GOVERNMENT IT SERVICES: RECOVERY & MODERNIZATION POWERSHIFT - GOVERNMENT IT SERVICES INDUSTRY UPDATE | MAY 2021
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GOVERNMENT IT SERVICES:
RECOVERY & MODERNIZATION POWERSHIFT
GOVERNMENT IT SERVICES INDUSTRY UPDATE | MAY 2021
3
TABLE OF CONTENTS
Key Industry Takeaways 3
2020: Recovery &
Transformation 4
Transformational M&A:
Confidence on Display 5
Middle Market M&A:
Strategic Imperatives Fuel
Late Year Recovery 7
2021 M&A Outlook:
Robust & Highly Targeted 10
Report Contributors 11
Firm Track Record 12
Endnotes 13
CONTACT OUR GOVERNMENT IT
SERVICES INDUSTRY EXPERTS:
David Brinkley
Managing Director
917-817-0375
dbrinkley@capstonepartners.com
Ted Polk
Managing Director
708-921-8961
tpolk@capstonepartners.com
Government IT Services
Recovery & Modernization Powershift
“IF NECESSITY IS THE MOTHER OF INVENTION, THEN URGENCY IS THE
UNCLE OF CHANGE.” - Nell Scovell
KEY INDUSTRY TAKEAWAYS
Capstone Partners’ Aerospace, Defense, Government, & Security (ADGS) Group is pleased to share its annual
Government Information Technology (IT) Services report. Through our relationships with leading strategic
players, conversations with private business owners, and careful tracking and analysis of merger and
acquisition (M&A) activity, we have identified several key takeaways below, followed by an in-depth overview
of industry dynamics on the following pages.
1. The impact of COVID-19 on the federal sector will be long-lived and forced Government agencies to
accelerate IT modernization, including cloud migration.
2. The incoming Biden administration is balancing a commitment to modernization with fiscal realities
and a conventional approach to geopolitics.
3. Despite moderate retrenchment in public company valuations, strategic buyers and sector-focused
private equity (PE) firms remain well capitalized and closed several notable transactions in 2020,
aggregating more than $17 billion.
4. M&A activity rebounded during the second half of 2020 and continues through the first quarter of
2021 at near record levels.
5. Deal activity focuses on high growth areas, including cyber, intelligence, data analytics, cloud and
network computing, virtualization in training, and automation including artificial intelligence (AI) and
machine learning (ML).
6. A less dramatic reduction in national defense spending than some anticipate and a sustained
emphasis on emerging technologies will sustain activity through the coming year.
Capstone Partners has developed a full suite of corporate finance solutions, including M&A advisory, debt
advisory, financial advisory, and equity capital financing to help privately owned businesses and private equity
firms through each stage of the company’s lifecycle, ranging from growth to an ultimate exit transaction.
To learn more about Capstone’s wide range of advisory services and Government IT Services industry
expertise, please contact Capstone Managing Director David Brinkley or Ted Polk.
3
Government IT Services | May 2021
2020: RECOVERY & TRANSFORMATION
In last year’s Government IT Services report, we discussed the record-breaking M&A activity that defined the
landscape over the course of 2019 until the impact of a global pandemic was internalized by market
participants in March of 2020. A year ago, we downplayed the uncertainties of the coming political season
and focused on the macroeconomic stability offered by a consistent budgetary process that had yielded
consecutive years of rational programmatic planning.
Then the clouds gathered and descended quickly and without warning. A few weeks into the shutdown, we
turned to history as our guide to ruminate on how the industry would weather this storm. We examined the
performance of U.S. Government Services (USG) stocks against the S&P 500 during two recent economic
shocks: (i) the events of 11 September 2001 and (ii) the 2008 Great Recession. In both of those instances, the
sector proved a safe haven during economic upheaval. This was once again the case through the first three
months of the pandemic.
As the initial surge faded, however, the reality of unprecedented stimulus spending aimed at bolstering the
U.S. consumer set in, compelling investors to reassess the risk to current discretionary accounts.
