Acquisitions tend to come in three flavors: those that leave you scratching your head as to why either party would pursue the transaction; those that leave you scratching your head why one party would pursue the transaction; and finally those that leave you nodding your head approvingly.
Anyone following M&A activity close enough can end up with a rather tender noggin. But the ManTech International Corp. acquisition of prime government contractor McDonald Bradley Inc. for $76.5 million announced earlier this month is one that likely resulted in a collective head nod throughout the Federal IT community.
Looking back at the interview ExecutiveBiz conducted with Robert Coleman, president and COO of ManTech, back in October of last year, it becomes clear just how the transaction is positioned to help his company execute on its growth plan and address pain points.
For example. Coleman noted in the interview how difficult it was to find high quality personnel ““ particularly those with specialized security clearances often required to do business with their customer base. McDonald Bradley reports that 60% of its revenue is derived from the defense and intelligence market and, perhaps even more attractive to ManTech, is the fact that 45% of McDonald Bradley's 270 employees hold security clearances at top secret level or above.
Mr. Coleman also made clear during the interview his intention to grow strategically both organically and through acquisition ““ with the goal of becoming a five billion dollar company. Deals pursued, Coleman added, would include ““¦companies that bring us new customers, new capabilities, technology, or geographic locations.“
The McDonald Bradley deal hits these targets by deepening and broadening its focus in the intelligence, homeland security and defense space. And while ManTech had a strong contract presence in the Department of Homeland Security, what it didn't have was a piece of the DHS seven-year, $42 billion indefinite-deliver, indefinite-quantity EAGLE (Enterprise Acquisition Gateway for Leading Edge Solutions) IT acquisition project. Last summer, 25 winning bidders ““ including McDonald Bradley ““ were notified by DHS they would be able to solicit work via task orders for EAGLE contracts.
Because these EAGLE contracts represent as much as three-quarters of the DHS' $6 billion annual technology spending budget, the opportunity for ManTech to gain an entrÃ©e via McDonald Bradley was no doubt a highly attractive component of the deal.
ManTech has witenessed rapid growth the past couple of years, (the company was named one of Business 2.0 Magazine's 100 Fastest Growing Technology Companies for the second consecutive year and to the Deloitte & Touche list of the 50 fastest growing technology companies in Virginia) both organically and through acquisition. The McDonald Bradley acquisition followed the one of SRS Technologies, Inc. earlier in the year, and Coleman – who himself joined as a result of ManTech acquiring his firm Integrated Data Systems Corporation in 2003 – seems to hint in the ExecutiveBiz interview that more strategic deals might be in the offing.
And investors are biting on the growth plan. ManTech’s (NASDAQ: MANT) stock climbed to an all-time high earlier this month of $43.01 when the company reported $383.4 million in third-quarter revenue, up 35% from a year ago. And though the stock has ebbed a bit from that high as part of the broader market swoon, it is still up roughly 20% from summer levels.
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.