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Volume 5, Issue 1 April 2007

Welcome to the Federal Growth Report, the newsletter published by Minuteman Ventures LLC, an investment bank that focuses on mergers and acquisitions.

Our newsletter addresses issues of importance to leaders in the federal contracting sector. These people build companies and increase equity value.


Paul Serotkin
Minuteman Ventures LLC


February 2007
December 2006
October 2006

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In This Issue
CEO Corner - Dr. Edward H. Bersoff, Chairman, CEO and President, ATS Corporation
The Federal Deal - The Engenuity Technologies Deal
Daily Deals - The Latest Sector M&A Deals

Minuteman Ventures LLC partners with InfoBase Publishers, Inc. to bring you expert analysis of recent federal M&A transactions. InfoBase is a provider of information on buyers and sellers in the global defense, aerospace, and government technology marketplaces. Their Defense Mergers and Acquisitions (DM&A) module is the most comprehensive collection of industry M&A data and analysis in existence.

InfoBase is a lot more than M&A. Their on-line service links the defense sector's latest news on companies, contracts and programs to insightful sector analysis, budget trends and M&A transactions.

For more on InfoBase Publishers and its web-based Defense/Aerospace Competitive Intelligence Service (DACIS), visit or contact Bill Burton ( (410.820.6821) for a personal tour.

The Minuteman Federal Deal Meter
  Purchase price  
  Under $50m $50–100m Over $100m Total Deals
YTD 2007 12 2 2 16
2006 20 3 0 23

The Minuteman Federal Deal Meter covers M&A transactions of services firms principally serving federal agencies. Transactions covered are those announced from January 1, 2007 through April 8, 2007.

For the list of M&A transactions closed in the sector through April 8, 2007 and 2006, email

CEO Corner

Dr. Edward H. Bersoff, Chairman, CEO and President, ATS Corporation

A notable name in federal/defense IT circles, Dr. Ed Bersoff has assumed the leadership of ATS Corporation (ATCT.OB), McLean, VA, the result of money raised in 2005 by a Special Purpose Acquisition Corporation (SPAC). As the name of its founding entity infers, ATS is committed to growth via acquisition.

Bersoff founded and became President of publicly traded BTG, Inc., a company acquired by the Titan Corporation in 2001. He also sits on the Boards of ICF Consulting and E.F. Johnson, both public companies in the sector.

The SPAC is a Wall Street instrument that allows funds to invest in a group of prominent executives, with the intent to exploit those persons’ industry sector experience. Bersoff and his team launched as Federal Services Acquisition Corporation (FSAC), raising $126 million in an IPO in October 2005.

FSAC was intent on finding private companies to acquire that may be ready to operate in the public markets, though not necessarily with current management. On January 16, 2007, FSAC completed the acquisition of Advanced Technology Systems, Inc., the only federal services SPAC to have completed an M&A transaction.

Minuteman caught up with Dr. Bersoff to gain his views on SPACs, ATS, and the industry sector.

DMA: How active do you expect ATS to be in the acquisition market?

EB: Very much so. Our targets are to reach revenue of $300 million in three years and $500 million in five years. While we project 10% organic growth (higher than industry average, says Bersoff), acquisition will be key in filling the revenue gaps on the way to those two targets. Our guidance for fiscal year 2007 is for $115–$120 million in revenue, so, by definition, M&A must play a strong role in our strategy.

For the entire interview, click here.

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The Federal Deal

FGR offers analysis of M&A transactions involving government services contractors. The analysis is written by Stuart McCutchan, president and CEO of InfoBase Publishers, Inc. © and editor of the Defense Mergers & Acquisitions, a premier source for information on defense/aerospace M&A. Opinions expressed below are those of InfoBase. All rights reserved. For more on InfoBase Publishers' services, contact Bill Burton (410-820-6821,

The Engenuity Technologies Deal

The decision by CAE Inc. (NYSE: CGT; TSX: CAE) to purchase Engenuity Technologies Inc. (TSX: EGY) speaks volumes about how far the Canadian simulation powerhouse has come in the half decade since it sold off its cleaning products and forestry products businesses.