Consequently, since mid-June 2020, the indices diverged, with the broader market reaching new records as
USG Services stocks struggled to retain positive traction. Key earnings and revenue misses by leading firms
that failed to accurately communicate COVID-19 impact to Wall Street further complicated the picture. Prior
to the onset of the pandemic, USG Services firms were trading near record highs of 15 times trailing EBITDA
and 1.5 times trailing revenues. These metrics have since moderated to 12 times and 1.4 times, respectively.
Nonetheless, for reasons that we discuss below, there is cause for mid-term optimism encompassing both
domestic and international geopolitics.
Most importantly, underneath this pedestrian performance, the pandemic was affecting how government
executives conceived of implementing business processes in fundamental ways that will be long lived. The
business of government took on new urgency as the nation grappled with a national crisis; in response,
agencies were forced to rapidly accelerate IT modernization efforts, most notably: (i) cloud computing and IT-
as-a-service, (ii) data analytics, (iii) agile software development, (iv) automation, ML, and AI, and (v)
cybersecurity and zero trust networking. While these efforts are as yet incomplete and progress has been
uneven across disparate organizations, the path is set and a period of technological powershift is underway.
This dynamism in turn placed new emphasis on strategic acquisitions to obtain the critical capabilities,
expertise, and contracts necessary to push innovation across the broader market.
U.S. Government Services Valuation Index U.S. Government Services Index vs. S&P
Mean EV/TTM Revenue Mean EV/TTM EBITDA % Change S&P 500 % Change USG Services
40%
1.8x 18x
1.6x 16x 30%
1.4x 14x 20%
Percentage Change
1.2x 12x 10%
EV/Revenue
EV/EBITDA
1.0x 10x
0%
0.8x 8x
-10%
0.6x 6x
-20%
0.4x 4x
0.2x 2x -30%
0.0x 0x -40%
Jan-21
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Oct-20
Mar-20
Sep-20
Nov-20
Dec-20
Feb-21
Mar-21
Jan-14
Jan-15
Jan-18
Jan-20
Jan-21
Jan-16
Jan-17
Jan-19
U.S. Government IT Services index includes: BAH, CACI, ICFI, LDOS, MANT, PRSP,SAIC,
Source: Capital IQ
4
Government IT Services | May 2021
TRANSFORMATIONAL M&A: CONFIDENCE ON DISPLAY
The powershift created new opportunities for opportunistic and strategic consolidation by the most
aggressive market participants. Leading firms announced nearly $17 billion in scaled transaction value over the
course of 2020 in four transactions that are reshaping the competitive landscape. This activity approaches
the frenetic pace witnessed in 2015 and 2018.
Two of these transactions closed in the first quarter of 2020 before the pace of deal making slowed amid the
uncertainty created by both the pandemic and a chaotic election season, the latter throwing into fierce
contest not only the White House but the balance of power in the Senate as well. SAIC (NYSE:SAIC) acquired
the federal business of Unisys (NYSE:USI) for $1.2 billion, bringing infrastructure modernization, cloud migration,
managed services, and IT-as-a-service. In addition, Veritas Capital purchased the state and local health and
human services business of DXC Technology (NYSE:DXC) for $5 billion and rebranded it Gainwell.
Leaning into the dominant themes discussed here, in December and January 2021, Veritas-backed Peraton
completed two significant acquisitions aggregating more than $10 billion. In the first, it acquired the federal IT
and mission support business of Northrop Grumman, a business providing advanced technology solutions
that include cybersecurity, data analytics, cloud development, and advanced engineering. In the second, it
acquired publicly traded Perspecta (NYSE:PRSP), a business Veritas had taken public in June of 2018. The
combination with Perspecta lends Peraton the scale and breadth to compete with the largest firms in the
Government IT sector: Leidos (NYSE:LDOS), Booz Allen Hamilton (NYSE:BAH) and General Dynamics (NYSE:GD).
