2017 Review and 2018 Outlook - Aerospace, Defense Technology & Government Services 2017 Review - Aronson Capital Partners

 
CONTINUE READING
2017 Review and 2018 Outlook - Aerospace, Defense Technology & Government Services 2017 Review - Aronson Capital Partners
2017 Review and 2018 Outlook
                 Aerospace, Defense Technology &
                 Government Services
                 2017 Review
                 Commercial Cloud Adoption Gaining Further Traction
                 Active M&A Participation Across the Buyer Landscape
                 2018 Outlook
                 Notable Transactions
                 Public Company Comparables & Recent M&A Transactions
                 Representative ACP Transactions

       Larry A. Davis                               Philip J. McMann                                    Mark Shaheen
             Partner                                        Partner                                    Managing Director
         (301) 231-6225                            (301) 231-6202                                     (301) 222-8227
ldavis@aronsoncapitalpartners.com          pmcmann@aronsoncapitalpartners.com                mshaheen@aronsoncapitalpartners.com

     805 King Farm Boulevard, Suite 300 | Rockville, Maryland 20850 | P 301.231.6200 | F 301.231.7630 | aronsoncapitalpartners.com
2017 Review and 2018 Outlook - Aerospace, Defense Technology & Government Services 2017 Review - Aronson Capital Partners
2017 Review
2017 M&A Recap
A total of 98 M&A transactions were announced in the defense technology and government services market in 2017,
which was an increase in comparison to transactions completed in the prior year, but slightly lower than 2015. M&A
deal count in 2017 further validated Aronson Capital Partners’ reference in the 2016 M&A Recap regarding the
normalized level of deal activity that has occurred since the flurry of activity in 2015.

              Defense Technology & Gov't Services Historical M&A Deal Volume
                      105                                        107                                     Foreign
        101                                                                                   98
                                     90                                         92
                                                   86
                                                                                                         New PE
                                                                                                         Platform

                                                                                                         PE-Backed

                                                                                                         Private

                                                                                                         Public

       2011           2012          2013          2014           2015          2016          2017

Despite normalizing to historical levels, the industry continues to ride the positive momentum brought on by President
Trump’s budget proposal plans, which called for an increase in funding for a number of agencies including but not
limited to the Department of Defense (9.0%+ y-o-y increase), Department of Homeland Security (7.0%+ y-o-y
increase) and Veteran Affairs (6.0%+ y-o-y increase). Furthermore, the Administration pledged to make cybersecurity
a major priority for both the public and private sectors, with a heavy reliance on government contractors developing
innovative methods and technologies.

In addition, the 2018 National Defense Authorization Act, including the Modernizing Government Technology (MGT)
Act, was signed at the end of 2017 and will be a year-plus effort allowing federal agencies to reprogram unused IT
budget allocation to fund future modernization projects. This is an important step forward to a next-generation (Next-
Gen) federal government focused on enabling the movement to the cloud, implementing shared services and improving
cyber defenses. The improved efficiencies from the MGT Act will authorize agencies to modernize their legacy IT
systems, better protect data from cyber-attacks and ultimately save billions in taxpayer dollars by reducing long-term
spending.

Commercial Cloud Adoption Gaining Further Traction

Spurred by a productive summer visit to the West Coast in August of 2017, the Defense Department’s top executives
are continuing to push the implementation of cloud computing services offered by a host of vendors including Amazon
(AWS), Microsoft (Azure), IBM (Watson), systems integrators and a cadre of other providers. The trip prompted the
creation of the Defense Department Cloud Executive Steering Committee to speed up cloud adoption, and the group
released a RFI for how the Pentagon might “acquire a modern enterprise cloud services solution” to support
unclassified, secret and top secret information, more specifically as it relates to elastic computing, data management
and analytics, cybersecurity and machine learning.
2017 Review
                                The August meeting seemed to have a positive impact, as Amazon Web Services
                                (AWS) announced the AWS Secret Region in November 2017, which will allow the
                                Intelligence Community to execute their mission with a common set of tools, a constant
                                flow of the latest technology and the flexibility to rapidly scale with the mission. This
                                is a follow-on to the Top Secret Region, which was launched three years ago. The new
Secret Region allows more agency collaboration, helps get critical information to decision makers faster and enables
an increase in the nation’s security.

                               In October of 2017, Microsoft announced they would expand their Azure Government
                               Secret offering outside of the Defense Information System Agency’s cloud security
                               requirements and offer the service to a number of agencies working on topics classified
                               as “Secret” in fields like energy research or law enforcement. This will allow for greater
                               access to cloud computing services like artificial intelligence and translation.

Active M&A Participation Across the Buyer Landscape

The positive funding environment and continued emphasis on enhancing legacy IT systems has translated into a
heightened level of confidence and active participation throughout the M&A marketplace, driven mainly by (i) private
equity sponsors (PEGs) acquiring platforms of scale and/or “bolting-on” niche companies with differentiated
capabilities (ii) larger Tier-1 and Mid-Tier’s selectively pursuing companies with emerging, Next-Gen IT capabilities
that align with mission-critical objectives (e.g., cloud, cyber, mobile, agile development, digital transformation
services, artificial intelligence), and (iii) strategic buyers targeting companies that round out their technical capabilities
and/or expand their client footprint into high priority end markets (e.g., Department of Defense, Department of
Homeland Security, Veteran Affairs).

                                                           As referenced in Aronson Capital Partners’ Mid-Year
               Historical Buyer Mix                        Review, PEGs continue to be the most active buyers in the
                  4%                      11%
                 12%                                       defense technology and government services market,
                                          16%              comprising 36% of transactions in 2017. This was
                 21%                                       followed by publicly-traded companies making
                                          20%              strategically    targeted     acquisitions     focused     on
                 28%                                       differentiated capabilities (e.g., cloud, cyber, mobile, agile
                                          26%              development, digital transformation services, artificial
                                                           intelligence). Acquisitive buyers in 2017 included
                 35%                                       seasoned private equity groups such as Arlington Capital
                                          27%
                                                           Partners, H.I.G. Capital, Enlightenment Capital, DC
                 2016                     2017             Capital and Acorn Growth Companies. Publicly-traded
    Public Private PE-Backed New PE Platform Foreign       companies like Accenture, CSRA, DXC Technology,
  Source: DACIS and ACP internal research                  Mercury Systems, Jacobs Engineering, Mantech
Corporation and L3 Technologies also acquired companies with targeted capabilities that will enhance their overall
service offerings. M&A activity from private equity sponsors, public, and privately held strategic acquirers over the
past year bodes well for the industry as it signals renewed confidence in the overall growth prospects of the federal
market. Outlined on the subsequent pages are the major deals of 2017 across the buyer landscape.
2017 Review
Private Equity Sponsor Participation

Arlington Capital Partners continues to build out its portfolio company, Polaris Alpha, acquiring Intelesys and
Solidyn Solutions, Inc. in January and September of 2017. Intelesys and Solidyn offer expertise in next-gen
capabilities related to cyber and C4ISR within the highly coveted Department of Defense and Intelligence Community.
In addition to shaping Polaris Alpha into a full-spectrum solutions provider, Arlington Capital Partners acquired
another platform company, Xebec Corporation, from seasoned private equity investor CM Equity in October of
2017. Arlington Capital Partners plans to invest additional capital into the business to support the growing demand for
enterprise IT, training and role-playing subject matter expertise to special mission support programs.

On the heels of H.I.G. Capital’s $283M take-private transaction of NCI, Inc., the private equity group acquired
Whitney, Bradley and Brown (WBB), a leading provider of program management and consulting services to the
Department of Defense and other federal agencies. This marks H.I.G.’s second relevant acquisition in under six
months, solidifying their increased appetite for investments in the defense technology and government services
industry. H.I.G. will work with the NCI and WBB teams to expand both portfolio companies’ capabilities through
organic investments and complementary acquisitions in adjacent end markets.

Enlightenment Capital has had a busy 2017, especially after the fund’s successful exit of Vistronix Intelligence &
Technology Solutions in August of 2016, and subsequent closing of an oversubscribed, $147 million fund in
November of 2016. Enlightenment further exemplified the fund’s commitment to the industry by announcing four new
investments in a variety of technology and government service providers including managed IT services provider 1901
Group, Inc., continuous security-assurance provider Telos Corporation, strategic management consulting firm The
Cadmus Group, and professional and managed services provider Cybercore Technologies.

