Chicago Shop Teams With National Security Pro

Target: Six3 Systems Inc.

Price: Undisclosed

Sponsor: GTCR Golder Rauner

GTCR Golder Rauner is employing one of its classic deal techniques to gain entry into the potentially lucrative national security and defense intelligence industry. The firm has hooked up with Robert Coleman, an executive with ample experience in the industry, to create Six3 Systems Inc., a Fairfax, Va.-based platform company to buy up businesses in the industry.

In the 1980s, GTCR, then known as Golder Thoma & Co., was one of the pioneers of the so-called roll-up strategy in which buyout firms partnered with industry executives to create platforms with which the firm then bought, or “rolled up,” a number of businesses in a given industry. It is a strategy that has since been copied by many of the firm’s peers.

GTCR has experience in aerospace and defense through its February 2008 investment in Landmark Aviation, an airport services provider, and prior investments federal internet technology providers, Larry Fey, vice president, explained to Buyouts. In recent years, the firm’s executives noticed more opportunities to buy security and intelligence companies that do business with the U.S. government as it adapts to modern, unconventional threats such as cyber hackers and terrorists, as opposed to armies. “As we looked at macro trends, it seemed to us there were some areas that were potentially more compelling than where we historically played,” Fey said.

Six3 Systems represents GTCR’s entry into the national security and defense intelligence industry, which Fey said is a relatively small, close-knit community. Firm executives wanted to find an industry executive with contacts to create a platform in the industry. Craig Bondy, principal, met Coleman at an investing conference in 2008, while Coleman was still COO of ManTech International, a national security contractor that specializes in cyber security. While at ManTech, Coleman led a series of acquisitions and growth initiatives that helped the company increase its revenues from $827 million to more than $1.8 billion, according to a GTCR statement. Prior to ManTech, Coleman was CEO of Integrated Data Systems, another cyber security provider, from 1990 to 2003.

Coleman and GTCR executives are now seeking acquisitions in the sector. Fey said he is unclear how many deals GTCR would like to back for Six3 Systems, or how much revenue the firm would like Six3 Systems to generate. Fey declined to say how much equity GTCR is allocating to the venture. The investment comes out of GTCR Fund IX LP, a $2.75 billion fund the firm closed in 2006. Fey said there is still a substantial amount of capital left in the fund; GTCR typically raises a new fund every two to four years.