April Defense Federal Technology Market Update
We invite you to read our April 2012 Newsletter, featuring the following topics:
*Selected M&A Transactions
*Public Company Updates
*New Army Cyber Unit at Fort Meade
*Government Services Industry Performance
*Public Company Comparables
*Recent Industry M&A Transactions
Click the following link for a complete pdf file of the newsletter: ACP Monthly M&A Update – April Edition
DoD Fast-Track Acquisition Process Promises New Opportunities for Contractors
The U.S. Department of Defense (“DoD”) is establishing a fast-track acquisition process for cybersecurity products and services. The new process, which DoD plans to roll out within the next six months, promises to provide new opportunities for government contractors in the cybersecurity industry.
Click here to read the entire article from Venable LLP.
March Defense Federal Technology Market Update
We invite you to read our March 2012 Newsletter, featuring the following topics:
*Selected M&A Transactions
*Public Company Updates
*Government Services Industry Performance
*Public Company Comparables
*Recent Industry M&A Transactions
Click the following link for a complete pdf file of the newsletter: ACP Monthly M&A Update – March Edition
WSJ — U.S. Outgunned in Hacker War
WASHINGTON—The Federal Bureau of Investigation’s top cyber cop offered a grim appraisal of the nation’s efforts to keep computer hackers from plundering corporate data networks: “We’re not winning,” he said.
Shawn Henry, who is preparing to leave the FBI after more than two decades with the bureau, said in an interview that the current public and private approach to fending off hackers is “unsustainable.” Computer criminals are simply too talented and defensive measures too weak to stop them, he said.
February Defense Federal Technology Market Update
We invite you to read our February 2012 Newsletter, featuring the following topics:
*Selected M&A Transactions
*Public Company Updates
*Government Services Industry Performance
*Public Company Comparables
*Recent Industry M&A Transactions
Click the following link for a complete pdf file of the newsletter: ACP Monthly M&A Update – February Edition
AFCEA Emerging Technologies Symposium: Big Data is a Big Problem
ACP attended the first annual AFCEA Emerging Technologies Symposium, which focused on the development of new technologies to reduce costs and increase efficiencies throughout the Federal Government. The event included 6 minute presentations from 19 pre-selected businesses who provided an overview of their latest emerging technology and its key differentiators. Exhibitors ranged from privately held businesses and venture-backed start-ups to the large players like HP and Adobe. Examples of featured technologies included a continuous network risk monitoring tool and a sustainable communications solutions via private cell networks. These presentations were complimented by industry panels and prominent keynote speakers, including Dr. Reginald Brothers, Deputy Assistant Secretary of Defense for Research and Gus Hunt, CTO of the CIA, amongst others.
Although the event encompassed a broad spectrum of technologies, the big data challenges were continuously highlighted by the key decision makers in government. Hon. Tara O’Toole, Under Secretary for Science & Technology, DHS outlined the need for a strategic solution to the immense DHS big data challenge, which is created by the inflow of TSA, CBP, and IC information. DHS is currently responding to issues on a case by case basis. Both Captain Christopher Page, Commanding Officer, Hopper Information Services Center, ONI and Frank Konieczny, CTO Secretary of the Air Force Office of Information Dominance focused on security around big data, and highlighted the transition to a Attribute Based Access Controls (ABAC), which is a new access control approach for service oriented architectures. CIA CTO Gus Hunt identified big data as one of the CIA’s 4 “Big Bets”.
In summary, big data is a big problem, and agencies are struggling to find a solution. The government is overwhelmed by the plethora of information it’s new technologies have collected over the past decade, and it will be looking to the private sector for tools to manage it. Small businesses that can provide solutions to the government’s big data challenges will be coveted M&A targets by the strategic buyers, and will drive M&A over the next couple of years. If you’d like to further discuss the event, or the broader implications on the M&A landscape, please contact tschmitt@aronsoncapitalpartners.com.
January Defense Federal Technology Market Update – 2011 Year In Review
We invite you to read our January 2012 Newsletter, featuring the following topics:
*2011 Industry Reflection
*2011 M&A Activity and Notable Transactions
*2012 Government Services M&A Outlook
*Government Services 2011 Industry Performance
*Public Company Metrics
*Recent Defense & Government Services M&A Transactions
Click the following link for a complete pdf file of the newsletter: http://www.aronsoncapitalpartners.com/index.php/2011-12-13-21-06-12/monthly-newsletter/item/january-2012-market-update?category_id=6
NY Times – The Age of Big Data
Big data continues to draw attention and is setting up to be the next “big thing” in Federal IT M&A.
