Octo & Sevatec to join forces in merger of equals

Mergers of equals are rare events in the government technology market, but Octo and Sevatec executives have broken that mold and explain to us why the companies are joining forces.

Mergers of equals are rare events in the government technology market, but Octo and Sevatec are breaking the mold Tuesday in announcing their deal to combine and create a larger middle-tier federal IT player.

Worth pointing out at the outset is both companies could highlight successes in their own journey on that path.

Reston, Virginia-based Octo scored in the national security and health domains, while Fairfax-headquartered Sevatec created a footprint with NatSec too and civilian clients like the Homeland Security Department and General Services Administration.

Some of those wins were a case of head-to-head victories. In a joint interview with his Sevatec counterpart, Octo founder and CEO Mehul Sanghani said Sevatec even “consistently beat us on a few opportunities at joint customers” such as GSA.

That is certainly part of why Octo had Sevatec “at the top of the list,” as Sanghani put it, for potential transaction opportunities when the former received backing from Arlington Capital Partners in Spring 2019. Octo’s first deal with Arlington’s assist was of Connexta later that year.

“Early in our partnership with Arlington, we talked about the fact that we also wanted to invest in capabilities that we felt were going to be part of modernization going forward to include open source software development, artificial intelligence and machine learning,” Sanghani told me.

Now in the self-touted Octo 3.0 phase of that strategy, Octo’s combination with Sevatec puts to the market a competitor of at least $300 million in annual revenue with around 1,100 employees.

“The combination of our skillsets (is) very powerful, I think it really does make a pure-play digital modernization company in this market at a size and scale that arguably probably doesn’t exist today,” Sevatec founder and CEO Sonny Kakar said in the same interview.

Sanghani will continue as CEO, while Kakar and his Sevatec colleagues will be part of the combined leadership team.

Kakar will be vice chairman of the board and one of his duties will be to oversee the cultural integration aspects. Sevatec Chief Growth Officer Tim May will hold the same title for the combined entity. Sevatec Executive Vice President Chuck Schefer will serve as EVP to manage programs with customers such as GSA, DHS and Patent and Trademark Office.

Creating a larger company gives those staffers more career development opportunities given the wider set of customers to work with, Kakar told me.

“If they’re in the Sevatec portfolio right now and they wanted to go into the Department of Defense or intelligence, those opportunities exist,” Kakar added.

One big piece of Sevatec’s own story in pursuing and winning business opportunities is seen in its footing with GSA, which arguably gives companies a multiplier effect to showcase modernization skills given what that agency does for its customers in other agencies.

Sevatec secured its place on GSA’s COMET vehicle for broad IT modernization work in 2019 -- as did Octo -- and has translated that position into multiple wins since. One task order with a $116 million ceiling value sees Sevatec helping GSA’s Federal Acquisition Service move into a secure cloud-centric platform.

Kakar said Sevatec’s approach to GSA first centered on sharing lessons learned from prior and similar modernization efforts with national security agencies. COMET is now GSA FAS’ main mechanism to acquire those services, from which the results can spread out to other agencies.

“We call them basically the ‘Amazon of the federal government.’ They bridge all of the vendors, and all the commercial service and product providers through a common portal, then offer that throughout the rest of the federal government,” Kakar said.

The combination of Octo and Sevatec will seek to introduce analytics capabilities as part of their broader modernization offering to GSA, particularly with its contract management functions and applications.

Bringing together the people who provide those offerings, and currently physically dispersed given COVID-19, is an item Sanghani has given much thought to and seeks to draw lessons learned from the Connexta integration.

Connexta’s employee base is primarily based in metropolitan regions like Phoenix, Denver and Boston. That playbook of integrating a business spread out in different locations is what Octo will lean on this time.

“When you look at a pandemic situation like we have right now and you look at this combination, we are dealing with a workforce that is distributed, but we are able to engage with through mechanisms like Zoom,” Sanghani said.

“We’ll look to creative means of ensuring that we can stay connected to our employees as we push integration forward.”

Sheppard Mullin served as legal advisor to Octo on this transaction. Pillsbury Winthrop Shaw Pittman LLP served as legal advisor, and Baird served as exclusive financial adviser to Sevatec.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.