Health IT Continues to be a Priority Buyer Focus
The sale of Maricom Systems to CSC (NYSE: CSC) was announced on September 1, 2011. KippsDeSanto & Co. was the advisor to Maricom in this transaction, which represents our 3rd transaction in the last 12 months with a client that focuses on the delivery of Health IT to Federal government customers. The sale of Buccaneer (primary customers included CMS and FDA) to Vangent in September 2010 and the sale of HPTi (significant VA presence) to Dynamics Research Corporation (Nasdaq: DRCO) in July 2011 are the other two recent transactions we recently completed.
Based in Baltimore, MD, Maricom’s business is focused on business intelligence and data management solutions for its primary customer, HHS’ Center for Medicare and Medicaid Services (“CMS”). As we have seen in the political and Federal budget machinations of the past few years, reducing the cost of our nation’s healthcare infrastructure and, just as importantly, improving the quality of patient care are clear priorities in today’s market. Maricom and its excellent management team were well-positioned to capitalize on these trends based on a 15 year history of being a trusted partner with CMS.
Through the three transactions referenced above, we have witnessed the intense interest of buyers and investors in accessing additional customers and capabilities that will help them position for the exceptional growth expected in the Health IT segment of the market. One surprising anecdote is that even the most focused strategic buyers, those that have traditionally been pure Defense or Intel oriented, have started to seriously consider the path to diversifying into high priority markets like Health IT. Two other recent transactions announcements, General Dynamic’s acquisition of Vangent and the announcement of Lockheed Martin’s acquisition of QTC, further highlight the importance of Health in business planning and acquisition strategies.
We expect to see additional deal activity in the Health IT sector over the coming years in light of the budget pressures being experienced by many other Federal customers. Given the dynamics of the Health IT sector, this is a classic 80 / 20 situation – 80% of buyers are chasing 20% of the independent, lower-middle market Health IT targets.