KippsDeSanto & Co. Advises Kforce, Inc. on its sale of Kforce Government Solutions to ManTech International Corporation
KippsDeSanto & Co. is pleased to announce the sale of its client, Kforce Government Solutions (“KGS” or the “Company”), a subsidiary of Kforce Inc., (NASDAQ: KFRC), to ManTech International Corporation (“ManTech”).
KGS is a leading provider of high-end technology and business consulting solutions focused on improving mission effectiveness and operational efficiencies for federal agency customers. With more than two decades of experience, KGS has developed extensive domain knowledge and past performance in critical areas that include: enhancing mission-critical enterprise-wide systems and architectures via DevOps and Cloud migration; improving and automating essential business functions; developing data management strategies and applying analytics to business operations; and sustaining augmented financial reporting capabilities and performance. KGS has developed a long-standing and deep relationship with the Department of Veterans Affairs (“VA”) and is a prime holder on the highly sought-after Transformation Twenty-One Total Technology-Next Generation (“T4NG”) vehicle. Additional customers include Defense Threat Reduction Agency (“DTRA”), U.S. Air Force, and Defense Advanced Research Projects Agency (“DARPA”).
In 2018, KGS realized ~$98M of revenue, (which represented ~10% growth over 2017) and had ~$480M of backlog at the time of sale. ManTech paid $115M, or ~12x 2018 EBITDA for KGS. The acquisition expands ManTech’s presence within the VA and provides access to T4NG, as well as adding key customers and capabilities.
We believe this transaction demonstrates key trends in the government technology services M&A environment:
- Prime, full & open positions on key vehicles, such as T4NG, continue to drive buyer interest and premium valuations
- Buyers remain interested in well-positioned companies with strong backlog and financial momentum
- Both buyers and sellers continue to gain value from corporate divestitures
About KippsDeSanto & Co. KippsDeSanto & Co. is the largest independent investment banking firm exclusively focused on serving leading, growth-oriented 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 100 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.
ManTech Completes Acquisition of KGS from Kforce
April 01, 2019 — ManTech completed its acquisition of KGS, a wholly-owned subsidiary of Kforce, Inc. Fairfax, Va.-based KGS provides technology solutions, transformation management, data management and analytics in support of federal health and defense missions. KGS has built a strong legacy of success with its customers particularly within the VA. The acquisition adds over 500 highly skilled employees to the ManTech team. In 2018, KGS generated approximately $98 million of revenue and has profitability comparable to ManTech.
The transaction does not include TraumaFX, Kforce’s federal government product business. Kforce is exploring strategic alternatives for that business. The operating results of KGS and TraumaFX are being reported as discontinued operations in the first quarter of 2019.
The combination will substantially increase ManTech’s footprint at the VA and enable ManTech to deliver services through the VA’s T4NG program. The T4NG program is a 10-year indefinite delivery, indefinite quantity (“IDIQ”) contract awarded by the VA Technology Acquisition Center (“TAC”) to help the VA transform its information technology programs.
ManTech President and CEO Kevin M. Phillips stated: “This acquisition is consistent with ManTech’s targeted federal civilian expansion strategy. We are pleased to welcome KGS’ talented employees, differentiated capabilities and important customers.”
KGS CEO Maureen Coyle stated: “We are thrilled to become a part of ManTech. This strategic combination will help us better meet our clients’ needs by broadening and deepening our solution offerings. Additionally, our cultures are well aligned, and our employees will benefit from expanded professional development opportunities.”
Kforce chairman and CEO David L. Dunkel stated: “We are excited for our KGS management team and associates to join forces with ManTech, which we expect will enhance KGS’s competitive positioning. The sale of KGS is the final step in our strategy to narrow our focus to domestic professional and technical staffing services and solutions.”
David M. Kelly, Kforce’s Chief Financial Officer, stated: “We expect to use the significant majority of the proceeds from this transaction for share repurchases and are pleased to announce that our Board of Directors approved an increase in our share buy-back authorization to $150.0 million. In anticipation of the closing of this transaction, we repurchased approximately 430 thousand shares for $14.6 million in the first quarter of 2019.”