Houlihan Lokey Advises Social & Scientific Systems, Inc.

Transaction: Houlihan Lokey Advises Social & Scientific Systems, Inc.

Houlihan Lokey is pleased to announce that Social & Scientific Systems, Inc. (SSS) has been acquired by DLH Holdings Corp. (DLH) for $70 million.

Headquartered in Silver Spring, Maryland, SSS is a leading public health research organization that collects, manages, and analyzes large-scale health datasets in support of critical public health initiatives. For over 40 years, SSS has enabled transformative decisions encompassing the most complex, generation-defining public health missions including large-scale disease outbreaks, HIV/AIDS, cancer, sexually transmitted infections (STIs), and environmental disasters. With approximately 400 employees, the company specializes in clinical and biomedical research, epidemiological research, health policy and data analytics, public health capacity building, and program evaluation. SSS serves some of the most discerning customers in the public health arena including the National Institutes of Health (NIH) and the Centers for Medicare and Medicaid Services (CMS). The company's decades-long track record of success is grounded in its world-class research expertise, mission-driven employee base, and unwavering commitment to improving public health.

Headquartered in Atlanta, Georgia, DLH (NASDAQ:DLHC) is a leading provider of technology-enabled healthcare solutions to federal government clients throughout the United States and abroad. DLH is a highly values-driven organization serving key health and human services programs with a reputation among its customers for disciplined excellence. DLH has more than 1,600 employees whose core competencies include assessment and compliance monitoring, program management, health IT systems integration, data analytics, medical logistics, and pharmacy solutions. Through its new partnership with SSS, DLH adds the scale, capabilities, and customer access to support growth in its public health and life sciences focus area.

This deal reinforces several prevailing themes that are driving M&A activity in today's federal marketplace.

  • Strong Interest in Federal Healthcare Market: In the last 12 months, M&A activity in the federal healthcare market has accelerated. After averaging only two deals per year over the last six years, this segment has seen eight completed transactions in the last 12 months. This activity has included PE firms establishing new platforms (e.g., Dovel, purchased by Macquarie and Emmes, purchased by Behrman) as well as large strategic acquirers (e.g., KGS, purchased by ManTech and Cognosante's Health IT Consulting Practice, purchased by NTT Data). Given the growth dynamics of the sector and strong bipartisan support for federal healthcare customers, this sector will likely continue to see robust M&A activity for the foreseeable future.
  • Highly Active "Mid-tier" Buyer Universe: While private equity and large ($1+ billion) strategic buyers remain highly acquisitive, mid-tier buyers continue to drive a substantial portion of M&A activity, driven in part by the robust credit environment. The SSS transaction is a transformative deal for DLH and will increase annual revenue by ~50%. DLH funded the transaction with a $95 million secured bank credit facility.
  • Full and Open Revenue Drives Value: Market participants continue to place valuation premiums on well-positioned businesses with strong credentials competing in full and open environments. Over the past several decades, SSS developed a tremendous track record securing large ($100+ million) prime contracts in full and open competition.

Houlihan Lokey served as the exclusive financial advisor to SSS.

Houlihan Lokey's Aerospace•Defense•Government (ADG) practice is among the leading M&A advisors to aerospace, defense, and government services companies in the United States. Since 2015, we have closed more than 60 transactions worth nearly $15 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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