Mergers and acquisitions are almost always exciting and (ideally) transformative events. These acquisitions expand existing capabilities and add footprints in new customer markets. This is NOT intended to be a comprehensive list of all acquisitions, but instead a sample of ones we found interesting, and some illustrate major developments in the GOVCON market.
Jacobs CMS / Cyber Intelligence and Amentum
We would be negligent to skip over an almost done acquisition in the planned mega merger (really an acquisition, but we can debate that) of private equity owned Amentum and the Jacobs Critical Mission Solutions (CMS) / Cyber Intelligence business. Jacobs’ May 2024 Q2 earnings call indicates that this transaction is moving ever so steadily to a close. When will this close? Their latest earnings call is indicated in the below quote from CEO Robert Pragada as follows.
We expect to fulfill the remaining closing conditions and complete the transaction in the second half of the fourth quarter of fiscal year 2024.
In more plain English, this translates into roughly late August or September of 2024 as Jacobs uses a October to September fiscal year.
This M&A journey started in May 2023 and it was discussed in more detail in another one of our blogs.
When this acquisition finally closes, it represents a new “mega prime” that may very well disrupt competitions in which Jacobs has been losing ground (lost SOCOM EOM, among others). Can Amentum wield the new capabilities to win big or will it pay a premium to maintain a status quo?
Accenture
Cognosante
In May 2024, Accenture acquired mid-tier power house Cognosante. The acquisition greatly expands Accenture’s health business portfolio, to add much more depth at the U.S. Department of Veterans Affairs (VA), Centers for Medicare and Medicaid Services (CMS), and adds a modest contract portfolio in the Social Security Administration and U.S. Department of Labor. The acquisition adds 1,500 employees to Accenture’s business. It appears that for the time being, Cognosante will form another business line to operate mostly intact as a “bolt-on” acquisition. Prior to the Cognosante acquisition, Accenture’s CMS business was almost entirely centered on its repeat Healthcare.gov contract.
The last major federal contracting market focused acquisition made by Accenture was Novetta in 2021. That acquisition expanded Accenture’s U.S. Department of Defense (DoD) and Intelligence Community business. Accenture makes routine acquisitions in its much larger commercial business.
LMI
JJR Solutions
In March 2024, private equity backed LMI made another smaller scale, capability based acquisition to continue to quietly build out its capabilities. This acquisition was made in the form of JJR Solutions to add depth to LMI’s application development and human-centered design theme. The acquisition adds a boutique workforce of 120 personnel based in Dayton, OH outside of the strategically valuable Wright Patterson Air Force Base. This acquisition deepens development capabilities of LMI’s “The Forge” used to do special projects for clients.
LMI is not trying to win an arms race with this and other boutique acquisitions such as their Synaptech acquisition in late 2022. Instead, they are adding unique capabilities to compete as a strong mid-tier.
ManTech
Since moving from a publicly traded business to being private equity owned by the Carlyle Group in 2022, ManTech has been restructuring itself through M&A.
Sale of select DoD portfolio business to Systems Planning and Analysis (SPA)
In March 2024, ManTech sold select parts of its technical advisory business to another privately owned GOVCON business in the form of Systems Planning and Analysis (SPA). SPA, who was acquired by Arlington Capital Partners (ACP) and then merged with another mid-tier business – MCR – has been adding its own blend of boutique professional and technical services capabilities. ManTech offloaded its portfolio of Defense Advanced Research Projects Agency (DARPA), Office of the Secretary of Defense Strategic Capabilities Office (OSD SCO) and select National Reconnaissance Office (NRO) technical advisory services programs to the surging SPA.
ManTech continues to evolve from advisory services and more into technology development which is supported by divesting itself of work that creates immediate Organizational Conflicts of Interest (OCI).
Definitive Logic
In August 2023, ManTech acquired boutique small to mid-tier technology consulting firm Definitive Logic. This added 330 employees with a broad customer base in defense, homeland security and federal civilian customers. While this is not a large acquisition, it was one that was readily absorbed into ManTech to add both technical depth and a range of customers that ManTech could more readily penetrate with technology enabled services specific to business functions and less military specific technology areas.
ManTech has made two M&A moves in less than two years after being acquired by Carlyle Group neither of which were “big moves” but more to carefully steer ManTech in a new direction.
BAE Systems
Ball Aerospace
In February 2024, BAE Systems made a massive and transformative acquisition with a purchase price of $5.5 billion to acquire Ball Aerospace. This is a significant move to greatly accelerate and expand BAE Systems space business of which Ball Aerospace is an original equipment manufacturer of spacecraft and mission payloads. Ball Aerospace is largely intact as the new Space & Mission Systems business. The very significant impact on BAE Systems is they can compete more thoroughly with other major aerospace businesses such as Boeing, Lockheed Martin and Northrop Grumman. The space market has had quite a bit of consolidation over the years, but now BAE Systems is a new(ish) force to be considered in military and civil space markets.
Bain Capital
Guidehouse
Five years after the original formation of Guidehouse as the public sector spinoff of PricewaterhouseCoopers (PwC) and new ownership under Veritas Capital, Guidehouse is sold in 2023 to another prominent private equity owner and investment firm in the form of Bain Capital. While Veritas Capital is a frequent buyer and seller of GOVCON businesses, Bain Capital’s portfolio has largely been focused on anything else but GOVCON with the exception of Nutanix (as observed by Washington Technology). This is a significant investment for Bain Capital to launch headfirst into professional services serving U.S. Government customers.
The FedSavvy Strategies Takeaway
- We’re seeing an interesting array of boutique acquisitions for mid-tier to larger businesses less focused on a market share grab, but more on transformation, as evident with LMI and ManTech.
- A few transformative acquisitions to truly disrupt mature and growing markets such as space came into being with the acquisition of Ball Aerospace by BAE Systems to disrupt the equilibrium at the top tier largest aerospace businesses.
- We witnessed an interesting new force in M&A with Bain Capital pushing in to the GOVCON market with a major acquisition in the form of Guidehouse…do they bolt on more acquisitions to Guidehouse or see GOVCON as a safe market to expand?
- The formation of a new mega-prime contractor with Amentum and part of Jacobs represents a new juggernaut competitor that has many prime contractors curious how (or if) Amentum can make 1+1=3 to disrupt many “usual suspects” competitions.
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