DC Capital Partners started the year with an addition to its cyber defense portfolio with the acquisition of Owl
Computing Technologies. Owl Computing will combine with DC Capital’s 2016 acquisition, QRC Technologies,
under Acuity Technologies Holding Company. The formation of Acuity signals DC Capital’s commitment to
expanding its cyber portfolio in 2018 and beyond. DC Capital had an eventful year end as well with the acquisitions
of Rocky Research and Janus Operations. Rocky Research provides customized engineering services to commercial
and federal defense customers, specializing in thermal and heat management. Janus is a provider of integrated stability
operations to public and private sectors worldwide, Janus was previously owned by Sterling International Group.

After acquiring Telecommunication Support Services, Inc. (TSS) in July, Acorn Growth Companies continued to
grow its presence in the DoD with the acquisition of CIS Computing. CIS is a provider of secure communications
and computing solutions previously owned by Bluestone Investment Partners. In addition, Acorn Growth Companies
had a successful exit of Commuter Air Technology to Meta Aerospace. Commuter Air Technology specializes in
integrated solutions for the global ISR market specifically in support of US Special Operations Forces in austere
environments.

Targeted Acquisitions by Strategic Acquirers

Chenega Corporation, an Alaskan Native-owned firm, acquired Antkowiak Design Group, Inc. (ADG) in mid-
December. ADG is a provider of communications and digital transformation solutions to the federal government.
Chenega plans to integrate the Company’s capabilities and experience into its Military, Intelligence and Operations
Support (MIOS) business unit.
2017 Review
Xator Corporation has been relatively acquisitive in the federal contracting space over the past five years. In
December, they continued that pattern with the acquisition of Merlin International’s Professional Services Group.
The acquisition fits into Xator’s overall plan of building a robust set of cybersecurity solutions for the federal
government.

In an attempt to more aggressively pursue the federal IT market, TeraThink merged with Dominion Consulting in
November. The surviving entity, TeraThink, will provide a wide-range of strategic IT solutions to the federal
government, including both defense and civilian industries. One of the major strategies behind the merger is to utilize
each companies’ agile development capabilities. Agile development continues to be one of the most valuable
contractor skillsets in federal IT.

SOS International (SOSi) has entered the M&A realm by making significant acquisitions in each of the last two years
to strategically position themselves in the Intelligence Community. In September, SOSi added Defense Group Inc.
(DGI) to their Intelligence Solutions Group. DGI provides data analytics and cybersecurity to first responders and
homeland defense. The Company also develops mission-specific software. DGI is a follow-up to SOSi’s acquisition
of intelligence contractor New World Solutions in 2016.

Buchanan & Edwards Inc., a technology leader creating transformative solutions for government customers,
announced that it has acquired The Reports and Requirements Company (R2C) LLC, a government services
provider offering national security-focused consulting services in intelligence collection, training support and data
governance and analysis. With this acquisition and the addition of R2C’s advanced capabilities in front-end data
governance and curation, BE’s offering will expand to include a full life cycle of analytics solutions to support
government customers across the spectrum of national security including defense, diplomatic corps, homeland
security, law enforcement and the Intelligence Community.

Selective Acquisitions by Larger Public Companies

Accenture has acquired more than ten companies in the past five years making them one of the most acquisitive buyers
in the federal space. 2017 was no different with acquisitions of Phase One Consulting Group and a business unit of
Endgame, Inc. Both companies expand Accenture’s IT capabilities; Endgame provides endpoint detection and
response cybersecurity software for the government while Phase One specializes in modernization and digital
transformation for federal agencies. Both companies will be merged into Accenture’s Federal Services practice which
has integrated six acquisitions in the past five years alone.

After the massive strategic merger of CSC’s public sector business and SRA International in 2015, CSRA remained
inactive in M&A until mid-2017. In July, the federal IT provider added NES Associates, LLC to the Company’s
Defense and Intelligence Segment. NES has experience providing IT infrastructure support at over 400 DoD sites
worldwide. NES has experienced rapid growth since 2012 mostly due to its access to the CIO-SP3 vehicle. Although
the vehicle is small business restricted, there is still five years remaining on the IDIQ and the contract has aided NES
in creating new client relationships.

Later in October, CSRA made its first acquisition in the Intelligence Community with the acquisition of Praxis
Engineering Technologies. Praxis’ 350+ employees provide software and system engineering technologies. The
acquisition enables CSRA’s ability to gain access to Praxis’ Technical Information Engineering Services (TIES)
vehicle.
2017 Review
14 months after the announcement of the merger of CSC with Hewlett Packard’s Enterprise Services segment, and
just four months after the official merger, the newly formed DXC Technology, Co. made its first acquisition.
Tribridge Holdings, LLC is one of the largest independent integrators of Microsoft Dynamics 365. Tribridge’s 740
employees provide enterprise software services across North America and Europe. The acquisition expands DXC’s
capabilities servicing private, public and hybrid cloud infrastructures for clients in the private and public sectors.

Not long after the Tribridge acquisition, DXC was part of another significant merger. DXC announced that a company
created from its spun-off U.S. Public Sector (USPS) business will combine with two Veritas Capital portfolio
companies. Vencore Holding Corp. and KeyPoint Government Solutions have provided services to the federal
civilian defense markets for decades. Vencore provides information solutions, cyber security, engineering and
analytics to the federal government through its 3,750+ employees. KeyPoint has over 3,500 employees that provide
investigative services to a broad range of organizations in the defense, intelligence and civilian sectors. With the merger
of the three companies DXC has become one of the top services providers in the federal government with a broad
portfolio of service offerings. Veritas Capital will remain as an investor in DXC.

Over the past three years Mercury Systems has added three acquisitions to its Mercury Defense Systems (MDS)
division, further expanding its already massive service offering in defense electronics. In April, MDS boosted its RF
capabilities with the acquisition of Delta Microwave, LLC, a designer and manufacturer of high-value radio
frequency (RF), microwave and millimeter wave subassemblies and components for the military, aerospace and space
markets. At the end of the year, MDS made an aggressive investment into the Command, Control, Communications,
Computers and Intelligence (C4I) market with the addition of Themis Computer. Themis is a designer, manufacturer
and integrator of computer hardware for US and international defense programs. Both Themis and Delta Microwave
provide Mercury a significantly expanded capability and customer set in a rapidly growing electronic warfare market.

Jacobs Engineering had an active summer, announcing the acquisitions of CH2M HILL and Blue Canopy in August.
CH2M provides design, engineering and program management services to key infrastructure projects in the
government sector. Jacob’s will leverage CH2M’s technical expertise against its global presence to provide a
significantly wider array of services to both the government and private sectors. Weeks after the CH2M announcement
Jacobs showed its desire to diversify with the acquisition of Blue Canopy. Blue Canopy provides custom cybersecurity,
data analytics and application development to various federal agencies, including healthcare and intel. Blue Canopy’s
experience in the Intelligence Community figures it as an apparent follow-up to Van Dyke Technology Group,
Jacobs’ first IC acquisition in early 2016, but Blue Canopy also has an extensive foothold in the healthcare space with
work at CMS among other agencies.

Mantech Corporation continues to use inorganic growth to remain on the forefront of providing services to the federal
government. In September, the Company added InfoZen to its Mission Solutions and Services (MSS) division.
InfoZen provides IT solutions to DHS, NASA and various other federal civilian agencies. The acquisition expands
Mantech’s IT service portfolio, including a specialization in agile development. Furthermore, in late December
Mantech released its growth plan via the Company’s website seeking to grow the Company’s revenues to at least
$2.5B in 2020 and views M&A as a key component of the Company’s growth strategy. Kevin Phillips, Mantech’s
newly appointed CEO, stated they will pursue targeted acquisitions, to build out key capabilities that help address
emerging IT areas as well as key customers. In addition, Phillips believes federal civilian work will grow incrementally
because “homeland security is as important as national security”.
2017 Review
At the start of 2018, Chris Kubasik will take over as CEO of L3 Technologies. During the Company’s 2017 Investor
Conference on December 5th, Kubasik stated the Company made six acquisitions during the past 24 months (including
Adaptive Methods, Openwater Power and OceanServer in 2017) and is currently evaluating over two dozen
companies worth about $2.0B in total sales. Kubasik believes with this robust pipeline, L3 Technologies is confident
they will close four to six deals next year, all of which will be strategic, with the goal of “putting the pieces together
to move up the food chain”.
2018 Outlook
2018 M&A Outlook
Several trends are surfacing that will drive continued deal flow in 2018. Expect to see continued M&A interest in
companies providing next-gen technologies (e.g., cloud, cyber, mobile, agile development, digital transformation
services, artificial intelligence). Continued adoption by the government of commercialized IT will drive demand for
companies with next-gen technologies and larger companies with access to capital on the balance sheet may target
companies with these differentiated capabilities to move up the “food chain”. The recent announcement of Amazon
Web Services (AWS) Secret Region offers the Intelligence Community a solution with Top Secret-level security and
the Pentagon’s recent visit to the West Coast further solidifies the demand for these types of technologies.

