KippsDeSanto & Co. Advises B3 Group, Inc. on its sale to Octo, a Portfolio Company of Arlington Capital Partners

KippsDeSanto & Co. is pleased to announce the sale of its client, B3 Group, Inc. (“B3” or the “Company”) to Octo, a portfolio Company of Arlington Capital Partners.

Headquartered in Herndon, Virginia, B3 is a leading provider of holistic digital transformation services delivering forward leaning digital thought leadership, deep technical expertise, cutting edge Salesforce and other low-code /  no-code technologies (including Microsoft Power Platform, Pega, and ServiceNow) domain knowledge and a range of next-gen IT capabilities that drive enterprise-wide digital transformation initiatives across the Department of Veterans Affairs (“VA”) to further improve health outcomes and support for veterans and military families.

Leveraging its differentiated capabilities, as well as its franchise position within the VA and as an established Transformation Twenty-One Total Technology Next Generation (“T4NG”) contract holder, B3 has established itself as the go-to digital partner with a significant footprint across the entire VA enterprise, including the Digital Transformation Center (“DTC”), which is a marquee $686M program to enable and deliver agency-wide access to modernized SaaS, PaaS, and emerging digital products, and technology platform management. Combined with over 350 certified subject matter experts and employees, the Company has been critical to its customers achieving next-generation, dynamic capabilities that facilitate information sharing and optimization of metadata and improve overall business performance.

The acquisition adds B3’s deeply embedded VA relationship and past performance to Octo’s broader federal health footprint, and a differentiated suite of digital services and capabilities, including Salesforce, low-code / no-code, data analytics, and cloud engineering.

We believe this transaction demonstrates several key trends in the healthcare IT and government technology M&A environment:

• Continued trend of investment and emphasis placed on large, growing federal health IT market given favorable budgetary environment
• Strong demand for access to VA via major contract vehicles and task orders (i.e., T4NG and $686M DTC Task Order) to complement and bolster existing Federal health practices
• Significant value attributed to targets with highly differentiated digital transformation offerings
• Private equity and private equity-backed buyers continue to actively invest in the government services market and pursue targets that add immediate scale and customer access, next-gen capabilities, and a talented workforce with deep subject matter expertise

About KippsDeSanto & Co. KippsDeSanto & Co. is an investment banking firm focused on serving growth-oriented Space / Aerospace / Defense, Government Services and Technology companies. We are focused on delivering exceptional M&A and Financing transaction results to our clients via leveraging our scale, creativity and industry experience. We help market leaders realize their full strategic value. Having advised on over 175 industry transactions, KippsDeSanto is recognized for our analytical rigor, market insight, and broad industry relationships. There’s no substitute for experience.  For more information, visit www.kippsdesanto.com.

Investment Banking products and services are offered through KippsDeSanto & Co., a non-bank subsidiary of Capital One, N.A., a wholly-owned subsidiary of Capital One Financial Corporation, and a member of FINRA and SIPC. Products and services are Not FDIC insured, Not Bank Guaranteed, May Lose Value, Not a Deposit, and Not Insured by Any Federal Government Agency.

Press Release

Octo Acquires Digital Transformation Leader B3 Group

 The B3 Group acquisition expands Octo’s innovative modernization offerings to all three major federal health markets.

 January 5, 2022, Reston, Va. – Octo, the premier pure-play IT modernization provider for the Federal Government, announced today that it has acquired privately held, Herndon-based B3 Group, Inc. (B3), which provides enterprise-level application modernization leveraging low-code/no-code software and platforms such as Salesforce, Microsoft Power Platform, Pega, and ServiceNow; large-scale data governance, integration and analytics; and cloud engineering and operations to federal healthcare customers.

B3 has 13 years of experience partnering with the U.S. Department of Veterans Affairs (VA) to improve patient experience and health outcomes for veterans. This acquisition expands Octo’s current federal health footprint from the U.S. Department of Health and Human Services (HHS) and the Defense Health Agency (DHA) to include the VA, and bolsters Octo’s position as a major IT modernization services provider to these major federal health customers. The addition of B3’s marquee programs, including the $686 million Digital Transformation Center (DTC) contract, expands the technical modernization expertise Octo provides at scale to its existing federal civilian, homeland security, defense, and intelligence customers.

