Can private equity create a better mouse trap?
- By David Hubler
- Apr 18, 2012
When private equity fund Arlington Capital Partners last month merged its portfolio company White Oak Technologies Inc. with FGM Inc. to create Novetta Solutions, the goal was to stand up a provider of mission critical technology solutions for the intelligence and defense communities and other organizations that work with massive quantities of data.
“They wanted to put together a mid-size growth platform that had a sharp focus on technology solutions that went beyond just delivering services,” said Novetta CEO Peter LaMontagne, a 23-year veteran of national security and technology leadership, most recently as an executive in CACI’s cyber defense practice.
“Long before [big data] was a one of the buzzwords, White Oak Technologies was working with very large data sets supporting national security customers,” he said in a recent interview.
With White Oak in tow, Arlington Capital Partners began to search for complementary businesses.
“In March they came together with FGM, which also had a long tradition of providing good technical solutions as well as services to similar but complementary customers,” he said.
“We really set out to combine two equals,” LaMontagne said, insisting that the integration now taking place is not a process of finding ways to cut costs or employees.
When he was asked to lead the new company LaMontagne said what appealed to him was that this wasn’t the traditional big company seeking to acquire others. It was really two same-size companies forming a mid-tier business, each of which was contributing just about half of Novetta’s combined workforce of 330 employees.
“The two companies are complementary enough that we’re really just focusing on the joint strategy and how to get some of the solutions that FMG was providing to its customers exposed to White Oak customers and vice versa,” he said.
Arlington Capital will provide significant additional capital to support Novetta’s growth plans,” Michael Lustbader, an Arlington Capital partner, said in the March 21 news release announcing the new company’s creation.
“Whether it’s strategic investment in technology, in our employees, or in additional acquisitions in the future,” LaMontagne said, Arlington Capital will be the primary source for funding and strategic advice.
For non-mathematicians, Novetta means 10 to the 27th power, or a billion, billion, billion and reflects the two companies’ big data heritage and ability to solve massive problems, the news release said.
LaMontagne said Arlington Capital did not want one of its operating partners running the company. Rather it wanted to put the right people in place who could complement one another.
The leadership team, which has been hands-on in the transition, includes FGM co-founder and CEO Scott Gessay, who was named president of Novetta, and Alan Broder, founder of White Oak Technology, who was named fellow and chairman of the board.
“I think it was very, very helpful when we brought the two companies together that the principal leadership from both companies stayed in place,” LaMontagne said.
The senior management team also includes Kris Heim, CTO; Larry Chang, senior vice president of operations; and Mike Fox, senior vice president of corporate business development and chief strategy officer.
The aim is become an agile company large enough to bid on contracts and take on large, significant programs, but not so large that Novetta loses sight of its employees’ needs and those of its customers,” LaMontagne said.
With employee needs in mind, Novetta will maintain White Oaks’ offices in Silver Spring, Md., and FGM’s in Reston, Va.
“However, we’ve established a new corporate office in between the two in Tysons Corner, Va.,” he said, adding that management meetings are held at the location most convenient for those attending.
“I’m please to say that we’ve had zero turnover tied to the transaction and coming together of the two companies,” LaMontagne said.
Looking ahead three to five years, “we’ll continue to focus on a couple of key trends. The first one of course is challenges specifically related to big data and data analytics,” he said.
“The second area that I am particularly excited about is to work in areas where the government wants to be next,” LaMontagne said, adding that the goal is to be solving big problems even before they are recognized as such by the public and the media.
“That’s a very, very challenging thing to do,” he said.
As new talent is needed to meet those challenges Novetta will grow organically. But the company has not set any targets it wants to reach in terms of employee numbers or annual revenue.
“Our primary strategic objective is to position ourselves well so that when our customers are talking about addressing a key technology problem,” LaMontagne said, “we will have the size and strength and capability to be able to answer that call as a prime contractor.”