Transformation Transaction Volume and Value
Total Enterprise Value No. Transactions
$30 10
9
$25
EV in Billions of U.S. Dollars
8
Number of Transactions
$19.1B 7
$20
$18.0B 6
$16.9B
$15 5
4
$10
$7.4B 3
$5.2B
2
$5
1
$0.9B $0.7B
$0 0
2014 2015 2016 2017 2018 2019 2020*
*Includes January 2021 purchase of Perspecta (NYSE:PRSP) by Peraton
Source: Capital IQ
5
Government IT Services | May 2021
GOVERNMENT IT SERVICES: TRANSFORMATIONAL TRANSACTIONS
2013 – Q1 2021, $ in millions
Date Pro Forma TTM EBITDA EV/TTM
Closed Type Target Buyer Seller Rev EBITDA Margin % EV Rev EBITDA
Jan-21 M&A Peraton Perspecta Public $4,546 $644 14.2% $7,274 1.6 x 11.3 x
Dec-20 M&A Peraton NG Federal IT Northrop Grumman $2,300 $265 11.5% $3,400 1.5 x 13.0 x
Mar-20 M&A Veritas Capital DXC State & Local HHS DXC Technology $1,400 undisc. undisc. $5,000 3.6 x undisc.
Feb-20 M&A SAIC Unisys Federal Unisys $689 $92 13.4% $1,200 1.7 x 13.0 x
Dec-19 M&A Dynetics Leidos Private $1,000 undisc. undisc. $1,650 1.7 x undisc.
Nov-19 M&A PAE Gores Holdings (SPAC) Platinum Equity $2,739 $145 5.3% $1,550 0.6 x 10.7 x
AECOM Managed LG / American
Oct-19 M&A AECOM $3,700 $200 5.4% $2,400 0.6 x 12.0 x
Services Securities
Apr-19 M&A KeyW Jacobs Engineering Public $495 $39 7.8% $921 1.9 x 23.8 x
Mar-19 M&A LGS / Mastadon CACI Madison / CoVant $480 $82 17.1% $835 1.7 x 10.2 x
Sep-18 M&A Engility SAIC Public $1,917 $178 9.3% $2,450 1.3 x 13.7 x
Jun-18 IPO Perspecta IPO Veritas Capital $4,200 $683 16.3% $4,422 1.1 x 6.5 x
May-18 M&A PWC Public Sector Veritas Capital PWC $451 $60 13.3% undisc. undisc. undisc.
Apr-18 M&A General Dynamics CSRA Public $5,064 $841 16.6% $9,871 1.9 x 11.7 x
Feb-18 M&A ECS Federal On Assigment Private/LG $586 $70 12.0% $775 1.3 x 11.0 x
Apr-17 M&A Harris IT Services Veritas Capital Harris Corp $1,070 $86 8.0% $690 0.6 x 8.1 x
Aug-16 M&A LM IS&GS Leidos LM $5,140 $488 9.5% $4,600 0.9 x 9.4 x
Feb-16 M&A L-3 NSS CACI L-3 $1,032 $68 6.6% $561 0.5 x 10.6 x
Nov-15 IPO CSRA IPO CSC $5,459 $909 16.7% $8,207 1.5 x 9.0 x
Aug-15 M&A SRA SRA International CSCGov $1,400 $196 14.0% $1,390 1.0 x 10.6 x
Aug-15 M&A Novetta Carlyle ACP undisc. undisc. undisc. undisc. undisc. undisc.
May-15 M&A Websense Raytheon Vista Equity $375 $75 20.0% $2,300 6.1 x 30.7 x
May-15 M&A Exelis Harris Public $3,277 $515 undisc. $4,730 1.4 x 9.2 x
May-15 M&A Scitor SAIC LG&P $604 $91 15.0% $961 1.6 x 10.6 x
Feb-15 M&A TASC Engility KKR/GA $1,100 $90 undisc. $1,100 1.0 x 12.2 x
Nov-14 M&A Blackbird Raytheon Private undisc. undisc. undisc. $420 undisc. undisc.
