Federal Services buys Advanced Technology Systems
- By Roseanne Gerin
- Apr 20, 2006
Federal Services Acquisition Corp. has acquired Advanced Technology Systems Inc. for up to $124 million in a cash and stock transaction. The companies expect to close the deal this summer.
Federal Services will pay $84 million in cash and $1 million in stock at closing, with up to $39 million payable in three contingent cash payments based on ATS' operating results over three separate periods ending April 30, 2008. The purchase is Federal Services' first acquisition.
ATS of McLean, Va., is a privately owned company that offers systems integration, application development, IT infrastructure management and IT consulting services to federal government agencies.
The company has more than 600 employees and has worked on more than 120 contracts for 26 civilian and six defense agencies. Among its federal customers are the Defense, Education, Health and Human Services, Homeland Security and Labor departments. ATS had annual revenue of $107.2 million for fiscal 2005. Stifel, Nicolaus & Co. Inc. advised ATS on the deal.
Edward Bersoff, vice chairman of Federal Services, will become chairman and chief executive officer of both Federal Services and ATS when the transaction is completed. Joel Jacks, Federal Service's chairman and CEO, will remain a company board member. Peter Schulte, Federal Services' president and secretary, will step down from his executive position but remain a board member as well. He also is a managing partner at CM Equity Partners, a private equity firm in New York.
Leon Perry, ATS' chief operating officer, will retain his position. The company will name a chief financial officer and other directors to its board in the future, Bersoff said during a conference call today with investors.
"The IT sector is a particularly attractive segment of the federal services market," Schulte said during the conference call. "Companies in this sector trade at a premium price. To get an IT platform of this size and stature and at a reasonable price was a real coup, and what we were working for from the outset."
Federal Services of New York is a special purpose acquisition vehicle, or SPAC. Such companies have no operations; they go public to acquire a company with the proceeds of an initial public offering. It plans to make additional acquisitions in the future, Bersoff said.
As new competitors for private equity groups looking for deals in the federal market, several SPACs have been set up over the last couple of years to buy companies that do public sector work. They are primarily interested in defense, IT and homeland security companies working with federal, state and local governments.