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By Nick Wakeman

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Nick Wakeman

Linxx founder picks alternate buy-out strategy

Sometimes, an exit strategy isn’t about finding the highest bidders. Sometimes, it’s about seeing to the people you know best.

Case in point is Linxx Global Solutions, a small business in Virginia Beach, Va., that provides highly specialized training, security, information assurance and program management services to the Defense, State, and Homeland Security departments, the Navy, intelligence community and NASA as well as other agencies.

The founder, Frank Cucci, was looking to exit, and he connected with Mosaic Capital to create an employee stock ownership plan that gives Cucci his exit and allows the company to protect its culture.

“Becoming an ESOP company only empowers our Linxx team to reach for greater opportunities in the years ahead,” said Martin Strong, Linxx CEO.

Mosaic specializes in finding the financing to create ESOPs as part of its investment strategy. According to its website, the firm uses “traditional private equity buyout strategies along with our unique expertise in [ESOPs]” to help owners “achieve liquidity, wealth transfer and ownership transition goals.”

For Linxx, that means it can continue to operate with what the company calls its “special operations premise that when given a focused mission statement, well led, cohesive teams always outperform,” Strong said.

The company has 430 full-time and part-time employees, most with active security clearances.

“We value the culture we’ve built at Linxx, and it was evident that employee ownership would enhance our culture of accountability and reward people who contribute to our success,” Strong said.

The McLean Group was Linxx’s advisor in the transaction, and the investment bank released a statement saying that the deal fits with several trends in today’s market:

  • Private equity firms remaining very active in the government market
  • The attractiveness of alternative structures such as ESOPs
  • Companies with specialized capabilities and customer focus are a priority target for buyers
  • Intell and national security remain areas of heightened buyer interest
  • Prime and full and open contracts and significant backlog drive value

Posted by Nick Wakeman on Apr 29, 2015 at 12:39 PM


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