Houlihan Lokey Advises Engineering Solutions and Products

Transaction: Houlihan Lokey Advises Engineering Solutions and Products

Houlihan Lokey is pleased to announce that Engineering Solutions and Products, LLC (ESP), a portfolio company of Ascribe Capital, LLC (Ascribe), has been acquired by Sev1Tech, LLC (Sev1Tech), a portfolio company of DFW Capital Partners, Inc. (DFW).

Headquartered in Chantilly, Virginia, ESP is a premier provider of command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) lifecycle support services for the U.S. Army. More than 485 of ESP's highly cleared employees specialize in engineering, modernization, training, system fielding, integrated logistics, and global operations support of U.S. Army C4ISR and intelligence systems. The company supports numerous programs of record for prominent ground, air, and watercraft C4ISR platforms, including the Army's premier intelligence platform, its tactical networks, communication systems, and radars. ESP leverages a robust portfolio of proprietary business productivity solutions and training suites to drive intimacy across these customers, and has become one of the Army's most trusted partners in the C4ISR domain. These proprietary solutions provide unique transparency and efficiency for the Army, creating tremendous value both in cost reduction and operational effectiveness. ESP's embedded customer relationships and deep domain expertise in the C4ISR technology realm position the company for continued success as a part of Sev1Tech moving forward.

Serving as the exclusive financial advisor to ESP, Houlihan Lokey leveraged its unique insight to complete a transaction with substantial strategic value to all parties. The sale of ESP to Sev1Tech also highlights the positive market dynamics for well-positioned government services and technology businesses and illustrates several key themes:

  • The transaction emphasizes the importance of a strategic customer base and deep domain expertise. ESP's pervasive presence at the U.S. Army's Aberdeen Proving Ground, coupled with the company's unique capability set centered around C4ISR technologies, is highly complementary to Sev1Tech's existing high-end IT capabilities and broader Department of Defense customer set. The companies explored and identified compelling cross-pollination opportunities that will create significant strategic value for both parties.
  • Sev1Tech's attraction to ESP was also driven in part by the company's franchise position on mission-critical programs of record. ESP's recent past performance includes the management of several programs with total values in excess of $100 million. These complex, multi-faceted Army programs of scale have created huge barriers to entry for the company and enhance Sev1Tech's ability to capture large procurements, a necessity for Sev1Tech to sustain its track record of growth on a rapidly expanding top line.
  • For a company of its size, ESP has built a sophisticated and highly scalable platform that leveraged the experience of its strong management team possessing backgrounds at large publicly traded companies in the sector. ESP developed a host of corporate discriminators, including advanced processes, procedures, and proprietary software tools that will help fuel the combined potential of ESP and Sev1Tech.

With the addition of ESP, Sev1Tech will gain meaningful scale, expand the diversity and breadth of its customer base, and leverage a highly complementary capability set to drive continued growth.

Ascribe Capital is a private investment firm managing approximately $3 billion of long-term capital focused on investing in the debt and equity securities of middle-market companies. Ascribe is an affiliate of American Securities LLC, a leading U.S. private equity firm, with more than $15 billion under management.

Headquartered in Woodbridge, Virginia, Sev1Tech is a leading provider of IT, engineering, and program management services and solutions to U.S. government agencies and major commercial organizations. Founded in 2010, Sev1Tech is a preferred and trusted advisor for the government and private sector, supporting critical missions across the defense, intelligence, homeland security, space, and health markets. Sev1Tech works in multidisciplinary teams, collaborating with its customers to deliver practical, timely, and best-value solutions that solve management, technology, and program challenges, which ultimately enables best-in-class outcomes. Sev1Tech delivers excellence through highly qualified people, CMMI SVC 3, ISO 9001, ISO 20000, and ISO 27001 certified processes, and cutting-edge technology.

DFW Capital Partners is a private equity investment firm focused exclusively on the lower middle market. Since 1983, DFW has been investing in and acquiring high growth businesses in the healthcare, business services, and industrial services industries. DFW partners with talented entrepreneurs, supports strong management teams, and equips them for rapid growth. DFW actively manages several pools of committed capital, with approximately $1 billion in assets under management.

Houlihan Lokey's Aerospace, Defense & Government (ADG) practice is a leading M&A advisor to aerospace, defense, and government services companies in the United States. Since 2016, we have closed more than 65 transactions worth more than $10 billion in enterprise value. With a staff of approximately 30 investment bankers in Washington, D.C., London, and Los Angeles, Houlihan Lokey's ADG practice is among the largest dedicated industry banking groups worldwide. 

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