Sep-14 IPO Vectrus IPO Exelis $1,245 $69 5.5% $219 0.2 x 3.2 x
May-14 M&A QinetiQ NA Vencore QinetiQ $740 $38 5.1% $215 0.3 x 5.7 x
Sep-13 IPO Leidos IPO SAIC $6,307 $822 13.0% $4,773 0.8 x 5.8 x
Source: Capital IQ, PitchBook, FactSet, and Capstone Research
6
Government IT Services | May 2021
MIDDLE MARKET M&A: STRATEGIC
IMPERATIVES FUEL LATER YEAR RECOVERY
The acceleration of widespread IT modernization Quarterly Transaction Volume
over the course of 2020 resulted in new
imperatives for executives and investors to access 45
emerging capabilities that are increasingly 40
Number of Transactions
required to drive innovation in the Government
market. As a consequence, after a brief hiatus due 35
29
to the initial COVID surge, M&A activity picked up 30
in the second half of the year, culminating in a 25 22 21
robust fourth quarter that witnessed 29
transactions in the sector, a near record. This 20
activity has continued into the first quarter of 2021, 15 13
on pace with the Q1 2020. 10
10
Viewed with an historical lens, the recovery of the 5
M&A market in the second half of 2020 was 0
dramatic enough to bring the year’s volume to 1Q20 2Q20 3Q20 4Q20 1Q21
near record levels, with 74 Government IT and
services middle market transactions
consummated. Deal activity in year-to-date 2021 Annual Transaction Volume
indicates the prevailing trend has taken hold:
aggressive, growth-oriented firms are buying into 140
the fast currents defining the outlines of a new
industry structure. 120
Number of Transactions
100
When we analyze completed deals by buyer type, 84
78 74
we note the aggressive involvement of strategic 80
59 63
acquirers and private equity groups with sector
60 52
specialization. Non-traditional acquirers from
outside the industry receded amid uncertainty and 40
weaker valuations of publicly traded peers.
20
Active strategic buyers comprised 62% of
0
acquirers from January 2020 to March 2021. These
included Leidos’ acquisitions of Gibbs & Cox and 2016 2017 2018 2019 2020 1Q21
Ann.*
1901 Group; Vectrus’ (NYSE:VEC) acquisitions of
Zenetex and HBB Systems; Tetra Tech’s
(Nasdaq:TTEK) acquisitions of BlueWater and
Segue Technologies; and ManTech’s (Nasdaq: Buyer Breakdown
MANT) acquisitions of Tapestry Technologies and January 2020-March 2021
Minerva Engineering.
5%
Specialized private equity (PE) accounted for a
third of deal volume, including deals by PE-backed Strategic
portfolio companies. The most active PE firms 20%
Financial
were AE Industrial Partners (acquiring Linkware,
PCI, Greenzone, and Ambit Group), the Carlyle PE-Backed
Group (acquiring Two Six Labs and IST Research), Diversified 13% 62%
DC Capital-backed Owl Cyber Defense (acquiring
Trident and Tresys), Veritas (acquiring Northrop’s
Federal IT business), Arlington Capital-backed
BlueHalo (acquiring Fortego and Base2), and *Annualized
Enlightenment Capital (acquiring Hart and Artlin Source: Capital IQ, Company earnings reports and
press releases, Capstone research
Consulting).
7
Government IT Services | May 2021
MIDDLE MARKET M&A (CONTINUED)
We have discussed at length in years past the utility of looking past the macroeconomics of the overall
industry, as stable as it is (the Fiscal Year 2021 budget increases topline IT spending at least $1.5 billion over FY
2020 levels of $116 billion1) to the segments that exhibit the highest growth in real terms. Never has this been
more true than at the present time, as renewed energy is applied to governmentwide modernization and next
generation IT systems drive business process innovation.
