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Volume 6, Issue 1 April 2008
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Welcome to the Federal Growth Report, the newsletter published by Minuteman Ventures LLC, a firm that focuses on mergers and acquisitions.

Our newsletter addresses issues of importance to leaders in the federal contracting sector. These people build companies and increase equity value.

Regards,

Paul Serotkin
President
Minuteman Ventures LLC



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In This Issue
 
"Ever Vigilant" - The CACI M&A Story
Five Hidden Opportunities - Increase Your Company's Value
Daily Deals - The Latest Sector M&A Deals

logo_dacis_140.jpg, 9.5kB Minuteman Ventures LLC partners with InfoBase Publishers, Inc. to bring you expert analysis of recent federal M&A transactions. InfoBase is a provider of information on buyers and sellers in the global defense, aerospace, and government technology marketplaces. Its Defense Mergers and Acquisitions (DM&A) module (reachable at www.dacis.com), is the most comprehensive collection of industry M&A data and analysis in the market.

InfoBase is a lot more than M&A. Their on-line service links the defense sector's latest news on companies, contracts and programs to insightful sector analysis, budget trends and M&A transactions.

button_dacis_red.gif, 6.2kB For more on InfoBase Publishers and its web-based Defense/Aerospace Competitive Intelligence Service (DACIS), visit www.dacis.com or contact Stuart McCutchan (sjmccu@dacis.com) (703.327.8470) for a personal tour.


The Minuteman Federal Deal Meter
  Purchase price  
  Under $50m $50–100m Over $100m Total Deals
YTD 2008 14 5 2 21
2007 14 2 3 19


The Minuteman Federal Deal Meter covers M&A transactions of services firms principally serving federal agencies. Transactions covered are those announced from January 1, 2008 through April 13, 2008, and the corresponding period in 2007.

For the list of M&A transactions closed in the sector through April 13, 2008 and 2007, email paulserotkin@minutemanventures.com.


"Ever Vigilant"

"Ever Vigilant" — The CACI M&A Story

Whatever the industry, it pays to step back and recognize the "masters" among us.

When it comes to federal sector M&A, few can lay claim to the record of success that CACI International, Inc. has achieved as a high-visibility integrator.

Paul Cofoni, CACI's President and CEO, stopped by Washington Technology recently to provide the state of CACI's M&A practice and performance to a WT webinar audience. Click here to see the presentation.

"Ever Vigilant", CACI's well branded theme, has paid dividends to both the organic growth of CACI and its ability to successfully grow by acquisition. Through both organic and external growth, CACI has targeted $5 billion in revenue by FY 2012.

"Ever Vigilant" derives from CACI's view that we live in a dangerous world; the company's vision is to be powerful, clear and unwavering in that mission.

Its brand might just as well describe CACI's M&A practice.

The company has completed 19 acquisitions since the millennium, totaling $1.13 billion in acquired revenue. Over 15 years, the company has acquired 40 companies. With this level of activity, Cofoni says that M&A has become one of the true core competencies of CACI.

Witness the dedication of resources within CACI to the M&A process. It starts with the deputizing of P&L managers in having them search for strategically-aligned M&A candidates. Operational management works with professional M&A staff to further vet the targets. Once the candidate comes under serious consideration, the CACI due diligence team jumps in, involving up to 100 or so from various disciplines at different junctures, says Cofoni. Many are assigned to support the integration process.

Prior to the acquisition, CACI develops a detailed integration program, then implements it immediately upon the closing of a transaction. All companies should be seen and operate as CACI companies on the first day after announcement, says Cofoni.

M&A pursuits in recent years parallel the core CACI missions, with emphasis in helping our nation counter global-terrorism, a multi-generational fight that is independent of the outcome of the current Iraq conflict. Cofoni thinks this war will be fought more with information than force — a perspective that plays to the strengths of the current and future CACI.

Its strategy has led CACI to gather and integrate "intelligence" assets, companies whose talents and contracts support intelligence and national security clients.

Cofoni touts the company's four most recent acquisitions as evidence of that mission/strategy (see table below). Three are professional services firm; one is an IT company, but they have one common aspect — serving intelligence and national security interests.

