Another private equity firm enters GovCon's middle tier

OceanSound Partners becomes the latest private equity firm to enter the government contracting market's middle tier and makes two investments to get started.

Stood up two years ago, a private equity firm focused on middle-market technology companies has made its first pair of investments and both are in government IT contractors.

New York City-based OceanSound Partners said Friday it recapitalized Smartronix and acquired Trident Technologies, which respectively were completed in March and December of last year. Terms of those transactions were undisclosed.

Smatronix is a provider of IT, cloud computing and ISR services and solutions to the Defense Department that was founded in 1995 and based in Hollywood, Maryland. The company also counts the Treasury as a government customer.

Investment bank KippsDeSanto & Co. was exclusive financial adviser to Smartronix, which came in at  No. 53 on the 2019 WT Top 100 rankings with roughly $455 million in unclassified prime contracting obligations.

Huntsville, Alabama-based Trident Technologies’ services include data management, meteorological support, IT and aviation maintenance to agencies such as the Army and Navy.

With these transactions, OceanSound becomes the latest private investment group to enter the GovCon market and one focused on mid-tier players. In their release, OceanSound leaders indicated both companies it has backed are slated to become platforms for making more acquisitions to create larger middle market businesses.

“We are united in the conviction that we can apply our collective expertise and experience to identify, acquire, and drive value creation within attractive middle-market companies operating in both government and commercial markets,” OceanSound Co-Founder and Partner Joe Benavides said in a release.

Benavides most recently was a partner at Veritas Capital, one of the GovCon market’s most active private equity investors. He co-leads OceanSound alongside Jeff Kelly, most recently a principal at H.I.G. Capital and also a former principal at Veritas Capital; and Ted Coons, most recently a general partner at TCV.

H.I.G. also focuses on middle market companies and currently holds a pair of such-sized government contractors in NCI Inc. and Whitney, Bradley & Brown -- the latter of which has made two acquisitions since the company was purchased itself by its current owner.

Arena Strategic Advisors provided due diligence and strategy support to Trident and OceanSound. Pillsbury Winthrop Shaw Pittman LLP served as legal counsel to Smartronix. Gibson, Dunn & Crutcher LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel to OceanSound.