Interview with CoVant Co-Founder Joseph Kampf on First Acquisition

April 9, 2008 by Brian Lustig

In 2006 Anteon, one of the area’s largest government contractors, was sold to General Dynamics for $2.1 billion. The transaction marked the successful culmination of a stratospheric growth story for the Anteon management team, which had guided the contractor from a $100 million company to the $2 billion mark in a decade’s time.

While Anteon began a new chapter as General Dynamics, principals of its management team also decided it was time to turn the page. Anteon President and CEO Joseph Kampf, Executive VP of Technology Seymour L. Moskowitz, Executive VP of Corporate Development Mark Heilman, VP of Corporate Development Gerald Dorros, and Senior VP Roger Gurner all decided to move on.

On the heels of the transaction, each was certainly in a financial position to retire after long and accomplished careers in the industry if so desired. But this was a uniquely tight-knit management team, and it didn’t take long for the group to decide it wasn’t ready to break out the golf clubs just yet – nor was it ready to sever a working relationship that for some traced back more than 20 years.

In exploring opportunities for a new venture, the former executives quickly concluded that the market environment was very different than the one faced in 1996 and could likely not sustain the repeat growth performance of a general services company such as Anteon. The group also knew that it possessed a unique pair of assets: 1) significant access to capital from their own gains tied to the acquisition and through the original partners of the Anteon Deal, CI Capital; and 2) tremendous collective expertise they could bring to bear for emerging technology companies in the defense, homeland security and intelligence communities.

These assets – coupled with a strong desire among the group to do something very different and entrepreneurial in nature – led to the 2007 formation of CoVant, a private equity partnership focused on developing a portfolio of defense, homeland security and intelligence firms.

Last month, CoVant announced its first acquisition – A-T Solutions of Fredericksburg, Va. I had the opportunity to chat with CoVant Co-Founder, Chairman and CEO Joseph Kampf (a former ExecutiveBiz “Been There Done That” Speaker) about the transaction, what made the company a good investment for CoVant, and where the firm is headed from here.

EB: Tell me about A-T Solutions, a privately held firm that trains military and law enforcement in detecting and defeating improvised explosive devices and weapons of mass destruction. What made it a strategic acquisition for CoVant?

JK: We looked at some different opportunities over the first 6-8 months and there were a couple firms we were interested in but for various reasons did not end up acquiring. With A-T Solutions, we immediately perceived a market opportunity in the counter-terrorism space that Anteon had operated in. At the same time, A-T quickly saw that CoVant possessed the capital for them to achieve growth objectives and gain access to the expertise of our management team.

EB: What tends to be the new structure of a firm once you acquire it?

JK: In the case of A-T, CoVant assumes a majority position but the A-T management team has stayed on board and has significant upside potential. And that is really the model: to retain and augment management teams of companies we acquire by inoculating them with expertise from our Anteon success story. We see ourselves as the only equity group to bring operational and strategic opportunities to the table – rather than just capital. This approach provides great assistance to small companies.

EB: Within the defense and intelligence space, what areas is CoVant enthusiastic about?

JK: The counter terrorism arena, including training modeling and simulation; WMD, CBRNE – the threat that doesn’t seem to want to go away. We also like the mission side of DoD, as well as the DHS/Intel world as it relates to Secure ID for network, border and facility security.

EB: Does CoVant end up competing for acquisition targets with the large government contractor/systems integrator players?

JK: Not really. It is tough to buy into the auction process, especially if an interested seller has already hired an investment bank and initiated the bidding process. For us, the optimal approach is to have time to bond with a company’s management team and develop a strategic vision. We need a seller who is patient and wants to stay with the business and capitalize on it, but that also might want some liquidity now. We go after these firms proactively. We have our own research unit and our goal is to find gold nuggets.

EB: Do you have a target number of acquisitions you would seek to close in a year?

JK: No. We started looking for first investment in April 2007 and made it in March 2008. Our goal really is to gradually own 3-5 separate companies that operate independently in different platforms. There is some magic to the value model and taking a company and creating a growth strategy – Anteon was great at generating organic growth. For these 3-5 companies we might then go find small, niche opportunities to expand each platform, in other words bolt-on acquisitions that could help a portfolio company like A-T expand its footprint and create more growth opportunities. That is what we feel CoVant does best: sitting on top of a number of different opportunities.

EB: Your son Jason, who also worked at Anteon, has joined you at CoVant. What is that like?

JK: As a small company Jason and I get to work closely together which is great.

Brian Lustig is co-founder of Lustig Communications, a Rockville, MD-based communications firm that works with growing technology and government IT firms. Lustig is also a contributor to local business and industry publications.

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