CACI Acquisitions Since May 2007
Company Service Revenue Price
Institute for Quality Management Performance management for intelligence agencies $20m $40.5m
The Wexford Group Asymmetric warfare, special operations $100m $115m
Athena Innovative Solutions Solutions to the Intelligence Community and National Security Clients $110m $200m
Dragon Development Professional/engineering services to the Intelligence community $32m N/D

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Five Hidden Opportunities

Five Hidden Opportunities to Increase Your Company's Value
By Lee W. Frederiksen, Ph.D.
Hinge

frederiksen_lee-photo1.jpg, 5.6kB Some of the best opportunities to improve your firm's value lie hidden in plain view. In our strategy work with federal contracting firms, we see several common problems emerge again and again, weakening profits and robbing firms of meaningful competitive advantage. But these problems, if solved, can become powerful opportunities. They can have strategic significance and improve a firm's long-term performance and value.

Too often these problems go unrecognized and unaddressed. Even if they know about them, operational managers may argue these issues are unimportant or are already being covered. Don't fall into this trap.

In our experience, five hidden opportunities surface with particular frequency. Address them and your firm will gain a tangible advantage as you compete for new business and the best employees.

Hidden Opportunity 1: Customers don't know all that you can do to help them.

Government agencies hire professional service firms to solve specific problems. Once selected, however, firms like yours can get pigeonholed. Chances are, your clients aren't aware of your full range of capabilities. In many cases, they will look elsewhere for services that you offer, even if they are fully satisfied with your performance.

For example, a well respected and rapidly growing government contractor commissioned interviews with their best clients. They found that over 60% of their government clients felt that they didn't know all the services the company offered. They were right. When asked to list services they wished the company would offer, almost all of them were already available!

How to capitalize: It's not your clients' job to figure out how to use your services.

You have to be proactive… and your clients want you to be. A major federal program manager said it best:

"We're focused on the immediate. We want our vendors to anticipate our needs and help solve problems before they become major issues. We don't want a sales pitch. Just educate us and offer solutions."

Just don't expect your project managers to take on the business development role — they are focused on contract performance. Be prepared to dedicate other resources to client development. It's no secret that many key decisions are often made well before the RFP even goes out. Take the initiative and put your firm in the driver's seat.

Dr. Frederiksen, a business psychologist and seasoned entrepreneur, is a principal at Hinge. Hinge is a Reston, Virginia based strategy and branding firm that specializes in helping professional service firms overcome marketplace challenges and reach their full growth potential. He can be reached at lwf@pivotalbrands.com or 703-391-8870. To read the entire article, click here.

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Daily Deals

Closing/
AnnouncementDate
BuyerSellerPurchase PriceSeller Revenue
April 9, 2008 Mcfadden and Associates Systems Integration Group, Inc. N/D N/D
March 31, 2008 Adayana, Inc. Vertex Solutions N/D 100 employees
March 25, 2008 KOR Electronics Paragon Dynamics, Inc. N/D N/D
March 19, 2008 Homeland Security Capital Corporation Safety & Ecology Holdings Corporation $26.4m (max) $50m
March 18, 2008 SAIC SM Consulting N/D $50m (est.)
March 17, 2008 Excellere Partners Acquisitions Solutions, Inc. (Investment) N/D N/D
March 11, 2008 NCI, Inc. certain assets of MTC Technologies, Inc. N/D N/D
March 5, 2008 McAulay-Brown Tera Research N/D $6.5m
March 5, 2008 CoVant A-T Solutions N/D N/D
March 3, 2008 Rockwell Collins Athena Technologies, Inc. N/D N/D
March 3, 2008 National Interest Security Company Edge Consulting, Inc. N/D N/D
February 21, 2008 Kratos Defense Systems SYS Technologies (merger) $48m (est.) $75m

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About Us

Minuteman Ventures LLC advises company owners on the sale of their businesses, and assists corporate and private equity buyers in strategic acquisitions and divestitures. Our team consists of experienced entrepreneurs and business executives who founded or operated companies and corporate divisions.

We specialize in companies that sell services, products, and solutions to federal government clients.

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