Both B3 and Octo have a history of driving innovation on behalf of their customers. B3’s Digital Transformation and Modernization (DTM) lab will augment Octo’s recently expanded oLabs™ environment. Housed in a 14,000 square foot facility in Reston, Virginia, oLabs is one of the largest D.C. metro area centers dedicated to Federal Government R&D, containing more than 15 petaflops of AI computer power and two petabytes of FlashBlade storage available to existing customers – and now the VA – to power emerging technology research and product development to improve mission effectiveness.

“We are ecstatic B3 is joining the Octo family,” said Octo CEO, Mehul Sanghani. “Octo’s differentiation lies in its ability to provide pure-play modernization capabilities and proven past performance at a scale and breadth that is unmatched. The addition of B3 further expands that differentiation, adding proven digital transformation capabilities with low-code/no-code technologies, more than 350 highly certified professionals, and over $1 billion of proven task order past performance delivering digital transformation solutions in key markets. These capabilities and proven performance combined with Octo’s highly certified personnel and innovative product suites, will enable current and future federal customers to better serve citizens, active-duty military, and veterans. Now with even deeper experience across the health space added to our defense, intelligence, national security, and civilian customer base, Octo has greatly enhanced its position to serve as the Federal Government’s complete, end-to-end digital modernization partner.”

“Joining Octo allows us to enhance our offerings to our customers through a more robust set of solutions and provide greater career opportunities to our employees,” said B3 CEO, Dwight Hunt. “As B3 and Octo began to collaborate, we collectively realized that our commitment to improving digital services to the VA and the broader federal health community will turbocharge the solutions we deliver to our nation’s veterans and those that support them. Our corporate philosophies and values strongly align, which makes us even more excited to join forces with Octo and create a new vision for the future.”

Octo’s General Manager of Federal Health, Charlie McQuillan, said, “The addition of B3’s low-code/no-code solutions and talented employee base expands Octo’s ability to deliver effective and efficient health solutions. In turn, Octo’s robust technical staff and offerings will enhance services available to B3’s customer base, including the VA. We look forward to working as a unified team, bringing the best of modernization to the Federal Government.”

Michael Lustbader, a Managing Partner of Arlington Capital Partners, said, “B3 adds differentiated capabilities in low-code/no-code software development to the suite of Octo’s solutions. We look forward to serving the U.S. Department of Veterans Affairs, bringing these expanded capabilities to our existing customers, partnering with B3’s management, and investing behind their modernization growth vectors.”

B3’s leadership will remain with the company and expand Octo’s Health business to drive continued growth and customer success.

About Octo

Octo is a technology firm dedicated to solving the Federal Government’s most complex challenges, enabling agencies to jump the technology curve. We don’t just modernize. We create lasting change through best practices that help agencies implement and integrate at-scale next-generation technology and innovation. With a mission and service first mentality, we provide Agile, DevSecOps, Artificial Intelligence, Cybersecurity, Blockchain, Cloud, Open Source, and Data Science solutions, collaborating to solve customers’ pressing problems. Headquartered in Reston, Virginia, Octo delivers proven technology vital to the intelligence community and health care, defense, national security, and civilian agencies that directly impact our nation. Visit octoconsulting.com to learn more. 

 About B3

B3 is an IT transformation firm specializing in digital services and technology solutions that impact the lives of veterans. B3 manages large-scale digital transformation platforms and provides services facilitated through its technology partnerships. Founded in 2008 on the principles of servant leadership, B3 has been recognized annually by Inc. 5000 for its strategic growth and was recently named a 2021 Washington Post Top Workplace. B3 brings its foundational values of innovation, collaboration, and integrity to every interaction with its stakeholders: employees, government, and partners. Visit b3groupinc.com to learn more.