2018 is also likely to see continued participation from private equity firms across the government services landscape,
as they continue to get comfortable with the funding outlook and growth prospects. The emergence of this trend is
seen in multiple transformational deals that have occurred in 2017 such as H.I.G. Capital’s acquisition of NCI, Inc. for
$283 million, who holds many multiple-award IDIQ contracts in the services space, and the funds subsequent
acquisition of Whitney, Bradley & Brown Inc. (WBB), a management consulting firm who focuses on process
improvement and organizational efficiencies. These deals are anticipated to set a precedent for future deals; the private
equity presence will be strong in 2018.

Strategic buyers are expected to be active in 2018, as referenced in recent conference calls from larger publicly-traded
government contractors (e.g., Mantech, L3). In addition, recent changes to tax laws could potentially free up cash flow
for public strategic buyers to allocate to M&A efforts. With thriving equity markets and shifts in corporate finance
strategy, do not be surprised if Q1 2018 is a record quarter for M&A announcements for Tier 1 and Mid-Tier companies
as they continue to acquire niche companies with differentiated capabilities that allow them to move up the value chain
into a pure solutions provider.
Notable Transactions
CSRA to acquire Praxis Engineering Technologies, Inc.
On October 17th, CSRA signed a definitive agreement to acquire Praxis Engineering Technologies, Inc. for
$235 million. Praxis Engineering delivers practical applications of software and system engineering to the
Intelligence Community.
Praxis Engineering’s specialties include SOA/Enterprise application development; configuration management;
embedded real-time technologies; automated testing of complex systems; database architecture; IT
infrastructure and network support; and program management.
Praxis president and co-founder, Bill Dunahoo, stated "Combining with CSRA will enable us to accelerate our
growth, provide more opportunities for our employees and significantly increase the value we bring to our
customers' most critical missions. We are very excited to become part of the CSRA family”.
Leigh Palmer, CSRA’s Executive VP of Intelligence, commented “The Praxis culture exemplifies best-idea-
wins and we look forward to leveraging Praxis’s creativity across the rest of the enterprise”.

ACP advises Syntronics, LLC on its strategic sale to General Atomics
Aronson Capital Partners is pleased to announce the acquisition of Syntronics, LLC by General Atomics.
Founded in 2004, Syntronics is headquartered in Fredericksburg, VA. ACP is proud to have served as the
exclusive sell-side M&A advisor to the company on this transaction.

General Atomics is a global leader in the research, design, and manufacture of state-of-the-art electromagnetic
and electric power generation systems. Syntronics prides itself on being a leading developer and manufacturer
of custom electro-mechanical technologies. They specialize in projectile and missile guidance systems, in-flight
and ground based shock resistant instrumentation and related software technologies. This deal will integrate
Syntronics into General Atomics’ Electromagnetic Systems Group (GA-EMS).

“Their level of experience designing and manufacturing sophisticated electronics and telemetry packages that
can withstand High G forces and environments has helped us make significant progress in advancing and testing
our railgun weapon systems” explained Scott Forney, president of GA-EMS.

Blue Canopy Group, LLC acquired by Jacobs Engineering Group, Inc.
On October 31st, Jacobs Engineering Group announced its acquisition of Blue Canopy Group, LLC. Blue
Canopy, who posted $104 million in 2016 revenue, specializes in mission support, cybersecurity, agile
development, cloud computing and data analytics. A winner of the 2016 GovCon Contractor of the Year award,
Blue Canopy delivers critical securities solutions to the national security, civilian, and commercial sectors.
Jacobs Engineering describes the acquisition as "part of ongoing investments to expand Jacobs Connected
Enterprise (JCE) solutions”. Blue Canopy will support JCE’s effort to connect critical infrastructure and protect
data from internal and external threats.
“Combining Blue Canopy’s technology-enabled solutions with the Jacobs Connected Enterprise will accelerate
client adoption around automation, analytics and innovation in commercial, civilian and national security
markets” remarked Brad Schwartz, CEO of Blue Canopy.
Public Company Comparables
Last 12-Month Returns
                          180
                                                       LTM 1/4/2018 Returns

                                               Defense System/Electronics:     55.6%
                          160                  Tier-1:                         34.0%
                                               Aerospace:                      21.7%
                                               S&P:                            19.6%
                           140                 Mid-Tier:                       1.0%
Indexed Performance

                           120

                          100

                              80

                               60
                                 Jan-17                                      May-17             Sep-17                           Dec-17

Last 12-Month Enterprise Value / EBITDA

                                       20.0x

                                       18.0x

                                       16.0x
         Enterprise Value/LTM EBITDA

                                       14.0x

                                       12.0x

                                       10.0x                                                    LTM 1/4/2018 Multiples
                                                                                        Defense System/Electronics :     19.0x
                                        8.0x                                            Tier-1:                          15.1x
                                                                                        Aerospace:                       12.8x
                                        6.0x                                            Mid-Tier:                        12.6x

                                        4.0x
                                            Jan-17                             May-17            Sep-17                          Dec-17
Source: Pitchbook
Mid-Tier Index: BAH, LDOS, CACI, MANT, EGL, ICFI, KEYW, VSEC, NCIT
Tier-1 Index: BA, LMT, GD, RTN, NOC, LLL
Defense Index: COL, LLL, HRS, COB, OA, TDY, FLIR, ULE, CUB, KTOS, MRCY, AVAV
Aerospace: UTX, BA, A, GD, SAF, FNC, ERJ, AM, TXT, B, CAE, PCP, TDG, COL, HO, HXL, TGI, CW, ESL, HEI, MOG.A, ULE
Public Company Comparables
USD in Millions, excluding share prices                                                           EV as a Multiple of
As of 1/8/2018                            Enterprise        LTM          LTM                LTM                      NTM             EBITDA Margin     Revenue Growth
Company                                       Value         Rev.     EBITDA          Rev.    EBITDA           Rev.         EBITDA    CY16A     CY17P   CY16A     CY17P
Mid-Tier Federal Service Providers
Leidos                                    $    12,875   $   10,229   $      928       1.3x        13.9x          1.2x        12.0x     7.5%    10.3%    39.1%     45.1%
CSRA                                            7,898        4,977          850       1.6x         9.3x          1.5x         9.9x     9.2%    15.6%     4.4%     17.5%
Booz Allen                                      7,243        6,022          560       1.2x        12.9x          1.1x        11.9x     9.5%     9.4%     2.5%      5.5%
CACI International                              4,506        4,367          366       1.0x        12.3x          1.0x        11.3x     8.8%     8.5%    13.0%     15.2%
Science Applications International              4,271        4,352          302       1.0x        14.1x          1.0x        13.1x     6.7%     7.5%    11.1%      4.6%
ManTech International                           1,891        1,649          125       1.1x        15.1x          1.0x        12.9x     7.6%     7.6%     3.3%      7.1%
ICF                                             1,229        1,198          114       1.0x        10.8x          1.0x         9.8x     9.5%     9.5%     4.7%      2.7%
Keyw                                              553          384             (7)    1.4x          NA           1.1x        12.2x     6.2%     8.6%    (3.3%)    52.6%
                                                                          Mean        1.2x        12.6x          1.1x        11.6x     8.1%     9.6%     9.3%     18.8%
                                                                         Median       1.2x        12.9x          1.1x        12.0x     8.2%     9.0%     4.5%     11.2%

