Blue Delta invested in Metis in late 2016 to support the senior management team in buying down the Founders original stakes, as well as providing capital to fuel additional organic growth through key hires, increased bid and proposal resources, and tuck-in acquisitions (such as Pluribus).
During our hold period, we worked with the CEO to grow the business by 5x, creating a leading provider of counter-threat finance, intelligence analysis, and training solutions to the Department of Defense (SOCOM, CENTCOM, DSS, etc), the Intelligence Community agencies, Homeland Security and Treasury. The Company graduated from small business contracts to winning Prime, Full & Open contracts that served some of the most demanding National Security customers with mission critical solutions.
Blue Delta helped Metis work through strategic interest in the Company, culminating in a formal sale process where publicly traded PAE acquired the business for $92 million in late 2020. The sale yielded multiple multi-millionaires on the management team, as well as significant life altering outcomes for a number of other management team members, and an incredible return for Blue Delta’s investors.
IST Research, headquartered in Fredericksburg, VA, enables full-capability operations in the information environment through the application of advanced technology and effective tradecraft. The company defends the U.S. against disinformation campaigns from our adversaries, protects vulnerable trafficked populations, and performs many national security missions in between. IST’s proprietary Pulse platform directly engages populations at scale and harvests a massive amount of publicly available information with global placement, access, and know-how, and its tradecraft augments Pulse’s information gathering abilities to enhance the end-to-end solutions offering.
Blue Delta invested in IST in late 2016 with a thesis centered around a strong management team, differentiated technology offering, and significant growth potential. When we met the IST team, the company’s R&D efforts showed considerable promise through its partnership with the Defense Advanced Research Projects Agency (DARPA), but it needed additional capital to refine its capabilities, expand its reach to other National Security customers, and effectively navigate each phase of the SBIR program. IST’s solution gained significant traction at marquee customers during our investment period, including the U.S. Cyber Command, the U.S. Special Operations Command, and the Department of State, which generated interest from a number of potential acquirers. Blue Delta’s investment culminated in IST winning multiple SBIR Phase III Prime contracts with over $250M of total contract value, which will continue drive exceptional growth for years to come.
Blue Delta helped IST navigate a formal sale process which resulted in an acquisition by The Carlyle Group, a global private equity firm that is both a pioneer in the private equity industry and one of the leading government contracting investors. The sale process yielded a life changing liquidity event for IST’s management team, and an outsized return for Blue Delta’s investors.
Sonatype is the leader in DevOps automation and the governance of open source components, providing open source software supply chain management solutions. Headquartered in Howard County, MD and led by CEO Wayne Jackson (former CEO of Sourcefire, which went public and then was acquired by Cisco for almost $3B), Sonatype’s core mission is to help safely and securely accelerate software innovation, by providing an end-to-end security solution for the open source components that are defining modern software development.
Our team partnered with Wayne and his team to help them scale their business in the U.S. Federal Government marketplace, in addition to their deep customer penetration in commercial enterprise on a global basis. We assisted the Sonatype team on a number of fronts, from Board of Director recruiting, VP of Federal Sales recruiting, channel partner introductions, customer support initiatives and strategic discussions with the CEO. During our investment period the company grew revenue almost 10x and was preparing for an eventual initial public offering (IPO).
Over the years, Sonatype attracted multiple potential buyers. We worked with Wayne and team to optimize the outcome for the Company at this stage and ultimately the company received a majority control investment from Vista Equity Partners, a leader in its field. That transaction provided Sonatype with another great chapter in its growth, significant wealth creation for the management team and a double digit multiple of capital return for Blue Delta.
The Tauri Group
The Tauri Group was a leading provider of homeland security solutions, headquartered in Alexandria, VA. In particular, the company had subject matter expertise in countering chemical, biological, radiological, nuclear, and cyber threats as well as providing for resiliency of operations. It was led by two serial entrepreneurs whom we had known for several years.
Our team partnered with these entrepreneurs to help them prosecute a large number of bid opportunities in their core market. We assisted the Tauri team with recruiting additional business development and proposal talent, and supported the entire bid lifecycle from strategic teaming and go-to-market approaches, to tactical decisions around pricing models, key personnel, and red teaming bids. We also created a Board of Directors that included independent members with deep experience in the government contracting community in general and specifically within the company’s core competencies. As a result, the company grew revenue nearly 300% during our involvement.
Tauri attracted multiple preemptive acquisition offers from strategic partners. We worked with the entrepreneurs to optimize the outcome for the entire team, and ultimately the company was acquired by LMI. That result provided significant wealth creation for the two co-founders, good opportunities for the employees and triple-digit annualized returns for Blue Delta.