Full article: http://www.nytimes.com/2012/02/12/sunday-review/big-datas-impact-in-the-world.html
Semantic Technology, Social Media Analytics and the Intelligence Community
The proliferation of information and data in open source
social mediums such as Twitter, Facebook and a variety of blog hosting sites
continues to shift the analysis of these vehicles from manageable to
overwhelming, unless of course an entity has the right technology. Social media
comprehension is an essential capability in the Intelligence Community’s (“IC”)
goal to “connect the dots.” One of the keys to unlocking this much-needed
capability is semantic technology.
Semantic technologies include the processing and analyzing of
structured and unstructured data, concepts and relationships, content tone and natural
language. These technologies require more than indexing content; they require
algorithms and sophisticated ontologies in order to understand contextual
meanings. When tracking social media, these technologies need to understand
sarcasm, figures of speech and other rhetorical devices for a complete and
accurate computational analysis.
IC members like the FBI and CIA are actively practicing and developing
semantic processing techniques to analyze social media. In the past, the FBI
has used social media to apprehend criminals. Now, the FBI seeks greater utilization of social
networks as indicated in its recent RFI (posted on January 19, 2012), requesting
market research to determine the capabilities for an “open source and social
media alert, mapping and analysis application solution.” The FBI hopes for
social media semantic technologies to improve its situational awareness and
identify/locate emerging threats.
The CIA’s Open Source Center, led by Director Doug Naquin, is
another example of the IC’s priority to analyze the open source social media
outlets. The Open Source Center monitors up to 5 million tweets per day—a
significant amount but still only 2.5% of the total 200 million tweets
generated each day. Stories of success in this new age of intelligence
gathering also show the IC’s current limitations. For example, the Open Source
Center foresaw the uprising in Egypt; however, the center had no indication of
the timing of when such an event would occur.
The Intelligence Community will continue to demand key
capabilities like semantic technologies in order to harness the full benefits
of what is considered the “Big Data” problem, and large integrators will pay
premiums for companies that provide them access to these capabilities.
To further discuss our analysis of the
Intelligence Community and recent M&A activity, please feel free to contact
Jensen Vessels at jvessels@aronsonllc.com.
Defense M&A: Corporate Spinoffs
The recent speculation that Textron is considering a spinoff of some of its business units, including Cessna Aircraft, is revealing of a growing trend in which diversified conglomerates face pressure from activist investors to dispose of certain defense-related business units. Rumors of a possible sale of the Cessna business unit have been fueled by the reported interest of activist investor Ralph Whitworth’s Relational Investors. According to Reuters, Relational Investors examined Textron as a potential target for a change in strategy a month ago; however, the activist firm has since stated that Textron was never a serious prospect.
Activist investors, like Relational Investors, have determined the slower growth federal contracting verticals of large conglomerates to be a drain on company valuations. To unlock shareholder value, investors are pushing for breakups or spinoffs of segments with a stagnant or declining growth outlook. These changes come as the wars in Afghanistan and Iraq wind down and major cuts are being made to the U.S. government’s defense budget. With the growing deficit and increasing budgetary strain, the trend of spinning off low-growth businesses from diversified conglomerates is likely to continue into 2012, with or without investor pressure.
Relational Investors has been known to pressure diversified conglomerates to split up in recent years. In October 2011, ITT Corporation spun off Exelis Inc., its Defense and Information solutions business, and Xylem Inc., its Water Technology and Services business, resulting in three distinct publicly traded companies. Relational cofounder Ralph Whitworth told Reuters that the hedge fund urged the company to sell its defense unit to a private equity firm and spin off its basic industrials business after accruing a 3.93% stake in the company and nominating three directors to the company’s board. ITT instead announced its two planned spinoffs, possibly in order to avert a proxy contest with Relational Investors, although ITT’s Chairman and CEO, Steve Loranger, maintains that the decision to break up the company was made with no investor pressure.
Relational also played a role in the pending spinoff of certain government services operations of L-3 Communications, which is expected to be completed in the first half of 2012. The firm became the largest shareholder in L-3 in June 2011 after acquiring an almost 6% stake in the company, when it began pushing for the conglomerate to spin off its low-margin and slow-growth businesses.
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