Jason Kaufman is head of investment banking for Chertoff Capital, a boutique investment bank focused on companies in the defense technology and national security communities. Kaufman has served the government contracting market for 15 years and closed over $3 billion in deal value in the sector. Earlier this year, Kaufman and his team advised Digital Sandbox, a data analytics software company, in its sale to Haystax Technology.
Chertoff Capital is the investment banking subsidiary of The Chertoff Group, a global advisory firm, with offices in Washington, San Francisco, New York, and London.
Having started his banking career with Quarterdeck Investment Partners in 1998, Kaufman brings a long historical view to the market. We asked him how this deal environment inspired him to build Chertoff Capital.
“Since 2001, our sector enjoyed a long supercycle of prosperity. Even in 2009, when the global economy dipped into recession, the national security sector held up very well. For over a decade, ‘Sell Now’ was the easy, obvious, and honest advice to give a business owner.
“So now we are two or three years into a down cycle. There’s a playbook for that too, and M&A plays a critical role, but it’s more nuanced. It became clear to me that I was going to need a better toolkit to help my clients get through a difficult time. Some would thrive and a sale would still be the right course. But others were going to have to focus internally and grind through it. How could I serve them too?”
Kaufman expects his clients will look to the broader capabilities of The Chertoff Group to accomplish their strategic objectives in preparation for a sale.
“There’s really no substitute for organic growth. I met The Chertoff Group in 2010 while advising a large, private equity-backed intelligence contractor on its sale. During the due diligence process, our client kept winning sizable new contracts and exceeding its growth projections – this was invaluable to me as a banker and armed me to drive a premium purchase price. Our client attributed advice it received from The Chertoff Group as an important factor in its success. So the founders and I got together and said ‘You know, we could do this under one roof.’ The idea that my platform could help a client to grow while also supporting them transactionally was a real ‘wow’ moment.”
Since Chertoff Capital was formed, Kaufman has stayed focused on the thrill of the deal.
“Helping clients achieve liquidity is my greatest passion. The Digital Sandbox team, for example, labored for 15 years building the company, and then trusted us to support them in their last mile. We take our role as trusted advocates very seriously. The sale to Haystax was a great outcome for everyone involved.”
Despite the difficult market climate, Kaufman sees some signs of optimism in the M&A market.
“Companies who got out in-front of the downturn are still performing quite well, mainly by taking away market share. And there is an enormous amount of untapped buyer demand for deals. We are seeing a pretty notable uptick in deal activity this quarter and have good transactions in our backlog.
I am really proud of the team we have built. We are investing in our platform for the long-term; we have a team of six investment bankers with experience from Goldman Sachs, BB&T/Windsor, and KippsDesanto. Several hold clearances, which can be an advantage in this market. We have all the resources we need to scale our practice.”
Being a part of The Chertoff Group has its share of unique moments.
“It’s an honor to collaborate with the likes of Michael Chertoff, Michael Hayden, Charlie Allen, and Pres Winter. They are among the leading security experts in the world, bar none. Their insights put the wind at our backs as bankers, and their networks are pretty stunning. Charlie Allen especially, a 47-year CIA veteran, gets mad when I don’t wear a tie to the office – he keeps us on our toes.”
The Chertoff Group also likes to make sure team building is done right.
“A group of us spent the day at Academi in Moyock, North Carolina. We fired different semi-automatic weapons and took tactical driving lessons. I had no idea what a police cruiser was capable of – or how carsick I could get!”