STG Group, Inc. has entered into an agreement to acquire Preferred Systems Solutions, Inc. for approximately $119 million. STG Group intends to fund the purchase price with a combination of debt and equity financing. The transaction is expected to close during the first quarter of 2017, and was facilitated by Morrison & Foerster LLP and Sagent Advisors.
Transaction rationale:
- Strengthens STG’s position in national security, extends the company’s reach into the intelligence community. Adds new customers and core capabilities in the departments of Homeland Security and Defense and the FBI.
- Allows for the integration of cyber, data and software security backgrounds of both companies, enabling greater reach into high-priority areas of government policy and spending.
- Expands margin profile of the company and expected to provide revenue synergies and cost efficiencies.
“The combined company will have stronger core competences, greater scale and depth, the ability to develop new capabilities and focus on a wider range of customers managing larger, more complex federal programs,” said Phillip Lacombe, STG president. “With our progressive vision for the business, I believe that we will deliver on the growing demands of those customers. As we work toward close, we look forward to welcoming and integrating PSS and its people in to the STG team.”
“We are extremely pleased to become part of the STG Group as it will significantly increase our ability to provide an expanded set of advanced technology capabilities across the broad spectrum of critical national security programs,” said Scott Goss, CEO of PSS. “Equally important is the opportunity for our associates to grow personally and professionally in an environment with similar values and culture. The company’s commitment to outstanding customer support enables world-class services in support of our country’s warfighters and the federal civilian workforce working daily to safeguard our country.”
“PSS looks to be a winner for STG giving them a boost in critical mass overall and most importantly, access to coveted national intel customers,” said Bob Kipps, managing director of KippsDeSanto. “For PSS, kudos to Scott, Jim and the CM Equity for a well-executed business transformation and value-creation strategy.”
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