KippsDeSanto’s DealView – Top 10 M&A Deals of the Quarter

KippsDeSanto & Co., a leading aerospace / defense and government technology solutions investment bank, would like to share its thoughts on the “Top 10 M&A Deals of the Quarter” for the period ended
June 30, 2018. The following table is our take on the most notable announced M&A transactions — not only based on size, but also on strategic importance and / or impact.

Click here to download the table above 

Of the above transactions, the following were especially noteworthy:

The aerospace / defense deal of the quarter is Boeing Co.’s acquisition of KLX, Inc. (NASDAQ:KLXI). KLX primarily provides aerospace fasteners, consumables, and logistics services worldwide through its
Aerospace Solutions Group, which generated 90% of total sales in its most recent fiscal year. KLX’s Energy Services Group made up the remaining 10% of revenue, and Boeing plans to divest the business unit
before closing the deal. The transaction values the Aerospace Solutions Group at a multiple of 15.7x LTM.

(1) KippsDeSanto & Company is not affiliated with any other company mentioned herein
(2) Source: KLX Press Release on May 1, 2018

EBITDA(2) for FY2017 and values the entire business at $4.2 billion, representing 14.7x LTM EBITDA. KLX will operate as part of Boeing’s expanding aircraft services business, Boeing Global Services, and will be
fully integrated with Boeing’s parts subsidiary, Aviall. The acquisition continues Boeing’s strategic push into the highly profitable aftermarket and MRO sector, as Boeing continues to make acquisitions along its
vertical supply chain. The transaction is expected to generate $70 million in cost-savings by 2021, and Boeing plans to finance the acquisition through a combination of cash on hand and $1.0 billion of net
debt.

The government technology solutions deal of the quarter is SOS International’s (“SOSi”) acquisition of STG Inc. The approximately $83 million all cash transaction closed on April 11th. The deal took place
approximately one year after STG’s failed transaction with Preferred Systems Solutions, and nearly five months after STG’s parent company, STG Group, was taken over by creditors. This marks the third and
largest acquisition in three years for SOSi, the Reston-based government services integrator, which also acquired Defense Group Inc., in September 2017, and New World Solutions, in January 2016. STG expands
SOSi’s capabilities across mission-critical technology, cyber, and data solutions. SOSi, with the addition of STG, now has 1,300 employees worldwide. STG also holds the Alliant 2 and Eagle II contracts, among
others, that provide SOSi with an ability to expand its customer base and pursue previously unavailable opportunities. This transaction highlights continued consolidation and capability expansion strategies
amongst mid-tier firms. Moreover, SOSi showcased deal ingenuity in its ability to navigate the complicated ownership and creditor dynamics of STG. As a result of this deal, the SOSi / STG combination
establishes a highly formidable mid-sized IT player with enhanced IT capabilities and footprint.

Click here to access KippsDeSanto’s 2018 Aerospace/Defense & Government Services M&A Survey

About KippsDeSanto & Co.: KippsDeSanto & Co. is an investment bank focused on delivering exceptional results for leading, growth-oriented aerospace / defense and technology companies. We leverage our
creativity and industry experience to provide M&A, private financing and strategic consulting. Capitalizing on real-time industry trends and in-depth technical and strategic analysis, our solutions-driven approach
is highly structured and uniquely tailored to each client. KippsDeSanto is recognized for its market insight and broad industry relationships. We help market leaders realize their full strategic value. KippsDeSanto,
member FINRA/SIPC, is not affiliated with other companies mentioned herein. For more information, visit www.kippsdesanto.com.

Aerospace/Defense & Government Services 2018 M&A Survey

KippsDeSanto is pleased to share its first annual survey of mergers and acquisition (M&A) activity and sentiment in the Aerospace/Defense and Government Services sectors.

In this study, we asked key dealmakers from relevant sectors to share their predictions about M&A deal activity and valuations over the next year. We also asked them to share their insights on strategic drivers of M&A activity and the impact of recent events, including 2017’s tax law changes and the Trump administration.

Respondents are very optimistic about the overall economy and M&A activity in the near- to medium-term. They expect activity levels and valuations to increase in 2018 due in part to the December 2017 tax law changes and greater budget visibility.

Click here to download the M&A Survey Report


For media, please view the Press Release.

KippsDeSanto Transactions Recognized by Washington Technology

Ten Consecutive Years of “Top Deals”

TYSONS CORNER, VA. (April 24, 2018) — KippsDeSanto & Co., the largest investment bank exclusively focused on the aerospace / defense and government services sectors, announced that five of the mergers and acquisitions (M&A) transactions the firm supported in 2017 were recognized in Washington Technology’s annual ranking of “the best deals of 2017” in the government market.