Tier 1 Prime Contractors
Boeing                                    $ 185,514     $   91,310   $ 11,623         2.0x        16.0x          2.0x        15.0x     8.3%    13.0%    (1.6%)    (2.5%)
Lockheed Martin                               105,499       49,663        6,687       2.1x        15.8x          2.1x        14.7x    14.3%    14.0%    16.6%      7.1%
General Dynamics                               63,280       31,142        4,928       2.0x        12.8x          1.9x        12.9x    15.2%    14.9%    (0.4%)    (0.8%)
Raytheon                                       58,347       24,789        3,785       2.4x        15.4x          2.2x        14.1x    15.6%    15.3%     3.5%      5.4%
Northrop Grumman                               58,010       25,566        3,870       2.3x        15.0x          2.1x        14.0x    15.0%    14.9%     4.2%      4.2%
L3 Technologies                                18,859       11,036        1,138       1.7x        16.6x          1.9x        13.9x    11.5%    13.1%     0.4%     (8.9%)

                                                                          Mean        2.1x        15.3x          2.0x        14.1x    13.3%    14.2%     3.8%      0.8%
                                                                         Median       2.1x        15.6x          2.0x        14.0x    14.7%    14.5%     2.0%      1.7%

Defense System / Electronics Firms
Rockwell Collins                          $    28,871   $    6,822   $    1,512       4.2x        19.1x          3.3x        13.9x    23.8%    23.3%     0.3%     30.5%
Harris (Florida)                               21,060        5,893        1,390       3.6x        15.2x          3.4x        14.3x    23.8%    24.3%    54.2%     (2.0%)
L3 Technologies                                18,859       11,036        1,138       1.7x        16.6x          1.9x        13.9x    11.5%    13.1%     0.4%     (8.9%)
Alliant Techsystems                             8,928        4,679          655       1.9x        13.6x          1.8x        11.7x    14.2%    15.5%    43.1%      4.5%
Teledyne Technologies                           7,796        2,452          399       3.2x        19.5x          2.8x        15.7x    16.4%    17.2%    (6.4%)    19.4%
FLIR Systems                                    6,866        1,780          374       3.9x        18.4x          3.6x        14.9x    21.1%    21.8%     6.7%      8.3%
Cobham                                          5,265        2,637   $     (742)      2.0x          NA           1.9x        12.5x   (28.1%)   14.1%   (16.7%)     3.2%
Mercury Systems                                 2,447          427             78     5.7x        31.5x          5.0x        21.6x    15.6%    22.7%    15.0%     50.8%
Cubic                                           1,820        1,486             69     1.2x        26.4x          1.2x        13.7x     3.3%     6.9%     2.1%      1.2%
Ultra Electronics                               1,662        1,066          177       1.6x         9.4x          1.5x         8.6x    16.6%    17.8%    (4.0%)    (2.2%)
Kratos Defense & Security Solutions             1,340          732             34     1.8x        39.6x          1.7x        17.8x     0.8%     7.2%     1.8%     11.4%
Aerovironment                                   1,049          296             41     3.5x        25.3x          3.4x        53.5x     5.0%     5.3%     1.8%     (0.8%)
                                                                          Mean        2.9x        21.3x          2.6x        17.7x    10.3%    15.8%     8.2%      9.6%
                                                                         Median       2.6x        19.1x          2.4x        14.1x    14.9%    16.4%     1.8%      3.9%
Source: Pitchbook
EV: Enterprise Value
LTM: Trailing Twelve Months
NTM: Next Twelve Months
Public Company Comparables
USD in Millions, excluding share prices                                                        EV as a Multiple of
As of 1/8/2018                            Enterprise        LTM          LTM             LTM                      NTM             EBITDA Margin     Revenue Growth
Company                                       Value         Rev.     EBITDA       Rev.    EBITDA           Rev.         EBITDA    CY16A     CY17P   CY16A     CY17P
Aerospace
Aircraft - OEM
Boeing                                    $ 185,514     $   91,310   $ 11,623      2.0x        16.0x          2.0x        15.0x     8.3%    13.0%    (1.6%)    (2.5%)
United Technologies                           126,613       58,816       10,447    2.2x        12.1x          2.0x        11.4x    17.7%    18.2%     2.0%      4.2%
Airbus Group                                   82,429       73,794        4,749    1.1x        17.4x          0.9x         9.0x     5.8%     9.7%     3.0%      9.4%
General Dynamics                               63,280       31,142        4,928    2.0x        12.8x          1.9x        12.9x    15.2%    14.9%    (0.4%)    (0.8%)
Textron                                        18,360       13,934        1,382    1.3x        13.3x              NA        NA     10.4%    10.4%     2.8%      4.2%
Bombardier                                     13,928       15,883          186    0.9x        74.9x          0.8x        11.3x    (0.5%)    5.9%   (10.1%)    (0.2%)
Dassault Aviation                              13,146        4,042          495    3.3x        26.6x          2.3x        23.6x    12.2%     8.7%   (12.8%)    27.7%
CAE                                             5,669        1,031          453    5.5x        12.5x          2.4x        10.7x    21.2%    22.5%    (3.0%)     5.6%

                                                                          Mean     2.3x        23.2x          1.8x        13.4x    11.3%    12.9%   (2.5%)      5.9%
                                                                         Median    2.0x        14.6x          2.0x        11.4x    11.3%    11.7%   (1.0%)      4.2%

Aircraft - Suppliers & Aftermarket
Rockwell Collins                          $    28,871   $    6,822   $    1,512    4.2x        19.1x          3.3x        13.9x    23.8%    23.3%     0.3%     30.5%
TransDigm Group                                25,454        3,504        1,581    7.3x        16.1x          6.9x        13.8x    43.3%    48.2%    17.2%     12.0%
Thales Group                                   20,999       16,467        1,990    1.3x        10.6x          1.1x         8.5x    12.1%    12.1%     5.5%     13.6%
Hexcel                                          6,484        1,945          445    3.3x        14.6x          3.0x        12.7x    22.6%    23.4%     7.7%     (1.9%)
Curtiss-Wright                                  6,006        2,225          437    2.7x        13.8x          2.6x        12.6x    19.2%    19.5%    (4.4%)     6.6%
Moog                                            3,773        2,498          306    1.5x        12.3x          1.4x        10.8x    12.7%    12.7%    (4.5%)     2.2%
Esterline Technologies                          2,799        2,002          299    1.4x         9.4x          1.4x         9.4x    13.6%    15.4%    (0.5%)     0.7%
Triumph Group                                   2,776        3,292          143    0.8x        19.4x          0.9x         8.8x   (23.5%)   12.2%    (0.1%)    (9.0%)
Ultra Electronics                               1,662        1,066          177    1.6x         9.4x          1.5x         8.6x    16.6%    17.8%    (4.0%)    (2.2%)