Having shed those failed diversifications, CAE has since been busy gussying up its core training and simulation business. (The company has, in fact, become the marketplace's leading consolidator.)

Geographically, a focus of its efforts has been reconstituting its business in the U.S. following the 1995 sale of CAE-Link to Hughes (that business subsequently changed hands two more times, and is now part of L-3 Communications).

Link, with its heavy reliance on "big iron" U.S. defense programs, was never really a good fit with CAE. Having shed the business, CAE moved to buy presences in marketplaces more to its liking. Tampa, Florida-based Reflectone, acquired from BAE Systems in 2001, added strength in transport and helicopter simulation equipment, and also added significant training and support services activities for both the commercial and military market. Dallas/Ft. Worth-based SimuFlite Training International, acquired later the same year, made CAE the world's second largest provider of business aviation training — the largest outsourced and full-service training market segment.

Looking beyond geography, in these moves one could see the beginnings of a second trend as well: a shift away from flight simulators themselves to a focus on the mission of training. In recent years this shift has accelerated, as CAE eschewed hardware-oriented deals in favor of targeted technology buys:

  • In 2004 the company acquired Greenley & Associates, a fast-growing Canadian professional services provider with a focus on project management, human factors, business analysis & usability, and modeling & simulation

  • In 2005 it acquired Tucson, Arizona-based Terrain Experts, Inc. (TERREX), a company specializing in COTS simulation software that makes database development simpler and more accessible to the entire simulation market

  • In Jan. 2007 it acquired Australia's KESEM International Pty., a company specializing in the application of modeling and simulation to decision support systems for the defense and homeland security markets. This deal, like Greenley, added to the company's CAE Professional Services business

With the acquisition of Engenuity Technologies, CAE has again (as it did with TERREX) added COTS simulation and visualization software for the aerospace and defense markets. Though Engenuity is Canadian, it brings with it a U.S. presence through recently-acquired AcuSoft, a modeling and simulation products and services company based in Orlando.

What these deals have in common is a move away from hardware and towards software, away from simulators and towards decision tools. We are intrigued by some of the technologies which Engenuity is bringing to the table, and in particular its STAGE simulation toolkit, used to create and interconnect simulation environments.

Engenuity also brings to CAE a rich dowry of operating locations: In addition to its Montreal headquarters, Engenuity Technologies has offices in Orlando, Atlanta, London, Paris and Dusseldorf, as well as a worldwide distributor network. It occurs to us that the company's challenge in realizing the value of its acquisitions will be to interconnect those far-flung locations with its technology, creating a network capable of channeling decision making solutions where and when they are needed.

It is a vision which is already dawning. In deals like these we are seeing the first steps away from the simulators which once seemed nearly as iconic as the aircraft for which they prepared pilots — and towards a software-driven future where simulation, training and modeling become hardware-agnostic, task-oriented solutions which increasingly insinuate themselves into processes and workspaces which are far afield from traditional "simulator time". In this future hardware will be a commodity and software will be king. We will know that future is fully upon us when companies like CAE, Thales and Link move at last to sell the simulator businesses which they are now merely de-emphasizing, and step fully into their inevitable role of "fab-less" integrators.

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Daily Deals

Announcement Date
Buyer Seller Purchase Price Seller Revenue
April 2, 2007 Stanley Associates Techrizon, LLC N/D $29m
March 22, 2007 Xedar Corp. Atlantic Systems Corp. N/D $5m
March 12, 2007 ATS Corporation Reliable Integration Services N/D N/D
March 2, 2007 Humana, Inc. DefenseWeb Technologies N/D 70 Employees
March 1, 2007 Calibre Systems Unity, Inc. N/D N/D
February 12, 2007 CAE, Inc. Engenuity Technologies $19.6m $10.5m
February 12, 2007 Global Strategies Group SFA, Inc. N/D $124m
February 12, 2007 VT Group MILCOM Systems $42.5m $100m

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About Us

Minuteman Ventures LLC advises company owners on the sale of their businesses, and assists corporate and private equity buyers in strategic acquisitions and divestitures. Our team consists of experienced entrepreneurs and business executives who founded or operated companies and corporate divisions.

We specialize in companies that sell services, products, and solutions to federal government clients.

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