Target: BIT Systems Inc.
Price: $30 million – $250 million
Sponsor: GTCR Golder Rauner
Seller: BIT Systems Inc.
Financial Adviser: Sponsor: Bank of America, Citizens Bank, SunTrust Bank:
Legal Adviser: Sponsor: Kirkland & Ellis LLP ; Seller: Mullin Richter & Hamilton LLP
The Dulles, Va.-based company is the second acquisition for Six3 Systems, a platform GTCR launched in April to target companies in the national security and defense intelligence industries. The company made its first purchase in July, buying Harding Security Associates Inc., a McLean, Va.-based company that specializes in biometric security, which involves identifying people based on physical or behavioral traits.
Terms of the deal were not disclosed, though GTCR typically invests more than $30 million of equity in its deals. The firm funded the deal with about 50 percent equity and 50 percent debt. Bank of America, Citizens Bank and SunTrust Bank provided senior debt of about 2.25x EBITDA, while GTCR provided junior capital, Bondy said. The acquisition of BIT Systems is expected to close in the next two weeks.
With the addition of BIT Systems, Six3 Systems will generate more than $200 million in revenue, employ about 800 people, and generate profit margins in excess of 10 percent, Bondy said.
GTCR created Six3 Systems in partnership with Robert Coleman, a longtime executive in the industry. The idea is to create an intelligence contractor with three areas of capabilities: biometric intelligence (which the company obtained via Harding Security); signal intelligence (which the company will obtain from BIT Systems); and cyber security. The firm is still scouting deals in the cyber security area.
Bondy said that Coleman, the former president and COO of ManTech International, a national security contractor that specializes in cyber security, sourced the deal through his familiarity with the founders of BIT Systems—Tom Ladd, Tim Lewis and Brad Worsham. The co-founders began speaking with Coleman and Bondy about a deal last summer, Bondy said.
Moving forward, at least one goal is to expand Six3 Systems’s clients to include more government agencies, such as the National Security Agency, Bondy said.
The BIT Systems investment comes out of GTCR’s ninth fund, a $2.27 billion pool that closed in 2006 and is now about 60 percent committed. Bondy said the firm will likely make three to five more platform investments through Fund IX.