                                                                          Mean     2.7x        13.8x          2.4x        11.0x    15.6%    20.5%     1.9%      5.8%
                                                                         Median    1.6x        13.8x          1.5x        10.8x    16.6%    17.8%   (0.1%)      2.2%
Source: Pitchbook
LTM: Trailing Twelve Months
NTM: Next Twelve Months
Recent M&A Transactions – Government Services & Defense
                                                         Target Information                                                          Buyer Information                                    EV Information
                                                                                                                                                                                                            /LTM
Close Date   Name                                                             Industry       Buyer                                                       Buyer Classification     $M        /LTM Rev       EBITDA
 Pending     Praxis Engineering Technologies, Inc.                            C4ISR          CSRA, Inc.                                                  Public Strategic        235.0        1.9 x         N/A
 Pending     Rocky Research                                                   Other          DC Capital Partners, LLC                                    P/E Sponsor               N/A        N/A           N/A
 Pending     Themis Computer                                                  C4ISR          Mercury Systems, Inc.                                       Public Strategic        180.0        3.2 x        13.7 x
 Pending     Globecomm Systems, Inc.                                          C4ISR          HPS Investment Partners [Tennenbaum Capital Partners]       P/E Backed Strategic      N/A        N/A           N/A
 Pending     Datapipe, Inc.                                                   IT Services    Apollo Global Management, LLC [Rackspace US, Inc.]          P/E Backed Strategic      N/A        N/A           N/A
 Pending     ImageSat International N.V. (53.6% Stake)                        C4ISR          First Israel Mezzanine Investors Fund (FIMI)                P/E Sponsor              40.0        N/A           N/A
 Pending     Vencore, Inc. & KeyPoint                                         IT Services    DXC Technology Co.                                          Public Strategic          N/A        N/A           N/A
 Pending     No Magic, Inc.                                                   Other          Dassault Systemes S.A.                                      Public Strategic          N/A        N/A           N/A
 Pending     Exa Corporation                                                  Other          Dassault Systemes S.A.                                      Public Strategic        500.0        6.9 x         N/A
 Pending     Antkowiak Design Group, Inc. (ADG Creative)                      Other          Chenega Corporation (MIOS)                                  Private Strategic         N/A        N/A           N/A
12/18/17     Janus Global Operations LLC                                      Other          DC Capital Partners, LLC                                    P/E Sponsor               N/A        N/A           N/A
12/15/17     CH2M Hill Companies, Ltd.                                        Other          Jacobs Engineering Group, Inc.                              Public Strategic       3,270.0       N/A           N/A
12/06/17     GAP Solutions, Inc.                                              Other          Thomas H. Lee Partners, L.P. [System One Holdings LLC]      P/E Backed Strategic      N/A        N/A           N/A
12/01/17     Merlin International Inc.                                        IT Services    Xator Corp.                                                 Private Strategic         N/A        N/A           N/A
11/17/17     Onvia, Inc.                                                      Other          Deltek, Inc. [Roper Technologies, Inc.]                     Public Strategic         70.0        2.8 x        36.8 x
11/17/17     Brocade Communications Systems, Inc.                             C4ISR          Avago Technologies U.S. Inc.                                Public Strategic       5,900.0       N/A           N/A
11/16/17     Decision Labs LLC                                                IT Services    KKR & Co. L.P. [Accuvant, Inc.]                             P/E Backed Strategic      N/A        N/A           N/A
11/14/17     Hypori, Inc.                                                     C4ISR          Intelligent Waves, LLC                                      Private Strategic         N/A        N/A           N/A
11/14/17     Whitney, Bradley & Brown, Inc. (WBB)                             Other          H.I.G Private Equity                                        P/E Sponsor               N/A        N/A           N/A
11/08/17     Liquid Robotics, Inc.                                            C4ISR          The Boeing Company                                          Public Strategic          N/A        N/A           N/A
11/03/17     1st American Systems and Services, LLC                           C4ISR          ABSS Solutions, Inc.                                        Private Strategic         N/A        N/A           N/A
11/02/17     Morphick, Inc.                                                   IT Services    Booz Allen Hamilton, Inc.                                   Public Strategic          N/A        N/A           N/A
11/02/17     Advanced Technical and Educational Consultants                   Other          L2 Defense, Inc.                                            Private Strategic         N/A        N/A           N/A
11/02/17     Dominion Consulting, Inc.                                        Other          TeraThink Corp.                                             Private Strategic         N/A        N/A           N/A
11/02/17     MesoScribe Technologies, Inc.                                    Other          CVD Equipment Corporation                                   Private Strategic         N/A        N/A           N/A
10/25/17     JBS International, Inc.                                          Other          Blue Cross and Blue Shield of South Carolina                Private Strategic         N/A        N/A           N/A
10/24/17     BTP Systems, LLC                                                 C4ISR          Serco Group PLC                                             Public Strategic         20.0        1.0 x         6.7 x
10/20/17     Peak Democracy, Inc.                                             IT Services    OpenGov, Inc.                                               Private Strategic         N/A        N/A           N/A
10/17/17     Manning Service, Inc.                                            IT Services    Intelligent Decisions, Inc.                                 Private Strategic         N/A        N/A           N/A
10/04/17     Global Technical Services, Inc.                                  Other          Novume Solutions, Inc.                                      Private Strategic         3.8        0.1 x         N/A
10/03/17     DigitalGlobe, Inc.                                               C4ISR          MacDonald, Dettwiler and Associates Ltd. (MDA)              Public Strategic       3,600.0       5.1 x         N/A
10/02/17     InfoZen, Inc                                                     IT Services    ManTech International Corp.                                 Public Strategic        180.0        1.8 x         N/A
10/02/17     Xebec Global Corporation                                         C4ISR          Arlington Capital Partners                                  P/E Sponsor               N/A        N/A           N/A
09/27/17     Solidyn Solutions, Inc.                                          C4ISR          Arlington Capital Partners [Polaris Alpha Holdings, LLC)    P/E Backed Strategic      N/A        N/A           N/A
09/27/17     CyberCore Technologies, LLC                                      C4ISR          Enlightenment Capital                                       P/E Sponsor               N/A        N/A           N/A
09/26/17     Silverback 7, Inc.                                               Other          Patriot Defense Group LLC                                   Private Strategic         N/A        N/A           N/A
09/25/17     Versar, Inc.                                                     Other          Kingswood Capital Management, LLC                           P/E Sponsor              51.6        0.5 x         N/A
09/25/17     Surveillance and Cyber Security Solutions, LLC                   IT Services    Mission Solutions Group (MSG), Inc.                         Private Strategic         N/A        N/A           N/A
09/25/17     CIS Secure Computing, Inc.                                       C4ISR          Acorn Growth Companies                                      P/E Backed Strategic      N/A        N/A           N/A
09/15/17     Ocean Aero, Inc.                                                 C4ISR          Lockheed Martin Corporation                                 Public Strategic          N/A        N/A           N/A
09/13/17     CDI Corp.                                                        IT Services    AE Industrial Partners, LLC                                 P/E Sponsor             154.2        0.2 x         N/A
09/11/17     Control Point Corp. (CPC)                                        C4ISR          Ricardo plc [Ricardo Defense Systems, LLC]                  Public Strategic         10.2        N/A           N/A
09/11/17     Cadmus Group, Inc.                                               Other          Enlightenment Capital                                       P/E Sponsor               N/A        N/A           N/A
09/11/17     Defense Group, Inc.                                              C4ISR          SOS International, LLC (SOSi)                               Private Strategic         N/A        N/A           N/A
09/08/17     L3 Adaptive Methods, Inc.                                        Other          L3 Technologies, Inc.                                       Public Strategic          N/A        N/A           N/A
08/31/17     Blue Canopy Group, LLC                                           IT Services    Jacobs Engineering Group, Inc.                              Public Strategic          N/A        N/A           N/A
08/28/17     RedOwl Analytics, Inc.                                           IT Services    Raytheon Co. [Forcepoint]                                   Public Strategic          N/A        N/A           N/A
08/15/17     NCI, Inc.                                                        IT Services    H.I.G. Capital                                              P/E Sponsor             283.0        0.9 x         9.8 x
08/08/17     Phase One Consulting Group, LLC                                  Other          Accenture plc                                               Public Strategic          N/A        N/A           N/A
08/01/17     Nextnine, Inc.                                                   IT Services    Honeywell International, Inc.                               Public Strategic          N/A        N/A           N/A
07/31/17     Telecommunications Support Services, Inc.                        C4ISR          Acorn Growth Companies [AGC Aerospace & Defense]            P/E Backed Strategic      N/A        N/A           N/A
07/25/17     Data Clairvoyance Group, Inc.                                    Other          Thoma Bravo, LLC [Infogix, Inc.]                            P/E Backed Strategic      N/A        N/A           N/A
07/18/17     KMS Solutions, LLC                                               IT Services    Subsystems Technology, Inc.                                 Private Strategic         N/A        N/A           N/A
07/18/17     Deltenna Limited                                                 C4ISR          Cubic Corp.                                                 Public Strategic          N/A        N/A           N/A
07/07/17     Engle Training and Design Group, Inc.                            IT Services    Greycells Technologies LLC                                  Private Strategic         N/A        N/A           N/A
07/07/17     Smiths Group plc [global explosive trace detection business]     Other          OSI Systems, Inc.                                           Public Strategic         80.5        1.2 x         N/A
07/06/17     Superior Resource Group, Inc.                                    Other          White Wolf Capital, LLC [NSC Technologies]                  P/E Backed Strategic      N/A        N/A           N/A
07/06/17     Project Performance Company, LLC                                 IT Services    Data Systems Analysts, Inc.                                 Private Strategic        20.0        N/A           N/A

