Who made the biggest deal of 2010?
We rank the the top mergers and acquisitions of the past year
- By Nick Wakeman
- Jan 28, 2011
Best overall deal
Buyer: CGI Group
Target: Stanley Inc.
Value: $1.1 billion
Why: One of the criteria for judging the top deal is the effect on the company making the acquisition. There is little doubt that CGI’s acquisition of Stanley transformed CGI’s federal business. Formed when CGI acquired American Management Systems' civilian business, CGI Federal had grown steadily but lacked any significant defense and intelligence business. The Stanley deal brought that business in spades and more than doubled CGI Federal’s annual revenue.
On the flip side of the deal, the sale of Stanley marked the exit of a longtime player in the government market that had explosive growth in the past 10 years, breaking the $1 billion in annual revenue barrier and becoming a publicly traded company.
The advantage of the deal is that the combined entity can now compete for larger projects, opening growth opportunities that neither company would have seen on its own.
Buyer: KEYW Corp.
Targets: Everest Technology Solutions, Sycamore US, Insight Information Technology and the Analysis Group
Value: $30 million for Everest, $28 million for Sycamore, $11 million for Insight Information Technology, and $35 million for the Analysis Group
Why: KEYW used 2010 to show that it was ready to quickly make a mark in the government space. Four deals closed during the year, each one building on KEYW’s focus on the intelligence market. The company went public in October and closed two of its deals with the proceeds. Company executives say more acquisitions are on the way.
Honorable mention: Science Applications International Corp. — for closing five deals during 2010, more than any other company on the list.
Best deal by a large business
Buyer: Boeing Co.
Target: Argon ST
Value: $799 million
Why: This acquisition by Boeing enhanced its ability to sell command and control systems, particularly at a time when spending is expected to decrease for weapons platforms. Argon develops information systems critical to warfighters and battlefield decision-makers. The price also captured the attention of the market along with marking the exit of Argon ST as an independent company.
Best deal by a midsize business
Buyer: Vangent Inc.
Target: Buccaneer Computer Systems
Value: $65 million
Why: This was a very strategic acquisition for Vangent, which has health care as one of its prime markets. Buccaneer was probably the largest health care business on the market in 2010. The acquisition positions Vangent to pursue more of the health care business that is expected to come to the market in the near future.
Best deal by a small business
Buyer: Six3 Systems
Target: Novii Design LLC
Value: Not available
Why: Although this was a fairly small deal, it was very important for Six3 because Novii became the centerpiece of the company’s cyber business, which is how it is positioning itself in the market. Six3 also had to out-hustle other buyers to acquire Novii. Six3 is one of the few small businesses to make a deal that significantly transformed its business during 2010.
Honorable mention: ITSolutions' acquisition of a business unit from NetStar-1.
Best intelligence-related acquisition
Buyer: IBM Corp.
Target: National Interest Security Co. LLC
Value Not available
Why: The deal was an eye-opener given the history of National Interest Security Co. NISC was formed through a series of acquisitions in 2007, a classic private equity roll-up strategy, focused on the intelligence market. This is an example of where a private-equity consolidation strategy worked. In this case, it was executed by DC Capital Partners. The strategy was validated when IBM bought the company because a roll-up selling to IBM is not an easy feat. For IBM, the acquisition gave it new customers and domain expertise.
Honorable mention: Cubic Corp.’s acquisition of Abraxas Corp. for $124 million.
Best defense-related acquisition
Buyer: ManTech International Inc.
Target: Sensor Technologies Inc.
Value: $242 million
Why: A longtime consolidator in the federal market, the acquisition of Sensor Technologies is the biggest deal ManTech has closed. The deal further solidified ManTech’s focus on critical defense needs, in this case, command and control services and technologies. The deal also added a hefty $450 million in annual revenue to ManTech. The January 2010 deal was not a one-shot for ManTech. The company closed two other deals: acquisitions of MTCSC Inc. and QinetiQ's security intelligence unit.
Best civilian-related acquisition
Buyer: SRA International
Target: Platinum Solutions Inc.
Value: $90 million
Why: This deal by SRA added highly coveted mission systems capabilities to the company. Platinum specializes in customer software applications and data management solutions for national security and civilian agencies, particularly in health care and law enforcement. Since the acquisition closed, Platinum was named one of the winners of the $30 billion FBI IT Supplies and Support Services contract.
Best deal by a private-equity group
Buyer: Veritas Capital
Target: Lockheed Martin’s Enterprise Integration Group
Value: $815 million
Why: The judges tapped this one because it is a high-price deal that sends a signal to other buyers that private equity can stretch to make big deals. The sale of Lockheed’s EIG unit also highlights the organizational conflicts-of-interest problem that caused Northrop Grumman to sell TASC in 2009 and Computer Sciences Corp. to sell one of its businesses in 2010.
For bankers, this deal also marks the return of the debt market in the government space to help get deals done.
Best deal by a foreign buyer
Buyer: AEA Technology PLC
Target: Eastern Research Group Inc.
Value: $83 million
Why: Buying this company marks AEA’s entrance into the U.S. environmental services market. ERG brought customers such as the Environmental Protection Agency, Occupational Safety and Health Administration, Labor Department and Centers for Disease Control and Prevention. AEA had to raise extra capital to make the deal, which essentially doubled the size of the company. With ERG, they are picking up new contracts and a company with close customer relationships in a segment of the market that is expected to grow in the coming years.