New NCI CEO puts focus on ripe M&A market

Brian Clark is barely two weeks into his new role as CEO of NCI Inc., and he's bringing a heightened focus on mergers and acquisitions as a growth strategy for the company.

Clark was hired by NCI founder and chairman Charles Narang in 2011 as an executive vice president. He was initially focused on turning around the struggling company. In July, the company announced that Narang would give up the CEO title.

Despite the change in leadership, however, the company’s vision will remain the same.

“In terms of managing the company itself, it’s not as dramatic of a change as you might think,” said president and new CEO Brian Clark.

But there was plenty of drama in 2011, when NCI was struggling. “It was a pretty tough two or three years,” he said, during which time the company focused on downsizing its infrastructure and tried to become “leaner, meaner, and more efficient.”

Those efforts paid off in early 2014 when Clark declared that the company had completed its turnaround phase. That meant the company could turn on its mergers and acquisitions program and start pursuing acquisitions as a complement to organic growth, Clark said.

This is where he shines, as a self-proclaimed “deal junkie.” And indeed, NCI quickly made good on its M&A promise, closing at the end of 2014 a $56 million acquisition of Computech that added civilian customers to NCI’s customer portfolio, including the FCC, Homeland Security Department and IRS among others. The company also brought Agile development capabilities.

Getting more federal civilian work is a driving factor behind NCI’s focus on acquisitions, Clark said.

“When I came [to the company], we were about 90 percent DOD work,” he said. In early 2011, the company acquired AdvancedMed Corp., which brought with it work with the Centers for Medicare and Medicaid. That moved the needle in the right direction, but more was needed, Clark said.

With the turnaround behind them, moving more aggressively on M&As is now possible, as the Computech acquisition shows.

The company wanted to grow its Homeland Security Department work and landing a spot on the Eagle II was a big help, but adding DHS customers also drove the Computech acquisition, Clark said.

After the Computech acquisition, NCI has two thirds of its revenue in defense work and a third split between health and federal civilian work, Clark said.

NCI has $300 million in revenue right now, but the company wants to hit $500 million in revenue by 2018, Clark said.

In order to meet such an ambitious goal, the company cannot rely on just organic growth; instead, NCI needs to focus on scaling up through strategic acquisitions. Clark said the market is ripe with opportunities and acquisition targets.

“I think there are a number of interesting targets out there,” he said. He estimated that there are probably around $20 billion in assets in play in the market currently.

“The place not to be is the guy sitting on the sidelines observing it all happening and not participating in it,” he said. If the company is going to hit $500 million in revenue by 2018, it has to act.

“If you try to just stay the course organically, you might stay flat, you might be able to grow a little bit.” Clark said. “But my bigger concern is that you’re not able to outpace any additional contraction that might happen from a valuation standpoint.”