Why ManTech's $90M WINS acquisition is a big deal

ManTech International Corp. completed its third acquisition of the year on Nov. 16, paying $90 million in cash for Worldwide Information Network Systems Inc., an IT solutions provider specializing in infrastructure engineering, enterprise architecture, cybersecurity and systems development.

Like most M&A activity, the process began more than a year earlier.

A successful family-owned company, WINS had graduated from the small-business 8(a) categories about two years ago with a number of government contracts and a reputation for successful work.

But WINS had reached a threshold.

“I and my two sons started looking at the challenges we faced getting the company beyond a successful 8(a) company into what I thought would be a competitive small business able to go head to head, to compete successfully, against the very large companies,” said WINS founder Ulysese [correct] Jefferson.

The Jeffersons crunched the numbers and concluded that if they wanted to play in that larger arena, they would need to increase their annual revenues five to ten times to about $300 million.

Instead, they decided to work another year and see how much new business they could attract.

Their investment in time, energy and money paid off when WINS won a prime position on the Defense Intelligence Agency's Solutions for Information Technology Enterprises (SITE) contract, an indefinite delivery, indefinite quantity vehicle that runs through 2015.

That lucrative prime position now passes to ManTech in what seems like a great bargain -- $90 million for access to a contract with a potential value of $6.6 billion.

But ManTech CFO Kevin Phillips said that wasn’t the only reason why the company pursued WINS.

“There was much more to WINS than just the SITE contract,” he said. “It’s a combination of their management team, the technology they support and the contract vehicles that they have available.”

When pursuing an acquisition, “you look for customers, contracts, technology and geography,” added Bill Varner, president and COO of ManTech’s Mission, Cyber and Technology Solutions Group, the business unit into which WINS is being integrated.

“Those are really the four things I look for in an acquisition that might bring us something a little bit different than what we currently have,” he said.

Even before the SITE contract win, Jefferson recalled, he received feelers from other companies about his possible interest in selling WINS.

That’s when he turned to Bob Kipps, managing director of KippsDeSanto, which ultimately negotiated the deal on his behalf.

Kipps told Jefferson there indeed was a good deal of interest in acquiring WINS.

“That kind of surprised me,” Jefferson said, “because I’d never thought about selling the company until that time.”

As Jefferson continued to consult with KippsDeSanto, interest continued to grow and “all of a sudden there were seven or eight companies that had an interest in us,” he said.

That’s when Jefferson said he realized “we really are going to have to work very hard to reach that $300 million [level].”

Realistically he knew it wouldn’t happen.

So he entered into an agreement with KippsDeSanto to test the seriousness of the company’s suitors, which included ManTech International, and what they might be willing to pay for WINS.

Kipps said a prime position on a multibillion dollar award is a strong attraction for any government contractor in an acquiring mode.

“This is when the fish are biting.” Kipps said. “It’s the road into the estate.”

In addition, WINS’ core competencies in hot government markets such as cloud computing and intelligence are areas the large players, such as ManTech, want to expand into through M&A activities, Kipps said.

“They’re doubling down to aggressively reposition their business to win the game,” Kipps said.

“As more and more work gets moved into a vehicle such as SITE, you may end up being a subcontractor as opposed to a prime contractor,” Varner said. “And of course everybody’s preference is to be the prime. That’s sort of the Holy Grail in our business.”

In addition, WINS was already well known to ManTech because the two companies had worked successfully on a worldwide Windows 2000 deployment for the State Department several years earlier.

And as ManTech looked deeper into WINS it discovered that its contracts aligned well with ManTech’s core competencies. Also, its corporate culture and synergies meshed with ManTech’s, Varner said.

That means, he added, “the two of us are able to pursue opportunities together that neither of us would be able to do by ourselves.”

For his part, Jefferson said he was attracted to ManTech because Chairman, CEO and co-founder George Pedersen’s management style was similar to his own and because ManTech had a good reputation in cybersecurity offerings, an area WINS was entering.

Three weeks before the closing, Jefferson announced the sale to his 200 employees. “I wanted them to understand that this decision was not about me but about them. I wanted to make sure there was a future, a place for them to work” for years to come, he said.

Phillips acknowledged that all acquisition and integration processes can be very disruptive to the individuals concerned.

“Our basic philosophy is to do no harm,” Phillips said. “The types of companies we look to acquire have succeeded based on their leadership. And unless their leadership wants to retire, we very much want to take advantage of their knowledge of their customers and how they run that business.”

Varner added that ManTech’s plan “is to leave things completely intact” for the WINS integration.

“We plan to have Mr. Jefferson fully involved in the company,” he said. Jefferson will remain with the company for at least one year, working especially to increase ManTech’s work at State Department.

In fact, Ulysses Jefferson’s son Mark will lead the WINS unit within Varner’s group.

Asked how he feels about parting with his company, Jefferson said, “Emotionally it’s been a difficult decision” to sell what he and his late wife started 10 years ago.

“But I think this is the best thing,” he added, because it ensures a future for his employees.

“I will continue on,” Jefferson said. “I will probably dabble in some other efforts and I’ll take a little more time off.”

ManTech International, of Fairfax, Va., ranks No. 22 on Washington Technology’s 2011 Top 100 list of the largest federal government contractors.

Reader Comments

Mon, Nov 21, 2011 Aditya

Good to read regarding successful m&a in technology and IT with detailed analysis of the process and investigations prior to an m&a. Just read an excellent white paper on strategies for successful merger integration http://bit.ly/pGoP25

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