M&A SPECIAL REPORT

Merger-born Novetta promptly grows by M&A

Arlington Capital company named top private equity dealmaker

In March 2012, the private equity firm Arlington Capital Partners, which had become a major investor in White Oak Technologies Inc. acquired FGM Inc. and merged the two companies to create Novetta Solutions, a provider of national security technology services.

Within its first six months Novetta completed two acquisitions with Arlington’s backing – White Cliffs Consulting LLC (WCC) in August and International Biometric Group LLC (IBG) in September 2012, to expand its offerings.

The deals landed the company recognition as the best private equity backed dealmaker of 2012, according to a Washington Technology panel of merger and acquisition experts.

“The thought was that the traditional services-based approach to providing the national security community with support – while it’s not fading away or dying – we believe that because of budget constraints and the pace of technology, there was room for a tech renaissance,” said Novetta CEO Peter LaMontagne, who joined the company at its inception.

Novetta’s capabilities include large-scale data analytics, entity resolution, information sharing, cybersecurity, cloud computing and custom solutions development. WCC specializes in the digital discovery domain and multidisciplinary high-end technical analysis applications, software engineering, and mission engineering for signal intelligence (SIGINT) and the cyber mission spectrum. And IBG provides advanced, mission critical technology solutions to the national security community and other organizations working with massive quantities of data.

As a combined company, Novetta’s three core competencies are data analytics, identity intelligence and cybersecurity, LaMontagne said.

“In order to attract the best people, you have to work with the coolest technologies and the problems of the most pressing national security concerns,” he said. “That’s why we’re focused so sharply on DOD, intell and other national security problems.”

“Our different company components have actually embraced integration because we haven’t forced it too quickly,” LaMontagne said, and added that Novetta is operating as one company but “with a healthy respect for and great connections with” the component units that until a year ago were independent businesses.

“We’re not trying to squash that memory out in any way,” he added. “In fact, we embrace our diversity. But I think we’re more ‘one Novetta’ than I think anyone would’ve expected at this time.”

LaMontagne attributes the mergers’ success to the fact that the companies operate in adjacent areas without much customer or capability overlap. As an example, White Oak was well-known for its work in large-scale data analytics while IBG was focused “on the nature of identity in the context of both biometrics and online persona,” he said.

Another factor was Arlington Capital’s full support, he said, and Novetta’s respect for the entrepreneurial skills and expertise of the founders of the acquired companies. As a result, WCC partners Diane Batchik and John Skordas and IBG co-founders and partners Raj and Samir Nanavati are now part of the Novetta leadership.

As Novetta enters its second year, the federal sequestration and budget stalemate so far have not negatively affected Novetta and its now more than 500 employees, who have shown their support for the new company with a retention percentage rate “well into the 90s,” LaMontagne said.

So Novetta will stay the course, pursue new business and continue to hire the best talent available, LaMontagne said. “We believe that there are particularly strong opportunities during these budgetary challenging times because the government customers need a change. The now decade-long tradition of larger companies delivering monolithic solutions that are multi-year, I just don’t believe are practical.”

Acquisitions also will continue to be part of our strategy, he said. “We’re looking for companies with strong technical capabilities that are complementary to ours.” Also companies that have deep ties to their government customers.

And their size is not an issue, LaMontagne added. “Arlington is committed to supporting us [financially] in our strategy. And if that’s a company that is small, in the $5 million to $10 million range or it’s a company that is $50 million to $100 million we’ll certainly be open to listen to those too.”

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