News & Events

Industry Week in Review – June 3, 2011

By

As part of Pentagon acquisition executive Aston Carter’s Better Buying Power initiative to buy more for less money, Shay Assad was appointed to the newly created position of Director of Defense Pricing.  Having previously served as Director of Defense Procurement and Acquisition, Assad will conduct peer reviews for sole-source programs that cost more than $1 billion and selective deals above $500 million.  To aid Assad in his mission, the Defense Contract Management Agency will undergo a major transformation, hiring 300 pricing analysts to assist contract officers during negotiations for weapons, sustainment, services, and other contracts.  The goal is to overhaul the workforce in an 18 to 24 month timeframe and help program managers achieve the new “should-cost” targets being put in place.

Notes on some relevant transactions:

Dynamics Research Corporation announced on Friday that it has signed a definitive agreement to acquire privately-held High Performance Technologies, Inc. (“HPTi”), a leading provider of high-end technology services, primarily to the federal healthcare and military technology markets, for $143 million in cash.  The transaction is expected to close on June 30th, and for the twelve months ending March 31, 2011, HPTi generated revenues and EBITDA of $97 million (1.47x) and $11.9 million (12.0x), respectively.  KippsDeSanto & Co. is acting as exclusive financial advisor to HPTi in this transaction.

Relativity Capital announced on Friday that it has entered into an agreement to acquire Evergreen Maintenance Center, Inc. (“EMC”) from Evergreen International Aviation, Inc.  EMC is the largest aircraft storage and maintenance facility in the world with 20 million square feet of ramp and storage area that accommodates over 400 aircraft.  Monroe Capital co-invested alongside Relativity and also provided a $28.45 million unitranche credit facility, which was used to help finance the acquisition and provide ongoing working capital.

Serco announced on Monday that it has agreed to buy Intelenet, an Indian outsourcing company for up to $634 million (including ~$82 million in contingency payments) as part of a drive into higher-growth overseas markets.  Serco wants to bolster its international businesses after recent strong growth, and plans for the deal to provide access to markets that are forecasted to grow by ~15% per year in the medium term.  Intelenet reported revenue and adjusted operating profit for the twelve months ending March 31, 2011 of ~$280 million (2.26x) and~$31 million (20.5x), respectively.

Click here to view the comparable company analysis.