The expertise required to drive sustained transformation, as ever, is resident in the highest performing middle
market businesses. The majority of these private enterprises are either founder owned or backed by private
equity and venture capital investors committed to the sector. It will come as no surprise then, that the middle
market transactions closed in 2020 directly reflect IT modernization priorities. The powershift focused the
acquisition lens over the past year and buyers became more selective.
Targeted segments comprised:
1. Diversified IT services. Firms that possess a complete suite of IT services and include areas of primary
emphasis including Software as a Service, IT-as-a-Service, cloud and distributed computing, data
analytics, and cybersecurity dominate the deal population and represent the maturation of the space in
response to ubiquitous demand for broad-based IT modernization and the automation of agency
processes and workflows. Companies in this population also hold coveted contract slots on prime
vehicles and strategic Government Wide Acquisition Contracts (GWACs) increasingly favored by
acquisition executives. These deals represented 42% of the middle market transactions closed over the
past five quarters.
2. Cloud computing. Growth estimates for federal spending on cloud computing are 10% per annum, with
total investment eclipsing $8.5 billion by FY20232. The adoption of distributed architectures
necessitated by Work From Home (WFH) mandates over the past year will likely result in even larger
investments. Firms that specialize in transitioning workflows based on fundamental understanding of
native business processes, and the application of cloud technologies to existing systems, are in high
demand. Through 2020 and year-to-date 2021, 13% of sector middle market deals were specialty cloud
computing, provisioning, engineering, and consulting firms.
M&A Transactions by Subsector
January 2020-March 2021
Cyber
9%
Diversified IT
Services Cloud Computing 13%
42%
Intelligence
19%
Software 13% Healthcare IT
4%
Source: Capital IQ, Company earnings reports and press releases, Capstone research
8
Government IT Services | May 2021
MIDDLE MARKET M&A (CONTINUED)
3. Intelligence operations and support. The contracting approaches taken by the Intelligence
Community (IC) support innovation within its contracting base by right-sizing technology-based
contracts for emerging firms. These firms leverage security credentials and unique technical expertise
to win coveted prime contracts. The FY2021 budget request maintains $85 billion in spending across the
17 intelligence agencies3. Intelligence firms made up 19% of the deals since January 2020 and remain an
area of high interest.
4. Agile software and AI/ML. Agile software development, machine learning (ML) and artificial intelligence
(AI) are evolving rapidly to embrace the sophistication of real-world applications, including the messy
business of interfacing with arcane legacy systems and processes. As automation matures and
engineering discipline is applied to ML operations (MLOps), these capabilities are becoming
transformative to a broader set of constituents. The pressing need to “do more with less” is driving
investment in AI; federal spending growth estimates exceed 50% annually4. Specialty software
development firms with these capabilities accounted for 13% of transactions over the past five quarters.
5. Cybersecurity and operations. As distributed computing networks expand, federal government attack
surfaces necessarily proliferate, amplifying risk. Cybersecurity has been one of the fastest growing
segments within the federal IT budget for the past decade. While the FY2021 budget request for
unclassified cybersecurity represents a modest decline to $18.8 billion5, we anticipate this to increase
significantly via supplemental funds. Offensive and classified cybersecurity spending represent
additional opportunities for well-positioned contractors. These companies comprised 9% of middle
market transaction volume since the beginning of 2020. It should be noted that many of the firms in the
Diversified IT Services category also offer sophisticated cyber capabilities.
2021 M&A OUTLOOK: ROBUST & HIGHLY TARGETED
As of this writing, the Biden administration has not yet released its detailed budget request for FY2022, which
is expected within weeks. The markets have already priced in relative weakness in defense spending (DoD
accounts for two thirds of total federal IT spending), due to: (i) competing Democratic domestic priorities, and
(ii) increasing pressure on discretionary accounts as the bill comes due for $5.3 trillion in pandemic stimulus.
We have a moderated view as history does not support the easy narrative of a Democratic White House
deemphasizing defense and understand the administration to hold conventional views of international
engagement. This last was on display as Secretary of State Antony Blinken’s confronted his Chinese
counterpart during his first official trip to Asia last month. Regardless of the push and pull of domestic politics,
the threat environment is likely to define the mid-term outlook for defense.
