The challenge ahead for what becomes of Peraton-Perspecta-Northrop IT

The three-way combination of Peraton, Perspecta and Northrop Grumman's IT services shop will definitely create a huge new player in the government market. But making that a success will require a massive integration effort.

I have no doubts or reservations about the abilities of the leaders of Perspecta and Peraton, but when I saw the news this morning and read Ross Wilkers’ story on their pending combination, the thought that kept running through my mind was -- Holy Smokes, that’s going to be a huge integration challenge.

In all honesty, Holy Smokes is the family friendly version of what I was thinking.

Veritas Capital was already buying Northrop Grumman’s IT services business and merging it into Peraton. Now Veritas is buying Perspecta, where it already was its largest shareholder at 14.5 percent, and merging that with Peraton.

So that means Peraton, Perspecta and the Northrop IT shop will soon become one. That entity will continue to be called Peraton.

But the integration challenge is more than three large businesses coming together, if that weren’t enough. There are all the pieces underneath of those pieces and there are plenty.

Northrop’s IT business has been relatively stable as far as making acquisitions is concerned. I’d have to dig through the archives to find when they did any deals of any significance. But the business has gone through multiple internal restructurings.

Despite its size, it became clear in recent years that IT services wasn’t a priority at Northrop and wasn’t seen as crucial to the long term success of the company. This is despite Northrop CEO Kathy Warden having previously run incarnations of that business.

Northrop’s IT business in many ways reminds me of the DXC Technology U.S. public sector segment that was spun out to help create Perspecta in 2018. That business traces its roots to EDS Corp. then to Hewlett-Packard, then the HP spinout Hewlett Packard Enterprise and then to DXC.

But U.S. public sector didn’t fit with DXC’s strategy. The carveout of that business into what became Perspecta helped pay down some DXC debt as well.

That move to a new company was a morale booster, Perspecta CEO Mac Curtis told me at the time, because they were moving from a company where public sector work wasn’t a priority to a company that was solely focused on public sector.

A version of that is true with Northrop’s IT business because they’ll be moving from a company where the focus is on big defense platforms to one where IT is the priority.

So the Persepcta team has experience in integrating a business with that type of background and how to identify new opportunities, both for growing the business and for career development.

Also remember that Perspecta's other two pieces to create it are Vencore and KeyPoint Government Solutions. Vencore alone had a long history of acquisitions, including its heritage as part of Lockheed Martin.

Peraton also has a history of integration. As a spinoff from Harris Corp., Peraton started life under its current identity in 2017, but it was more a group of businesses rather than a coherent unit.

Job one at the creation of both Peraton and Perspecta was to take the pieces and create a new whole. Both companies also have made and integrated acquisitions since they were created.

So there alone are two teams with integration experience. That’s a plus but this is still a daunting task.

First on my mind is personnel. You have three defense leaders, three civilian leaders, three leaders for business development and the list goes on. Not all of those folks will have jobs when this is over.

If you have say five or six redundant positions across Peraton, Perspecta and Northrop Grumman -- that’s as many as 18 people. So half or more of those people could be back on the job market.

I know Perspecta went through a very formal process when it brought the DXC and Vencore teams together. KeyPoint didn’t overlap with the other two. Perspecta's management team at launch was split evenly between former DXC and former Vencore.

We now know that Stu Shea will remain as CEO of Peraton. But what about Mac Curtis? We don’t know what his role will be going forward. The company declined to comment.

The people part will be worth watching because some very talented people might be looking for jobs in a few months.

There also are the nuts and bolts of contracts to novate and perhaps there are some assets that will be jettisoned.

Obviously, we have plenty to watch as this deal closes and the new Peraton emerges.

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.