earnings growth, and interest rate cuts later in 2024.
How CCA Helps Government Contractors
CCA 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.
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.
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
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:
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.
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.
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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