Houlihan Lokey Advises GovernmentCIO

Houlihan Lokey is pleased to announce the recapitalization of its client GovernmentCIO (GovCIO) by Welsh, Carson, Anderson & Stowe (WCAS). The strategic investment by WCAS positions GovCIO for accelerated growth and market expansion. The transaction closed on October 30, 2020.

Headquartered in Washington, D.C., GovCIO is a leading provider of next-generation technology and digital services to the federal health IT services market. The company is singularly focused on transforming and advancing government IT capabilities, and its approximately 500 employees leverage Agile software development as well as leading COTS technology solutions to advance its customers’ abilities to meet their mission requirements. In the 10 years since its founding, the company has created a franchise position within Veterans Affairs (VA), where it holds seats on the agency's primary technology IDIQs and has won more than $900 million of prime awards in the past three years, and within the Department of Health and Human Services.

WCAS is a leading U.S. private equity firm focused on two target industries: technology and healthcare. Since its founding in 1979, the firm's strategy has been to partner with outstanding management teams and build value for its investors through a combination of operational improvements, growth initiatives, and strategic acquisitions. WCAS has deep experience in acquiring founder-led businesses and corporate carve-outs. The firm has raised and managed funds totaling more than $27 billion of committed capital. Joining the GovCIO platform and partnering with WCAS are Jim Brabston, a former senior executive with Stanley Inc. and Camber Corp., who will be CEO; and Joe Cormier, a former senior executive with Camber Corp., Sotera Defense, and ManTech, who will be executive vice president and CFO.

Serving as the exclusive financial advisor to GovCIO, Houlihan Lokey leveraged its unique sector insight to consummate a transaction with substantial strategic value to all parties. This transaction yet again demonstrates Houlihan Lokey’s strong leadership position advising companies in the federal healthcare services sector and follows transactions involving other notable companies in the sector, including IMPAQ International (sold to the American Institutes for Research) and Social Scientific Systems (sold to DLH Corp.). GovCIO exhibits several characteristics that are currently on the radar screens of both strategic and financial sponsor investors in the government technology and services sector:

• Capabilities Delivering Next-Generation Technology. As government organizations accelerate the migration of their core legacy systems to more modern architectures, companies with proven track records of delivering next-generation systems at scale will continue to receive strong interest in the M&A market. GovCIO delivers a differentiated set of next-generation technology solutions and digital services that enhance its customers’ mission efficacy and improve enterprise-wide adoption of change, transparency, and performance. The company is a recognized leader in Agile transformation as well as low- and no-code development platforms and has supported the transition of more than 300 projects to Agile development methodologies. The transaction emphasizes the continued demand for companies with strong past performance delivering next-generation technology and digital solutions.
• Positions on Strategic Contract Vehicles. Companies holding prime seats on major IDIQs, BPAs, and GWACs continue to be highly sought-after targets in the government services and technology marketplace. With seats on both of the major technology-focused contracts at VA (T4NG and VICCS), which represent multibillion-dollar market opportunities, GovCIO has positioned itself for continued opportunity across the agency.
• Deep-Seated Relationships Within Strategic Customers. Companies with embedded relationships within prioritized and well-funded customers, particularly those enjoying bipartisan support, continue to be highly valued in the marketplace. With an annual budget north of $100 billion and the critical mission of delivering benefits to our nation’s veterans, the VA remains a highly attractive customer in the government contracting community. Over the past several years, GovCIO has won more than $900 million in awards within VA, where it supports nearly every major component of the agency.

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

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 the beginning of 2019, the ADG practice has closed more than 30 transactions worth more than $7 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. 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 (formerly known as Thomson Reuters).