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Volume 6, Issue 3 October 2008

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Welcome to the Federal Growth Report (FGR), the newsletter published by Venture Management, Inc.

Venture Management and Minuteman Ventures recently merged and are operating under the Venture Management, Inc. brand. The combined firm will continue to provide M&A advisory services to federal contractors serving defense, aerospace, intelligence, homeland security and civilian sectors. Our clients include public and privately held corporations, as well as their investors and lead executives. We feel strongly that this combination provides clients with broader national coverage and deepens our presence in the federal contracting sector.

Historically published as a Minuteman Ventures newsletter, Venture Management will continue to publish the FGR, bringing to clients and interested parties current news about the federal M&A marketplace

So, welcome to the NEW Venture Management. We hope you will find the merged team stronger and even more adapted to the needs of the market!

Regards,

Mark Shappee
Paul Serotkin
Venture Management, Inc.


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In This Issue
 
Five Ways to Stay Out of Organizational Conflict of Interest Trouble
Dynamics Research Corp. (NASDAQ: DRCO) Acquires Kadix Systems
Daily Deals - Latest Sector M&A Deals

logo_dacis_140.jpg, 9.5kB Venture Management, Inc. 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 Federal Deal Meter
  Purchase price  
  Under $50m $50–100m Over $100m Total Deals
YTD 2008 29 9 12 50
YTD 2007 39 13 9 61


The Federal Deal Meter covers M&A transactions of services firms principally serving federal agencies. Transactions covered are those announced from January 1, 2008 through September 26, 2008, and the corresponding period in 2007.

For the list of M&A transactions closed in the sector through September, 26, 2008 and 2007, email paul@venturemanagement.com.


Five Ways to Stay Out of Organizational Conflict of Interest Trouble

For the government services industry, conflict of interest is a one-way issue. That is, don't expect to see any reversal in government concern, active scrutiny, and enforcement of conflict-of-interest policies and regulations. And, perceptions of conflicts, whether deserved or not, have a way of amplifying damage to your firm's reputation and freedom to do business.

Here are five things to avoid or do to stay out of trouble. (For legal advice, be sure to talk with your counsel rather than using the business advice in this article) .

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The boundary of impermissible organizational conflicts is in the eye of the beholder; what is harmless to you may be toxic in a politician's eyes. Last year, Rep.Henry Waxman, chair of the House Oversight and Government Reform Committee, pilloried Booz Allen Hamilton for alleged organizational conflict of interest (OCI) at a hearing on SBInet, a contract performed by Boeing. His investigators had found on Booz Allen's Web site that the firm had done work for Boeing's commercial airplane division.

The author, Michael Lent, is editor and publisher of Government Services Insider, a subscription-paid information service about the business strategies and methods of contractors. He can be reached at mlent@gsinsider.com, or at (202) 237-0765.

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Dynamics Research Corp. (NASDAQ: DRCO) Acquires Kadix Systems

Dynamics Research Corp. (NASDAQ: DRCO) completed its acquisition of privately held Kadix Systems, LLC. SBA certified Kadix Systems in the 8(a) program in April 2003. Its expected graduation date is 4/17/2012.

Arlington, VA-based Kadix Systems is a rapidly growing, high-end management consulting firm. Kadix maintains practice specialties in organizational change, human capital, information technology, public and environmental health and learning and organizational development. Founded in 2001, the company is focused on the U.S. Department of Homeland Security (DHS), Marine Corps information technology, military medical health, and federal civilian markets. About 95 percent of Kadix' contracts have been awarded as prime and approximately 40 percent are performance-based.

In addition to its Arlington headquarters, Kadix has additional offices in Greater Washington, Aberdeen, MD, and Fort Sam Houston, Texas — areas that are targeted for significant expansion due to the DOD BRAC.

DRC Chairman and CEO Jim Regan stated:

"Kadix Systems' high-end management consulting capabilities fully complement DRC's current core competencies in IT infrastructure, business intelligence, business transformation and training and enable greater access to key markets that we have targeted for growth. We look forward to welcoming Kadix employees to the DRC family of dedicated professionals serving our nation's highest priorities. We are committed to strategic growth that expands the mission-critical management and consulting work we provide to clients, fosters our long-standing culture of quality and excellence and enhances shareholder value."

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Daily Deals

Closing/
AnnouncementDate
BuyerSellerPurchase PriceSeller Revenue
September 25, 2008 BAE Systems Detica plc $1.075 $405m
September 10, 2008 Northrop Grumman Corp. 3001 International, Inc. N/D N/D
September 8, 2008 iRobot Corp. Nekton Research LLC $10m (+$5m ptl.) $6m (est.)
September 4, 2008 IHS, Inc. Documental Solutions LLC $24.5m N/D
September 2, 2008 Constella Group (investors) Constella Futures (part of SRA International) N/D N/D
August 26, 2008 Serco, Inc. SI International $510.3m $510.8m
August 19, 2008 ManTech International Corp. Emerging Technologies Group, Inc. N/D $20m (est)
August 6, 2008 Apptis, Inc. Base One Technologies, Inc. N/D N/D
August 4, 2008 QinetiQ North America Operations LLC Dominion Technology Resources, Inc. $104.5m $46.6m
July, 2008 Raytheon Co. Telemus Solutions, Inc. N/D N/D
July 31, 2008 Logistics Management Institute(LMI) Jasmah Consulting N/D N/D
July 31, 2008 Dynamics Research Corp. Kadix Systems, LLC $42m (+$5 ptl.) 270 employees
July 30, 2008 Cubic Corp. Omega Training Group, Inc. N/D 790 employees
July 15, 2008 MacAulay Brown, Inc. KosTech, Inc. N/D N/D
July 15, 2008 MacAulay Brown, Inc. Gray Research N/D 175 employees
July 2, 2008 Bart & Associates, Inc. Digital Solutions, Inc. N/D $14m
July 2, 2008 SRA International Interface & Control Systems, Inc. N/D N/D
June 17, 2008 AEA Technology plc Project Performance Corp. $65m 300 employees
June 9, 2008 USISHireRight $249m N/D

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About Us

Venture Management, Inc. (VMI) is an investment bank that provides merger and acquisition advisory services to technology based businesses, their investors and lead executives. VMI is particularly known for its expertise in supporting consolidation strategies in the Federal Services market, especially for firms in the aerospace and defense, intelligence and homeland security sectors.

For more information regarding Venture Management's services, call Mark Shappee at (805) 644-5335 mark@venturemanagement.com or Paul Serotkin at (781) 750-8065 paul@venturemanagement.com

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