While it is early days, there are indicators of what to expect in the coming year, and they point to a deepening
of the developments that drove consolidation in the sector over the latter half of 2020. As the powershift
extends, trends to watch include:
1. Sustained commitment to IT modernization, including civilian agencies. The incoming administration
sent a strong signal on its commitment to modernization by funding the Technology Modernization Fund
(TMF) at $1 billion as part of the 2021 stimulus bill. This investment represents a 3,900% increase over
the paltry $25 million annual budget the program has received since its creation in 2017. Powerful Hill
Democrats had asked for $9 billion. Discussion of delaying and/or suspending repayment obligations will
accelerate the deployment of funds to bring modernization across the federal government’s arcane and
disparate legacy systems. Additional incremental investments include $200 million for the U.S. Digital
Service, $150 million for the Federal Citizen Services Fund and $25 million for Agriculture to expand
mobile access. $100 million is also allocated to state workforce agencies for fraud prevention and the
Department of Labor is using supplemental funds to upgrade systems recently tested by the need to
support extended unemployment benefits payments for prolonged periods of time.6
9
Government IT Services | May 2021
2021 M&A OUTLOOK: ROBUST & HIGHLY TARGETED
2. Emerging technologies. Not limited to AI, MLOps engineered to bring automation to business
processes and Robotic Process Automation (RPA) to enhance the efficiency of the government
workforce, will proliferate. Agile software development, cloud computing, and IT- and Software-as-a-
Service will streamline workflows and connect collaborating, but geographically dispersed, organizations.
Advances in data processing and analytics will empower decision-making in compelling ways.
3. Continued investment in cyber. While the outgoing administration’s FY2021 budget request for
unclassified cybersecurity was flat, the classified investment in both offensive and defensive cyber
remains among the highest bipartisan investment priorities. The Biden administration communicated its
support by allocating an additional $650 million for DHS’ Cybersecurity and Infrastructure Agency
(CISA) as part of the American Rescue Plan.7 We anticipate the FY2022 budget will contain substantial
investments in cyber operations to assure competitiveness within this rapidly evolving, increasingly
strategic, battlespace.
4. Primacy of GWACs. Annual contract obligations funded through governmentwide vehicles have
expanded from $12 billion in FY2010 to more than $20 billion in FY20208. The flexibility that these
vehicles offer government acquisition officials is now a part of the industry’s firmament. Accordingly,
these vehicles will continue to be utilized for transformational projects. Holders of coveted slots on
these vehicles that are not restricted by size or other award basis present strategic value.
5. Strong, effective leadership driving CMMC. In response to multiple high profile, and many more low
profile, but very damaging, data breaches within the U.S. defense industrial base, the DoD unveiled its
long-awaited Cybersecurity Maturity Model Certification (CMMC) in summer 2019. How the framework
will be instituted effectively has been a bit of question mark until just a few days ago, when long-time
friend and former client Matthew Travis (Capstone represented the firm he founded, Obsidian, in its sale
to the Cadmus Group in 2016) was named CEO of the CMMC Accreditation Body (CMMC-AB). Travis
comes to the organization after serving as Deputy Director for DHS Cybersecurity and Infrastructure
Agency (CISA). We could be not be more confident that his experience, both in industry and
government, and his leadership will chart a clear path to a safeguarded industrial base.
As we close these pages, we reflect on the challenges our community has faced over the past year, both
personal and professional. As ever, we marvel at the ingenuity of the entrepreneurs, innovators, and disrupters
we are privileged to represent. For these renegades, who are focused on transforming the business of
government, assuring tactical mission succuss, and preserving and extending our national competitiveness in
cyberspace, the capital markets remain accommodating. Our active M&A processes are extremely
competitive, resulting in enduring partnerships and record valuations. As we enter a season of renewal,
Capstone stands prepared to assist you in realizing your most ambitious goals.