According to KippsDeSanto, the firm represented clients in three of the eight “Top Deals” of 2017 and, overall, five of the 16 “Best Deals of 2017” as determined by Washington Technology. This brings the total to 19 KippsDeSanto transactions recognized by Washington Technology since 2012, and marks the 10th year in a row that deals advised on by the firm have been recognized in the annual rankings.

“There were over 100 transactions in the government market in 2017,” said Co-founder and Managing Director Bob Kipps. “We are extremely proud that so many of our clients were acknowledged as participants in the leading transactions in the industry. It is a true testament to the quality of company that hires KippsDeSanto to advise them on their M&A transaction.”

The recognized KippsDeSanto deals represent a complete set of M&A transaction alternatives, including selling on behalf of private equity clients (DFW Capital Partners and Lake Capital) and privately-held clients (InfoReliance); supporting a merger of private companies (Dominion merging with TeraThink); and selling to a private equity group (H.I.G. Capital) and private equity-backed platform companies (Salient CRGT and ECS Federal).

“These efforts show our entire team’s dedication, creativity and investment in our clients,” Kipps said. “We have built our organization and honed our approach to be a key partner for the best companies in the industry.

“We anticipate 2018 to be another strong year for M&A in the government market and for our firm, as we have already closed or announced seven transactions in the first quarter of 2018,” Kipps added.


About KippsDeSanto & Co.: Founded in 2007, KippsDeSanto & Co. is an investment bank of 25 professionals focused on delivering exceptional results for leading, growth-oriented aerospace / defense and technology companies. We leverage our creativity and industry experience to provide M&A, private financing and strategic consulting. Capitalizing on real-time industry trends and in-depth technical and strategic analysis, our solutions-driven approach is highly structured and uniquely tailored to each client. KippsDeSanto is recognized for its market insight and broad industry relationships. We help market leaders realize their full strategic value. KippsDeSanto, member FINRA/SIPC, is not affiliated with other companies mentioned herein. For more information, visit www.kippsdesanto.com.

 

KippsDeSanto’s DealView — Top 10 M&A Deals of the Quarter

 KippsDeSanto & Co., a leading aerospace / defense and government technology solutions investment bank, would like to share its thoughts on the “Top 10 M&A Deals of the Quarter” for the period ended March 31, 2018.  The following table is our take on the most notable announced M&A transactions — not only based on size, but also on strategic importance and / or impact.

Click here to download the table above

Of the above transactions, the following were especially noteworthy:

The aerospace / defense deal of the quarter is TransDigm Group’s acquisition of Extant Aerospace.  The proposed acquisition is worth $525 million, or more than 6x fiscal year 2018E pro-forma revenue.  Aircraft aftermarket sales are expected to drive 80% of Extant’s 2018E revenue, with a majority of revenue derived from the military end-market.  The company licenses or acquires aftermarket products form aerospace and defense original equipment manufacturers, and then provides maintenance and support for these products throughout the rest of its useful life.  Extant support various military aircraft platforms such as the F-16, AH064, F-18, F-15, and C-130.  Its commercial platforms include the King Air series, MD 900 / 902, B747, B757, and B777 as well as various business jets.  TransDigm expects the acquisition to provide significant opportunities for growth and believes that Extant’s unique business model will be a natural fit within its aftermarket-focused value generation strategy.  TransDigm plans to finance the acquisition through a combination of cash on hand and its existing revolving credit facility.

The government technology solutions deal of the quarter is General Dynamics’ (“GD”) announced acquisition of CSRA.  The proposed transaction is worth approximately $9.9 billion, or 11.7x LTM EBITDA.  Recently, GD increased its original February 12th offer of $40.75 per share to $41.25 after CACI made a counter bid on March 18th for $44 per share in cash and stock.  GD ultimately prevailed in the bidding war because its offer was all cash, unlike that of CACI’s, which consisted of cash and stock.  CACI’s stock traded down approximately 7% the week after their counter-offer was made public, making its offer less compelling given the stock component.  The deal highlights sector buyers’ continued focus on increasing scale and next-generation IT (“NGIT”) capabilities via M&A.  Following the acquisition, GD’s federal IT business will generate nearly $10 billion per year in revenue.  This will make GD the second largest government contractor, slightly behind $10.6 billion Leidos, which became the largest government IT and services contractor through its merger with the former Lockheed Martin IT business in 2016.  General Dynamics and CSRA have received clearance from anti-trust officials, and the deal is expected to close in the first half of this year.

(1)       KippsDeSanto & Company is not affiliated with any other company mentioned herein