Former GTSI CEO Friedlander makes deal for new company

A year after resigning amid controversy, Scott Friedlander returns to government contracting.

It’s taken a year, but former GTSI CEO Scott Friedlander is back in the market and he’s making a splash.

He’s spent the year since resigning from GTSI to save it from a Small Business Administration suspension looking for the right acquisition to mark his return.

Working with the backing of the private equity group LLR Partners, Friedlander has acquired a majority stake in Paragon Technology Group, a government contractor based in Vienna, Va. Friedlander’s title will be president and CEO.

The company provides IT systems engineering and application development, program management, business intelligence and data management, enterprise modernization, and financial and quality management services.

Terms of the deal were not disclosed, but Friedlander said that the company is headed toward $50 million in annual revenue in 2012. The investment bank, the McLean Group served as an advisor to Paragon.

He said he was drawn to Paragon because of its stable of government contracts with strategic agencies and the fact that the company does high-end, mission-oriented work.

Paragon, which was founded by Gazelle Hashemain and Sassan Kimiavi, has major health care customers at the National Institutes of Health, Health and Human Services Department and the Centers of Medicaid and Medicare Services.

It also is working with the Defense Department, the Homeland Security Department and several intelligence agencies providing logistics, enterprise architecture and software development services.

“They are in really good strategic places to be long term,” Friedlander said.

Hashemain will become a member of Paragon’s board of directors and Kimiavi will remain as a consultant to the company going forward. The rest of the management team will remain place, he said.

Friedlander returns to the executive suite after resigning in late 2010 from GTSI after that company was suspended by the SBA. His resignation cleared the way for SBA to lift its suspension for alleged misdealings with small business partners.

“It was very important to me as the leader of the company to protect the future of the company, very important, and to protect the families here,” Friedlander said at the time of his resignation. If the suspension hadn’t been lifted, GTSI likely would have filed for bankruptcy and several hundred people would have lost their jobs, he said.

He said he met Paragon’s leaders nearly a year ago and has been working with them for several months to structure the acquisition. While LLR owns the majority stake, the rest of the company is owned by the founders, the management team and employees.

With Paragon, Friedlander gets a 15-year old company that’s had a steady growth record. In 2011, it had over $40 million in revenue; the projection is $50 million in 2012, he said. The company has about 225 employees.

With LLR’s backing, acquisitions also will be part of the company’s growth strategy, Friedlander said.

“Our growth will be a combination of organic growth and acquisitions. We want to continue the momentum of the company in health care, DOD and intell,” he said. “We want to continue to develop new offerings such as cloud and deeper cyber offers.”

Acquisitions will be focus on domain expertise and specific technologies that will make a good offering to public sector customers, he said.

As CEO, Friedlander said he’ll focus a lot on human capital issues, strategic planning, the go to market strategy and continual process improvement.

Another plus from Friedlander’s perspective is that LLR takes a long-term view of the market. The company usually invests for seven years and isn’t opposed to stretching that out to 10 years.

“2012 will not be an easy year, but if you stay focused and will to be flexible and agile you’ll succeed,” he said. “But you have to look beyond 2012. You have to look at the market with a long lens.”