Houlihan Lokey Advises DHPC Technologies

Well-positioned defense and government services companies are demonstrating significant resilience during the COVID-19 crisis. Strategic buyers remain focused on acquiring highly strategic assets with capabilities that are aligned with their long-term growth objectives.

Headquartered in Woodbridge, New Jersey, DHPC Technologies was a highly innovative electronic warfare (EW) engineering and solutions development platform supporting the nation’s most vital national defense priorities. As a niche developer of innovative electronic warfare (EW) technologies with market-leading technical solutions and a solid, proven reputation with Army customers, the company provided a vast array of electronic attack, protection, and countermeasure solutions, enabling advanced air and ground system survivability in the face of increasingly sophisticated adversarial threats. DHPC developed capabilities that enable disparate sensor systems to collaborate autonomously, and in real-time, to appropriately characterize and respond to threats. Such capabilities are particularly vital to mission applications in the areas of Counter-UAS (CUAS), missile warning, perimeter defense, and airborne and ground vehicle protection.

The transaction with Perspecta, Inc. (NYSE:PRSP) converged DHPC's proven, rapid-prototyping expertise in information warfare with Perspecta’s leadership positions in cybersecurity, advanced analytics, and secure communications.

DHPC exhibited several characteristics that support strong growth momentum in 2020 and beyond, notwithstanding the current public health crisis. Businesses that share similar characteristics are best positioned to execute on near-term liquidity strategies despite the lingering economic impacts related to COVID-19.

Businesses that possess the attributes listed below will be best positioned to continue to attract buyer and investor interest.

• Unique, Mission-Enabling Capabilities: Customers across defense, intelligence, and civilian agencies continue to prioritize funding for capabilities that accomplish their most important mission objectives, even as most agencies are operating via remote means. Within the national security arena, investments in capabilities that are aligned with the national defense strategy, including electronic warfare, directed energy, cyber, and hypersonics will continue with limited to no impact related to COVID-19. DHPC’s pivotal role in the development and fielding of the Army’s next generation of electronic warfare solutions is an example of an enduring mission requirement whose advancement will continue to garner significant focus and funding.
• Scale and Market Leadership Within Desirable, Well-Funded Customers: Buyers and investors will continue to favor businesses that have both scale and strategic relationships with customers that will continue to see strong funding. With a prominent presence at strategic locations, including Aberdeen Proving Ground, Picatinny Arsenal, and Huntsville, DHPC supports nearly all of the primary mission objectives of the Army Futures Command, established in recent years to align funding with the Army’s most important priorities. DHPC’s strategic prime contract portfolio and scale with the aforementioned customer communities were significant value drivers for the business.
• Ability to Drive Rapid Technology Development and Insertion From R&D to Fielding: Companies such as DHPC that develop, test, prototype, and rapidly field mission-enabling technology solutions will continue to attract strong buyer interest. Leading government services firms are increasingly attracted to businesses that develop products and technology solutions that address vital customer needs. Perspecta’s acquisition of DHPC and Leidos’ acquisitions of Dynetics and L3Harris Technologies’ Security Detection and Automation businesses are a few examples of this trend.

Houlihan Lokey served as the exclusive financial advisor and assisted in marketing, structuring, and negotiating the transaction on behalf of DHPC.

Houlihan Lokey's Aerospace, Defense & Government (ADG) practice within the global Industrials Group is a leading M&A advisor to aerospace, defense, and government services companies in the United States. Since 2016, the practice has closed over 80 transactions worth more than $14 billion in enterprise value. With a staff of approximately 30 investment bankers in Washington, D.C., Chicago, Los Angeles, and Europe, Houlihan Lokey's ADG practice is among the largest dedicated industry banking teams worldwide. In 2019, the Industrials Group was once again ranked as the No. 1 M&A advisor for all U.S. industrial transactions according to Refinitiv (formally known as Thomson Reuters).