10Government IT Services | May 2021
GOVERNMENT IT SERVICES REPORT CONTRIBUTORS
David Brinkley
Managing Director
dbrinkley@capstonepartners.com | 917-817-0375
David brings 20 years of experience executing over $1 billion in strategic transactions
for middle market firms in the Aerospace, Defense, and Government sectors. David is
widely recognized for his industry expertise, which encompasses intelligence and
national security activities and applied advanced technologies. In addition, David holds
unique security credentials that enable him to advise on the most sensitive
government transactions. David also serves as a subject matter expert to the Office of
the Secretary of Defense on matters pertaining to the financial health of the U.S.
defense industrial base and on Pentagon-sponsored technology investments. Prior to
joining Capstone Partners, David founded Castellum Capital Advisors, a boutique
investment bank providing advisory services to middle market firms engaged in the
national security sector. Castellum Capital served as exclusive financial advisor on
several high-profile transactions, including large scale corporate divestitures and niche
intelligence acquisitions. Prior to founding Castellum Capital, David served as Managing
Director of Aronson Capital Partners, where he managed the firm’s buy and sell-side
investment banking engagements. While at Aronson Capital, David completed
transactions featuring prominent government services and technology firms active in
international security, intelligence, and defense, with publicly-traded firms based both
in the U.S. and internationally, and with leading private equity sponsors. He obtained his
BS in International Relations from Georgetown University’s School of Foreign Service
and an MBA in Finance from Columbia University. He is a Series 63 Registered Uniform
Securities Agent and a Series 79 Registered Investment Banking Representative.
Ted Polk
Managing Director
tpolk@capstonepartners.com | 708-921-8961
Ted is a Managing Director at Capstone, based out of Chicago. Previously, Ted was
also a Managing Director in Morgan Stanley’s Capital Strategies Group and with Citi
Capital Strategies. He has over 25 years of transactional experience in various service
and product categories, such as training and simulation. Transactions he has led have
been the recipient of multiple industry awards including Cross-Border Middle-Market
Deal of the Year, Middle-Market M&A Financing Deal of the Year, Middle-Market Deal of
the Year, Professional Services Deal of the Year, Corporate M&A Deal of the Year and
USA Recapitalization Deal of the Year. Previously, Mr. Polk worked at Valuemetrics, Inc.
and in the Corporate Banking Group at The Bank of New York. Ted received his BSBA
degree from Georgetown University and MBA from the University of Chicago. He is a
Chartered Financial Analyst (CFA), a Series 7 and 63 Registered Securities
Representative, and a Series 24 Registered Securities Principal.
2020 2020 2020 2020 2019
MID-MARKET MIDDLE MARKET CORPORATE
INVESTMENT BANKING INVESTMENT BANKING
INVESTMENT BANKING INVESTMENT BANK RESTRUCTURING
FIRM OF THE YEAR FIRM OF THE YEAR
FIRM OF THE YEAR OF THE YEAR FIRM OF THE YEAR
INTERNATIONAL AWARDS
11Government IT Services | May 2021
FIRM TRACK RECORD
HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY
AN UNDISCLOSED
STRATEGIC BUYER
HAS PARTNERED WITH HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY
Command System, Inc.
HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY
“ The entire Capstone team made a tremendous effort to understand the
uniqueness of SCI and provide the appropriate guidance and advice that directly
”
attributed to maximizing the value of the acquisition.
John Ashton,
General Manager & Executive VP of SCI
12Government IT Services | May 2021
ENDNOTES
1. Alex Rossino, GovWin IQ, “Federal Information Technology Market, 2020 – 2022 – GovWin IQ,” https://iq-
govwin.com/neo/marketAnalysis/view/Federal-Information-Technology-Market-2020-2022/, accessed March 9,
2021.
2. Frank Konkel, Nextgov, “Federal Cloud Spending Tops $6.6 Billion,” https://www.nextgov.com/it-
modernization/2021/02/federal-cloud-spending-tops-66-billion/171865/, accessed March 10, 2021.
