URS Acquisition of Apptis Represents Continued Broad Interest in Federal IT Services
URS Corporation announced on April 25th the signing of a definitive agreement to acquire Apptis Holdings, Inc., a provider of information technology services to the federal government, for $260 million (0.82x last year revenue). Apptis’ offering includes cloud computing, cyber security, and network, software, and systems engineering services. This deal highlights two key trends in government services M&A:
1) URS, better known for more hard engineering, construction, and infrastructure management services, evidences the continued diversity of strategic buyer interest for Federal IT and professional services. URS / Apptis follows several similar deals by other large engineering and construction (“E&C”) firms, including AECOM / McNeil Technologies (August 2010) and Jacob Engineering’s acquisitions of TechTeam Government Solutions (October 2010) and TYBRIN Corporation (December 2009). These transactions afford large E&C’s increased exposure to the less cyclical government market and additional service offerings to cross-sell to existing government customers. Apptis specifically expands URS’s growing IT capabilities portfolio and its customer base within the DoD and key civilian agencies poised for IT spending growth (e.g., FAA, HHS).
2) A portfolio company of New Mountain Capital (also majority owner of Camber Corporation and Deltek), Apptis is another private equity related transaction, albeit this time as a seller. While private equity buys have recently increased in volume and transaction size (see April 21st blog post “Private Equity Activity Rising in Government Services M&A”), the number of portfolio company sales may also trend up given improved market conditions and the end of typically three to five year holding periods (i.e., acquisitions from 2006 to 2008); a period when debt was similarly more available and private equity buyers were pretty active.