                                    805 King Farm Boulevard, Suite 300 | Rockville, Maryland 20850 | P 301.231.6200 | F 301.231.7630 | aronsoncapitalpartners.com
Recent M&A Transactions – Government Services & Defense
                                                        Target Information                                                                    Buyer Information                                                EV Information
                                                                                                                                                                                                                                 /LTM
Close Date   Name                                                               Industry             Buyer                                                                 Buyer Classification        $M        /LTM Rev       EBITDA
07/05/17     Tribridge Holdings, LLC                                            Other                DXC Technology Co.                                                    Public Strategic             N/A        N/A           N/A
07/05/17     NES Associates, LLC                                                Cyber / Intel        CSRA, Inc.                                                            Public Strategic           105.0        N/A           N/A
06/30/17     V1 Analytical Solutions                                            C4ISR                National Technologies Associates                                      Private Strategic            N/A        N/A           N/A
06/30/17     CB&I Corp. [Capital Services]                                      Other                Veritas Capital Fund Management                                       P/E Sponsor                700.0        0.3 x         N/A
06/23/17     American K-9 Detection Services, LLC (AMK9)                        Other                Apollo Global Management, LLC [Constellis Group, Inc.]                P/E Backed Strategic         N/A        N/A           N/A
06/16/17     Natoma Technologies, Inc.                                          IT Services          Red River Computer Co., Inc.                                          Private Strategic            N/A        N/A           N/A
06/13/17     FCi Federal, Inc.                                                  Technical Services   Platinum Equity Holdings [PAE]                                        P/E Backed Strategic         N/A        N/A           N/A
06/05/17     SWN Communications Inc.                                            Other                Veritas Capital Fund Management [OnSolve]                             P/E Backed Strategic         N/A        N/A           N/A
06/01/17     Next Digital Solutions, LLC                                        IT Services          Fila Group, LLC                                                       Private Strategic            N/A        N/A           N/A
05/31/17     ABM Government Services, LLC                                       Other                The GC Companies, LLC [Valiant Integrated Services]                   P/E Backed Strategic        35.5        N/A           N/A
05/22/17     Harris Corp. [Government IT Service Business]                      IT Services          Veritas Capital Fund Management                                       P/E Sponsor                690.0        0.6 x         N/A
05/22/17     Open Water Power, Inc.                                             Other                L3 Technologies, Inc.                                                 Public Strategic             N/A        N/A           N/A
05/08/17     Schafer Corp.                                                      IT Services          AE Industrial Partners, LLC [Belcan, LLC]                             P/E Backed Strategic         N/A        N/A           N/A
05/03/17     Advatech Pacific, Inc.                                             C4ISR                General Dynamics Corp.                                                Public Strategic             N/A        N/A           N/A
05/01/17     Peraton Corp.                                                      IT Services          Veritas Capital Fund Management                                       P/E Sponsor                690.0        0.6 x         N/A
04/21/17     Centerra Group                                                     Other                Apollo Global Management, LLC [Constellis Holdings, LLC]              P/E Backed Strategic         N/A        N/A           N/A
04/18/17     InfoReliance Corp.                                                 Cyber / Intel        Lindsay Goldberg [ECS-Federal]                                        P/E Backed Strategic         N/A        N/A           N/A
04/11/17     The Reports and Requirements Company, LLC (R2C)                    C4ISR                Buchanan & Edwards, Inc.                                              Private Strategic            N/A        N/A           N/A
04/11/17     Human Solutions, Inc. (HSI)                                        Technical Services   The GF Fund [Oasis Systems, LLC]                                      P/E Backed Strategic         N/A        N/A           N/A
04/04/17     Sotera Defense Solutions, Inc.                                     Cyber / Intel        KeyW Corp.                                                            Public Strategic           235.0        1.0 x         9.8 x
04/03/17     Delta Microwave, LLC                                               Other                Mercury Systems, Inc.                                                 Public Strategic            40.5        3.2 x         N/A
03/31/17     Endgame, Inc. [U.S. federal government services business]          Cyber / Intel        Accenture Plc                                                         Public Strategic             N/A        N/A           N/A
03/31/17     Hewlett Packard Enterprise [Enterprise Services]                   IT Services          CSC                                                                   Public Strategic          8,500.0       0.5 x         N/A
03/27/17     Day1 Solutions, Inc.                                               IT Services          Deloitte Touche Tohmatsu (UK)                                         Private Strategic            N/A        N/A           N/A
03/17/17     OceanServer Technology, Inc.                                       Other                L3 Technologies, Inc.                                                 Public Strategic             N/A        N/A           N/A
02/21/17     Telos Corp [2.5%]                                                  Cyber / Intel        Enlightenment Capital                                                 P/E Sponsor                  N/A        N/A           N/A
02/21/17     IAP Research, Inc.                                                 Other                BAE Systems plc (UK)                                                  Public Strategic             N/A        N/A           N/A
02/20/17     1901 Group, Inc.                                                   IT Services          Enlightenment Capital                                                 P/E Sponsor                  N/A        N/A           N/A
02/20/17     The Woods Hole Group, Inc.                                         Other                CLS (France)                                                          P/E Backed Strategic         N/A        N/A           N/A
02/01/17     Optiv Security, Inc.                                               Cyber / Intel        KKR & Co. L.P.                                                        Public Strategic             N/A        N/A           N/A
02/01/17     Owl Computing Technologies, Inc.                                   Cyber / Intel        DC Capital Partners, LLC [Acuity Technologies Holding Co.]            P/E Backed Strategic         N/A        N/A           N/A

        Target Industry                                                                                             Buyer Classification
                                                                                                                                                                       P/E Sponsor
                              Cloud / Data                  Cyber / Intel    Other                                                                                        13%
                                Analytics                       9%           35%
                                  7%                                                                                                                                                               Public
                                                                                                                                                                  P/E Backed                      Strategic
                                                                                                                                                                   Strategic                        40%
                                  Technical                                                                                                                          24%
                                  Services
                                     3%
                                                                             IT Services
                                                               C4ISR
                                                                                 27%                                                                                            Private
                                                                18%
                                                                                                                                                                               Strategic
                                                                                                                                                                                 23%