3. Congressional Research Service, “Defense Primer: Budgeting for National and Defense Intelligence,”
https://crsreports.congress.gov/product/pdf/IF/IF10524, accessed March 10, 2021.
4. Jon Harper, National Defense Magazine, “Federal AI Spending to Top $6 Billion,”
https://www.nationaldefensemagazine.org/articles/2021/2/10/federal-ai-spending-to-top-$6-billion, accessed
March 10, 2021.
5. John Skye, Gov Win IQ, “The FY 2021 Budget Sustains Cybersecurity Funding, But Could Growth Be Slowing,”
https://iq.govwin.com/neo/marketAnalysis/view/The-FY-2021-Federal-Budget-Sustains-Cybersecurity-Funding-
But-Growth-Could-Be-Slowing/, accessed March 9, 2021.
6. Jason Miller, Federal News Network, “Technology Modernization Fund on Track to Receive Biggest Pay Day Ever,”
https://federalnewsnetwork.com/reporters-notebook-jason-miller/2021/Technology-modernization-fund-on-
track-to-receive-biggest-pay-day-ever/, accessed March 29, 2021.
7. Natalie Alms, Justin Katz, Adam Mazmanian, Federal Computer Week, “Biden Signs Rescue Bill, Boosting TMF and
Adding Pandemic Relief for Feds,” https://fcw.com/articles/2021/03/12/rescue-act-recap-biden-signs.aspx
8. Daniel Snyder, Bloomberg Government, “Federal Contract Spending: Five Trends in Five Charts,”
https://about.bgov.com/news/federal-contract-spending-five-trends-in-five-charts/, accessed March 9, 2021.
Common Goals. Uncommon Results.
Disclosure
This report is a periodic compilation of certain economic and corporate information, as well as completed and announced merger and
acquisition activity. Information contained in this report should not be construed as a recommendation to sell or buy any security. Any
reference to or omission of any reference to any company in this report should not be construed as a recommendation to buy, sell or
take any other action with respect to any security of any such company. We are not soliciting any action with respect to any security
or company based on this report. The report is published solely for the general information of clients and friends of Capstone
Partners. It does not take into account the particular investment objectives, financial situation or needs of individual recipients.
Certain transactions, including those involving early-stage companies, give rise to substantial risk and are not suitable for all investors.
This report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not
be relied upon as such. Prediction of future events is inherently subject to both known and unknown risks and other factors that may
cause actual results to vary materially. We are under no obligation to update the information contained in this report. Opinions
expressed are our present opinions only and are subject to change without notice. Additional information is available upon request.
The companies mentioned in this report may be clients of Capstone Partners. The decisions to include any company in this report is
unrelated in all respects to any service that Capstone Partners may provide to such company. This report may not be copied or
reproduced in any form or redistributed without the prior written consent of Capstone Partners. The information contained herein should
not be construed as legal advice.
13Capstone Partners is one of the largest and most active independently-owned
investment banking firms in the United States. Over the past 20 years, thousands
of business owners, investors, and creditors have trusted us to help guide their
strategic decisions and maximize financial outcomes at every stage of the
corporate lifecycle.
MIDDLE FULL SUPERIOR TOP ESTABLISHED
MARKET SERVICE CLIENT RANKED BRAND
FOCUS CAPABILITIES RESULTS PERFORMANCE REPUTATION
A DIFFERENT KIND OF FIRM. BUILT FOR THE MIDDLE MARKET.
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capstonepartners.comMarket Presence
With a long-established U.S. footprint, together with an international partner
platform, we provide clients with broad expertise and access to key market
relationships on a global basis. Our presence is backed by ~200 professionals in the
U.S. with 450+ professionals across 43 countries.
218 $12.5B 30% 6th
M&A transactions aggregate of our deals globally ranked for
completed in 2020 transaction value are cross- deals under $500m
border
$65.1M 51 65%
average deals involving foreign completed with a
transaction private equity firms European partner
value
United States International
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