Bill Varner, the President and Chief Operating Officer of ManTech’s Mission, Cyber and Technology Solutions (MCTS) Group, talked to ACG National Capital’s members about the characteristics that distinguish a business as a potential target for acquisition. Greg Woodford of event sponsor BB&T Capital Markets introduced the speaker at February’s monthly meeting, who went on to discuss two events in his career that helped make him the right person to lead a group at one of the area’s most active acquiring companies. Once he provided the group with insight into his background, Mr. Varner shared the six key qualities that he evaluates when determining the potential value of a merger or acquisition.
The ManTech president noted his appreciation for the writer Malcolm Gladwell and started his remarks with a discussion of two “Tipping Points” in his own life. The first event occurred when Mr. Varner was nearing the end of his graduate work in the mid-1970’s and an office-mate asked if he wanted to come along for a trip to California and an interview with a new business out there. He gave it some thought but decided to direct his career more toward the east than the west. Despite the success he has enjoyed since, Mr. Varner still wonders how things might have been different if he had joined Intel as an electrical engineer in 1976.
The second “Tipping Point” moment came not long after when ESL, the company where Mr. Varner went to work after completing his masters, was acquired by TRW. The unit that he worked in was prohibited from the transaction due to OCI concerns and the group chose to put itself up for sale. The uncertainty of the situation and the work that went into valuing the business and finding a purchaser inspired him to learn more about the business side of engineering, and he went on to get an MBA.
He spent a number of years with TASC, the company that bought ESL. During that time the business was involved in a number of acquisitions, some as the acquiring entity and some as the entity being acquired. His technical engineering knowledge and experience combined with his MBA and familiarity with business combinations made him the ideal candidate to head ManTech’s MCTS group, and that’s where he has been since 2009.
Over the course of his career, Mr. Varner has determined that there are 6 key components that make a business an attractive target for acquisition.
- Customers—Does the target serve a customer base beyond that of your current business?
- Contracts—Does the target have ongoing contracts that provide value to the acquirer?
- Capability—Does the target offer services or expertise not currently available from the acquirer?
- Culture—Will the combined entity offer a workplace similar to the one both businesses enjoyed prior to the transaction?
- Technology—Does the target offer a product that the acquirer does not?
- Geography—Does the target have offices in locations that support the acquirer’s mission?
Mr. Varner pointed out that the ideal combination involves some level of overlap in these areas to make sure that the combined entity functions effectively going forward. He noted that in his experience, the recent acquisition of WINS by ManTech may have provided one of the best examples of a transaction that satisfied all 6 of his criteria. He praised a recent article about that deal in Washington Technology magazine, saying that it provided an excellent account of the process from all of the parties involved.