The deal, expected to close in the second quarter, will see GTEC shed its publicly-traded status and become an entirely private company. GTEC’s new California-based investor manages almost $40 billion in committed capital.
But don’t expect any major shifts at the company. According to CEO John Hillen, “continuity” is the theme of the deal.
“The reason [Ares is] buying in is because it loves what we've been doing since we started,” he said. “[Ares wants] to continue with the same management team, same customers, same acquisition strategy, same penchant for robust organic growth which we've been executing on.”
Hillen oversaw the company’s transition to the NASDAQ in November 2009 and the acquisitions of Zytel and Signature Government Solutions in 2010, all moves that sparked financial growth. He characterized the Ares decision as the next move to extend the company’s growth strategy.
“We're recapitalizing with a big, healthy investment from a private investment group that will reinvigorate our balance sheet,” he said. “It's another good step to keep the strong growth going.”
When speaking on the growth potential of the intelligence and defense market, Hillen notes the recent activity of private-equity firms in the space as a positive indicator.
“Given what's happened in the past year with private-equity firms in this space, it's starting to be a self-evident conclusion [that the market has value].”
Hillen noted TASC, The SI and Oceus (formerly Ericsson Federal) as specific examples of firms experiencing success following a private investment.
“Very few private-equity firms are known for making bad investments,” he said. “It tells me that they see a lot of potential for growth in the hot areas of the defense and intelligence space.”
While he noted that the years of 20 percent growth are over, Hillen also points to the fact that the “defense intelligence and DHS space is still an $800 billion spend every year. There's a lot of room to run around in an $800 billion budget.”