                                    805 King Farm Boulevard, Suite 300 | Rockville, Maryland 20850 | P 301.231.6200 | F 301.231.7630 | aronsoncapitalpartners.com
Recent M&A Transactions – Aerospace
                                                        Target Information                                                                                Buyer Information                                                  EV Information
                                                                                                                                                                                                                                               /LTM
Close Date   Name                                                                      Industry                  Buyer                                                                         Buyer Classification     $M       /LTM Rev     EBITDA
 Pending     Rockwell Collins, Inc.                                                    Electronics               United Technologies                                                           Public Strategic       22,750.0     2.8 x       N/A
 Pending     CPI International, Inc.                                                   Electronics               Odyssey Investment Partners, LLC                                              P/E Sponsor             800.0       1.6 x       N/A
 Pending     Anaren, Inc.                                                              Electronics               TTM Technologies, Inc.                                                        Public Strategic        775.0       3.5 x      14.2 x
 Pending     Sparton Corp.                                                             Engineering               Ultra Electronics Holdings Plc                                                Public Strategic        234.8       0.6 x       N/A
 Pending     Anodyne Electronics Manufacturing Corp.                                   Electronics               Structural Monitoring Systems Plc (SMS)                                       Public Strategic          7.9       N/A         N/A
 Pending     Infotech Aerospace Services, Inc. (IASI)                                  Engineering               United Technologies [Pratt & Whitney]                                         Public Strategic         10.9       N/A         N/A
 Pending     Sigma Bravo Pty Ltd                                                       Other                     KBR Inc.                                                                      Public Strategic          N/A       N/A         N/A
 Pending     Bombardier, Inc. [C Series Aircraft Limited Partnership]                  Other                     Airbus Group SE                                                               Public Strategic          N/A       N/A         N/A
 Pending     WestWind Technologies, Inc. (WTI)                                         MRO                       Strata-G Solutions, Inc.                                                      Private Strategic         N/A       N/A         N/A
 Pending     Asian Compressor Technology Services Ltd. (ACTS)                          MRO                       Blackstone Group L.P. [MB Aerospace Limited]                                  P/E Backed Strategic     60.0       N/A         N/A
 Pending     B&F Design, Inc.                                                          MRO                       Cyient Limited                                                                Public Strategic          N/A       N/A         N/A
 Pending     Metals Testing Co Inc                                                     MRO                       Bridgepoint Capital Ltd. [Element Materials Technology]                       P/E Backed Strategic      N/A       N/A         N/A
12/22/17     Encore Composite Holdings, Inc.                                           MRO                       AE Industrial Partners                                                        P/E Backed Strategic      N/A       N/A         N/A
12/15/17     Oxford Performance Materials, Inc. (OPM)                                  Structures & Components   Hexcel Corp.                                                                  Public Strategic          N/A       N/A         N/A
12/15/17     Wright Tool Company                                                       Structures & Components   Federal Resource Supply Company                                               Private Strategic         N/A       N/A         N/A
12/12/17     Automated Dynamics                                                        Structures & Components   Trelleborg AB [Trelleborg Sealing Solutions]                                  Public Strategic          N/A       N/A         N/A
12/12/17     Colfax Corp. [Fluid Handling Business]                                    Structures & Components   CIRCOR Intl Inc.                                                              Public Strategic        855.0       N/A         N/A
12/11/17     CDI Aerospace & Industrial Equipment                                      Engineering               AE Industrial Partners [Belcan LLC]                                           P/E Backed Strategic      N/A       N/A         N/A
12/04/17     Laser Depth Dynamics, Inc. (LDD)                                          Other                     IPG Photonics Corp.                                                           Public Strategic          N/A       N/A         N/A
12/04/17     Excelitas Technologies Corp.                                              Other                     AEA Investors L.P.                                                            P/E Backed Strategic    847.0       N/A         N/A
12/01/17     Telefonix, Inc.                                                           Other                     Astronics Corp.                                                               Public Strategic        104.0       1.5 x       N/A
11/30/17     True Position Technologies, Inc.                                          Structures & Components   HBD Industries Inc.                                                           Private Strategic         N/A       N/A         N/A
11/29/17     GEM City Engineering Co.                                                  Other                     CapitalWorks LLC                                                              P/E Sponsor               N/A       N/A         N/A
11/17/17     Chassis Plans, LLC                                                        Other                     Aeronautics, Ltd.                                                             Public Strategic          6.0       N/A         N/A
11/15/17     Cadence Aerospace, LLC                                                    Structures & Components   Arlington Capital Partners                                                    P/E Sponsor               N/A       N/A         N/A
11/14/17     Hydrix Group Pty Ltd.                                                     Other                     Panorama Synergy Limited                                                      Public Strategic          1.5       N/A         N/A
11/13/17     Surrey Satellite Technology US, LLC [an Airbus Company]                   MRO                       General Atomics Corp.                                                         Private Strategic         N/A       N/A         N/A
11/09/17     Avenge, Inc.                                                              Other                     MAG DS Corp.                                                                  Private Strategic        45.0       N/A         N/A
11/08/17     Aurora Flight Sciences Corp.                                              Structures & Components   Boeing Co.                                                                    Public Strategic          N/A       N/A         N/A
11/08/17     Tex Tech Industries, Inc.                                                 Structures & Components   Arlington Capital Partners                                                    P/E Backed Strategic      N/A       N/A         N/A
11/07/17     Tecnologie Industriali e Aeronautiche                                     Structures & Components   Elettronica Aster S.p.A.                                                      Private Strategic         N/A       N/A         N/A
11/06/17     Mistral Solutions                                                         Other                     AXISCADES Engineering Technologies Ltd                                        Public Strategic          N/A       N/A         N/A
11/03/17     Vector Aerospace Corp.                                                    MRO                       Veritas Capital Fund Management, LLC [StandardAero Aviation Holdings, Inc.]   P/E Backed Strategic      N/A       N/A         N/A
11/02/17     MesoScribe Technologies, Inc.                                             Electronics               CVD Equipment Corporation                                                     Private Strategic         N/A       N/A         N/A
11/01/17     Applied Composites Engineering, Inc.                                      Structures & Components   AE Industrial Partners, LLC (AEI) [AC&A, LLC]                                 P/E Backed Strategic      N/A       N/A         N/A
11/01/17     F.M.I., Inc                                                               Structures & Components   AE Industrial Partners, LLC (AEI)                                             P/E Sponsor               N/A       N/A         N/A
11/01/17     UltiSat, Inc.                                                             Structures & Components   TA Associates Management, L.P. [SpeedCast Ltd]                                P/E Backed Strategic      N/A       N/A         N/A
10/31/17     Butterfield Industries (BI)                                               Structures & Components   Acorn Growth Company [Raisbeck Engineering, Inc.]                             P/E Backed Strategic      N/A       N/A         N/A
10/31/17     SKTRAC Systems Ltd                                                        Electronics               Jordan Company L.P. [Drew Marine USA Inc.]                                    P/E Backed Strategic      N/A       N/A         N/A
10/23/17     Connecticut Coining, Inc.                                                 Structures & Components   MavenHill Capital                                                             P/E Sponsor               N/A       N/A         N/A
10/18/17     Scott Instrument Co.                                                      MRO                       Sunvair Aerospace Group [Aviation Avionics and Instruments Inc.]              Private Strategic         N/A       N/A         N/A
10/13/17     Sepang Aircraft Engineering Sdn Bhd                                       MRO                       Airbus Group SE [Airbus SAS]                                                  Public Strategic          N/A       N/A         N/A
10/12/17     Fortner Engineering & Manufacturing                                       MRO                       Warburg Pincus, LLC                                                           Private Strategic         N/A       N/A         N/A
10/04/17     Luciad N.V.                                                               Electronics               Hexagon AB                                                                    Public Strategic          N/A       N/A         N/A
10/03/17     MW Industries, Inc.                                                       Structures & Components   American Securities LLC                                                       P/E Sponsor               N/A       N/A         N/A
10/02/17     Syntronics, LLC                                                           Other                     General Atomics Corp.                                                         Private Strategic         N/A       N/A         N/A
10/02/17     Structil S.A.                                                             Structures & Components   Hexcel Corp.                                                                  Public Strategic          N/A       N/A         N/A
09/18/17     Triumph Processing -- Embee Division, Inc.                                Structures & Components   Watson Family Investments, LLC                                                P/E Sponsor               N/A       N/A         N/A
09/15/17     AeroAntenna Technologies, Inc. (AAT)                                      Electronics               HEICO Corp.                                                                   Public Strategic        316.5       N/A         N/A
09/12/17     Doss Aviation                                                             MRO                       L3 Technologies, Inc.                                                         Public Strategic          N/A       N/A         N/A
09/11/17     Lightning Diversion Systems, Inc.                                         Structures & Components   Ducommun Inc.                                                                 Public Strategic         60.0       N/A         N/A
09/05/17     Aroma                                                                     Structures & Components   Activa Capital [Mecadaq]                                                      P/E Backed Strategic     21.7       N/A         N/A
08/31/17     Pattonair                                                                 MRO                       Platinum Equity Holdings (PEH)                                                P/E Sponsor               N/A       N/A         N/A
08/11/17     Bandy Machining Inc.                                                      Structures & Components   JW Hill, LLC                                                                  P/E Sponsor               N/A       N/A         N/A
07/05/17     Richland Technologies, LLC (RTL)                                          Electronics               Mercury Mission Systems International (MMSI)                                  Private Strategic         N/A       N/A         N/A
06/27/17     Fuller Road Management Corp. [STC-MEMS Wafer Manufacturing Facility and   Electronics               Akoustis Technologies, Inc.                                                   Public Strategic          2.8       N/A         N/A
06/27/17     Jet Edge, Inc.                                                            Structures & Components   Spell Capital Partners, LLC                                                   P/E Sponsor               N/A       N/A         N/A
06/27/17     Vortex Aviation, Inc.                                                     MRO                       AE Industrial Partners, LLC [Kellstrom Aerospace]                             P/E Backed Strategic      N/A       N/A         N/A