42Six was a cutting-edge “Big Data” analytics company, headquartered in Columbia, MD, which spun-off from a larger government technology business. It was led by two young veterans of the Intelligence Community and Defense Department who were first-time entrepreneurs with a unique mix of technical expertise and advanced business acumen.
Our team partnered with these entrepreneurs to introduce them to new customers, new channel partners, middle-level management, and technical talent. We assisted them with the upgrade of their business development and pipeline management processes. The company grew revenue and EBITDA by almost 100% during our involvement.
42Six attracted multiple preemptive acquisition offers from strategic partners. We worked with the team to maximize the purchase price and the company was acquired by Computer Sciences Corporation (NYSE: then CSC, now CSRA), for a significant premium to comparable transactions. That outcome also provided life-changing wealth creation for the two co-founders and triple-digit annualized returns for Blue Delta.
KTSi was an industry-leading provider of highly classified space and satellite superiority solutions, which was headquartered in Chantilly, VA but also had significant operations in Los Angeles, CA and Colorado Springs, CO. The company was founded by a former special operator who later partnered with a serially successful entrepreneur who served as CFO/COO.
Blue Delta’s team helped the company with several key hires and assisted in establishing a robust infrastructure (including a new accounting system to support a massive cost plus prime contract win). We also shaped the go-to-market strategy in adjacent customers and implemented formal business development and pipeline processes. KTSi grew revenue by 130% and EBITDA by more than 600% during our involvement.
After receiving a number of pre-emptive acquisition offers, the company produced a significant dividend for shareholders and then initiated a formal sales process led by an investment bank. BDCP helped the management team successfully navigate that process and ultimately the business was successfully sold to Scitor (now NYSE: SAIC). This outcome yielded life-changing wealth creation for the founder and a number of the management team members, as well as a significant double digit return for our investors.
Acentia was a later-stage healthcare pure-play headquartered in Falls Church, VA, which provided IT and clinical support to US Federal Government customers including the FDA, CMS, MHS, CDC, and IRS (specifically its role enforcing the Affordable Care Act, “ACA”).
We invested in Acentia after our Venture Partner, Todd Stottlemyer, became the CEO of the company (this exit was his 4th successful company in the government contracting market). Despite being a small shareholder, we used our federal healthcare domain expertise to source several successful proprietary acquisitions for Acentia, most notably one that positioned them to capitalize on of the regulatory and compliance changes mandated by adoption of the ACA.
Acentia grew healthcare-related revenue nearly four-fold during our involvement and also divested some lower margin, non-strategic business units. After receiving preemptive interest from several acquirers, the company initiated a formal sale process led by an investment bank. Acentia was acquired by MAXIMUS Inc. (NYSE: MMS), for an amount that was roughly twice the enterprise value at the time of our investment.
PAE is a leading provider of mission support and “smart power” services and solutions to the State Department, USAID, and Defense Department customers. The company is headquartered in Arlington, VA.
Blue Delta was originally contacted to aid in a management-led buyout of the unit from its then-parent corporation, Lockheed Martin. Given the size of the business, we partnered with Lindsay Goldberg LLC (LG) who led the acquisition of the business and we became a small shareholder alongside LG.
Our team recruited the new CEO and Executive Chairman, and provided them and the management team with insights and introductions into various federal customers. We also helped LG and the management team set strategic direction and then re-shape the customer and contract portfolio through a series of acquisitions, as well as producing two significant dividends for shareholders along the way.
After tripling revenue and quadrupling EBITDA, as well as winning several large, long-term new contracts, and key re-competes, the company initiated a formal sale process led by two investment banks. PAE was acquired by Platinum Equity for an amount which provided excellent double digit returns for our investors.
HALO was a market-leading provider of financial analysis software and human capital management solutions to both commercial and government customers.
Blue Delta participated in a financing that helped HALO scale its management team, including helping recruit a new CFO/COO well known to Blue Delta, as well as increase its presence in the government marketplace.
After significantly growing revenue, HALO was acquired by a large publicly traded financial services company, providing a very nice double digit annual return for our investors.
The Company was a significant provider of commodity IT solutions to the US Federal Government marketplace, which was originally looking to scale its corporate venture capital activities, particularly in the technology services arena.
Our efforts helped evolve the company’s strategy, which then allowed us to help recruit new management team members and support a large divestiture. With the proceeds from that divestiture we helped source a key tuck-in acquisition for the company, which catalyzed their pivot to higher value-added services and solutions in the marketplace.
After that repositioning, the Company was acquired by a multi-billion dollar, privately-held technology company, producing a good double digit annual return for Blue Delta.