January 07, 2008

Venable Closes Out Strong 2007 on Transactional Front, Advising on $1 Billion in Government Contractor M&A Deals; Sector Less Impacted by Credit Crunch Affecting Larger Debt-driven Deals

4 min

Firm closed 15 transactions, including Perot Systems’ $250 million acquisition of QSS Group and ManTech’s $195 million purchase of SRS  


WASHINGTON, D.C. (January 7, 2008) – Completing a strong year advising companies in the government contracting sector, Venable LLP’s Government Contractor Services Group closed 15 contractor-related merger and acquisition transactions in 2007, with an aggregate value of $1 billion.

The deal list reflects the success that Venable has had in representing both acquirers and target companies in middle-market M&A assignments. The group, led by partner Joe Schmelter, was launched in 2005 and has quickly carved out a role as a top adviser for government contractors in the M&A marketplace nationally. 

“This was a very solid year in M&A activity for government contractors,” Mr. Schmelter said. “We saw a steady stream of transactions, as companies continue to search out high-quality providers that will allow them to grow.”  Mr. Schmelter added that the year was marked by its consistency, as the group worked on a similar number of transactions in both the first and second halves of the year.

Mr. Schmelter also noted that the middle market has remained robust despite the credit crunch that has subdued larger-scale M&A and private equity transactions dependent on heavy debt financing.  “A lot of the deals we see involve strategic buyers with substantial cash looking for particular technology and value-added services developed by niche players,” he said.  “The presence of committed corporate buyers that are not as dependent on newly issued debt to fund their acquisitions makes a huge difference in the health of the middle market.”

Wallace Christner, another senior member of the Government Contractor Services Group, pointed out several other characteristics of the segment that have helped deal flow.  “Increasingly, as the federal government outsources more types of services related to IT, infrastructure, logistics, procurement and other functions, a healthy farm system has developed for emerging contracting firms,” Mr. Christner said.  “We’re seeing more deals well outside the Beltway, involving highly specialized technologies and services that can develop quickly and become extremely valuable for top-tier contractors.  The likely continuation of government outsourcing should help maintain a vibrant market in the years ahead.”

The following is a recap of the government contracting transactions closed by Venable in 2007.  The firm represented:

ØPerot Systems Corporation and its subsidiary Perot Systems Government Services, Inc., in the $250 million acquisition of QSS Group, Inc.;

ØManTech International Corp in its $195 million acquisition of SRS Technologies, Inc.;

ØManTech International Corp.in its $76.5 million acquisition of McDonald Bradley, Inc.;

ØSwales & Associates, Inc.(Swales Aerospace) in its $100 million sale to Alliant Techsystems, Inc.;

ØHaverstick Consulting, Inc.in its $90 million sale to Kratos Defense & Security Solutions, Inc.;

ØAdvanced Concepts, Inc. in its $78 million sale to L-1 Identity Solutions, Inc. (including $6 million earnout);

ØSumma Technology, Inc.in its $65 million sale to AAR Corp.;

ØStanley, Inc.in its $30 million acquisition of Techrizon, LLC;

ØCritiCom, Inc.in its $32 million sale to Ultra Electronics Defense Inc., an indirect subsidiary of Ultra Electronics Holdings PLC (including $4 million earnout);

ØPotomac Management Group, Inc. in its $18 million sale to ATS Corporation (including $1.5 million earnout);

ØAlion Science and Technology Corporation in its acquisition of LogConGroup, Inc;

ØTWD & Associates, Inc.in its acquisition of the federal government unit of HCI Technologies, Inc.

ØDataline Holdings, Inc. in the sale of its subsidiary, Dataline, Inc. to DLN Holdings LLC, an affiliate of the White Oak Group;

ØSuntiva, LLC (Suntiva Executive Consulting) in its purchase of the Professional Services Division of C-Systems International Corporation;

ØReliable Integration Services, Inc. in its sale to ATS Corporation;

Venable attorneys involved in the firm’s 2007 transactions include:

Mergers & Acquisitions: Partners Wallace Christner, James Dvorak, Elizabeth Hughes and Joe Schmelter; Associates Monica Grande, Bjorn Hall and Emily Murphy

Government Contracts: Partners Scott Hommer and William Walsh, Jr.; Associates Keir Bancroft and Peter Riesen

Employee Benefits, Executive Compensation: Partners Andrea O’Brien and John Wilhelm

Intellectual Property:  Partners Nora Garrote and A.J. Zottola

Tax: Partners Brian O’Connor, Norman Lencz and Associate Brian Masterson

One of the American Lawyer’s top 100 law firms, Venable LLP has attorneys practicing in all areas of corporate and business law, complex litigation, intellectual property and government affairs. Venable serves corporate, institutional, governmental, nonprofit and individual clients throughout the U.S. and around the world from its headquarters in Washington, D.C. and offices in California, Maryland, New York and Virginia. For more, visit www.Venable.com.