                                   805 King Farm Boulevard, Suite 300 | Rockville, Maryland 20850 | P 301.231.6200 | F 301.231.7630 | aronsoncapitalpartners.com
Recent M&A Transactions – Aerospace
                                                            Target Information                                                                            Buyer Information                                                  EV Information
                                                                                                                                                                                                                                               /LTM
Close Date   Name                                                                         Industry                  Buyer                                                                     Buyer Classification     $M      /LTM Rev       EBITDA
06/22/17     ISEI                                                                         Electronics               Safran S.A.                                                               Public Strategic         N/A       N/A           N/A
06/20/17     Carbon by Design                                                             Structures & Components   HEICO Corp.                                                               Public Strategic         N/A       N/A           N/A
06/20/17     Space-Lok, Inc.                                                              Structures & Components   Rosewood Private Investments [Novaria Group]                              P/E Backed Strategic     N/A       N/A           N/A
06/19/17     Applied Poleramic Inc (API)                                                  Structures & Components   Kaneka Corp. [Kaneka Americas Holding, Inc.]                              Public Strategic        15.0       N/A           N/A
06/15/17     Dunlop Aircraft Tyres Ltd.                                                   Structures & Components   Liberty Hall Capital Partners                                             P/E Sponsor            135.0       N/A           N/A
06/14/17     Putnam RF Filters, Inc.                                                      Electronics               KleinPartners Capital Corp. [Epec, LLC]                                   P/E Backed Strategic     N/A       N/A           N/A
06/13/17     DST Computer Services S.A.                                                   MRO                       Hexagon PPM                                                               Public Strategic         N/A       N/A           N/A
06/13/17     Isselnord SRL                                                                MRO                       Fincantieri - Cantieri Navali Italiani S.p.A.                             Public Strategic         N/A       N/A           N/A
06/13/17     OC Robotics Ltd                                                              MRO                       General Electric Co.                                                      Public Strategic         N/A       N/A           N/A
06/12/17     Gardner Aerospace Ltd.                                                       Structures & Components   Shaanxi Ligeance Mineral Resources (SLMR) [Chengdu Aerospace Superalloy   Public Strategic       405.0       2.4 x         N/A
06/06/17     Fore Machine Company, Inc. [Aero Components, Inc.]                           Structures & Components   P4G Capital Management, LLC                                               P/E Sponsor              N/A       N/A           N/A
06/06/17     HALO Industries, Inc.                                                        Structures & Components   Elite Aerospace Group, Inc. (EAG)                                         Private Startegic        N/A       N/A           N/A
06/05/17     CM Equity Partners, L.P. (CMEP) [Graco Supply & Integrated Services, Inc.]   Structures & Components   American Securities LLC [Royal Adhesives & Sealants LLC]                  P/E Backed Strategic     N/A       N/A           N/A
06/01/17     BerrieHill Research Corp. (BRC)                                              Electronics               Applied Research Associates, Inc. (ARA)                                   Private Startegic        N/A       N/A           N/A
06/01/17     Qualiseal Technology                                                         Structures & Components   EnPro Industries, Inc.                                                    Public Strategic         N/A       N/A           N/A
05/30/17     Naval Shipyard SA - Stocznia Marynarki Wojennej SA (SMW)                     MRO                       Polish Armaments Group (Polska Grupa Zbrojeniowa - PGZ)                   Public Strategic        60.1       N/A           N/A
05/16/17     Noliac A/S                                                                   Electronics               CTS Corp.                                                                 Public Strategic         N/A       N/A           N/A
05/12/17     Cletronics, Inc.                                                             Electronics               TT Electronics plc                                                        Public Strategic         1.2       N/A           N/A
05/12/17     EuroAvionics GmbH                                                            Electronics               Kohlberg Kravis Roberts & Co. (KKR) [Hensoldt Sensors GmbH]               P/E Backed Strategic     N/A       N/A           N/A
05/11/17     Apollo Video Technology, LLC                                                 Electronics               Audax Group [Luminator Technology Group, LLC]                             P/E Backed Strategic     N/A       N/A           N/A
05/09/17     Camtech Technologies                                                         Electronics               American Standard Circuits, Inc.                                          Private Strategic        N/A       N/A           N/A
05/03/17     Microphase Corp. [50.2%]                                                     Electronics               Digital Power Corp.                                                       Public Strategic         2.0       0.3 x         N/A
05/02/17     Radio Waves, Inc.                                                            Electronics               Genstar Capital, LLC [Infinite Electronics, Inc.]                         P/E Backed Strategic     N/A       N/A           N/A
04/21/17     International Transducer Corp. (ITC)                                         Electronics               Gavial Holdings, Inc.                                                     P/E Sponsor              N/A       N/A           N/A
04/21/17     Puritan Products, Inc.                                                       Electronics               New Mountain Capital, LLC [Avantor Performance Materials, LLC]            P/E Backed Strategic     N/A       N/A           N/A
04/19/17     Pho-Tronics, Inc.                                                            Electronics               H&T Global Circuits                                                       Private Strategic        N/A       N/A           N/A
04/13/17     Lynn Electronics, Inc.                                                       Electronics               NewSpring Capital                                                         P/E Sponsor             14.3       N/A           N/A
04/13/17     Quintus Technologies AB                                                      Structures & Components   Kobe Steel Ltd                                                            Public Strategic       115.0       N/A           N/A
04/10/17     Accessory Technologies Corp. (ATC)                                           MRO                       Wencor Group, LLC                                                         P/E Sponsor              N/A       N/A           N/A

  Target Industry                                                                                                           Buyer Type

                                                                 Other                                                                                                 P/E Sponsor
                                                                  9%                                                                                                      18%
                                                                                   Structures &                                                                                                             Public
                                                                                   Components                                                                                                              Strategic
                                             Electronics                               40%                                                                      P/E Backed
                                                32%                                                                                                                                                          45%
                                                                                                                                                                 Strategic
                                                                                                                                                                   19%

                                                                       MRO                                                                                                         Private
                                                                       19%                                                                                                        Strategic
                                                                                                                                                                                    18%

                                     805 King Farm Boulevard, Suite 300 | Rockville, Maryland 20850 | P 301.231.6200 | F 301.231.7630 | aronsoncapitalpartners.com
Aronson Capital Partners
                    Advised                  Advised                      Advised                 Advised                   Advised

                                                                                               on its sale to           on its sale to
                  on its sale to          on its sale to                on its sale to
                                                                                           portfolio company of       portfolio company of
               General Atomics

                    Advised                  Advised                     Advised                 Advised                   Advised

                  on its sale to      on the sales of its Alliant      on its sale to                                    on its sale to
                                          Business Unit to
                                                                                              on its sale to
                                                                    portfolio company of

                    Advised                   Advised                    Advised                 Advised                   Advised

                                                                                           on its divestiture of IC   portfolio company of
                  on its sale to                                                              SETA assets to

                                          on its sale to              on its sale to                                   on its acquisition of
               portfolio company of                                                        portfolio company of

                    Advised                   Advised                    Advised                 Advised                   Advised

                                           on its sale to
                                                                                                on its sale to
                                                                     on their sale to                                   on its sale to
                 on its sale to
                                      portfolio company of
                                                                                           portfolio company of

                    Advised                  Advised                     Advised                 Advised                   Advised

                                                                                               on its sale to
                                                                                                                          on its sale to
                on its acquisition        on its sale to               on its sale to
                        of                                                                 portfolio company of

       WHO IS ARONSON CAPITAL PARTNERS?
       Aronson Capital Partners is a leading financial advisor to government services and technology firms. We
       exercise our special domain expertise in the Defense, Intelligence, and Federal Civilian markets to achieve
       exceptional results for our clients. In addition to completing more than 100 transactions in the federal sector,
       our principals have decades of executive level, hands-on experience in the industry – a key differentiator that
       leads to success.

Mergers & Acquisitions                            Corporate Finance                                     Financial Advisory
•   Sell & Buy-Side M&A                           •   Recapitalizations & Restructurings                •   Internal Capital Transaction Advisory
•   Private Equity Investments                    •   Common & Preferred Equity                         •   Independent Corporate Valuations
•   Management Buyouts                            •   Debt Capital Raises                               •   Fairness Opinions
•   Divestitures                                  •   Minority Equity Investments                       •   Strategic Alternatives Assessments
•   Asset Sales

805 King Farm Boulevard, Suite 300 | Rockville, Maryland 20850 | P 301.231.6200 | F 301.231.7630 | aronsoncapitalpartners.com
You can also read