According to a study released by Aronson Capital Partners, the second quarter of 2016 saw significant investment and deal activity in the region’s IT and technology markets – specifically in the areas of cybersecurity and big data.

Due to the area’s large concentration of government contractors and companies that sell to the federal government, it’s not surprising that much of this growth and deal activity was driven by government spending priorities.

Federal government investments in cybersecurity, big data and data analytics, and C4ISR have propelled mergers and acquisition activity as enterprises look to add in-demand solutions and skillsets to their portfolio and compete for these federal funds.

Let’s take a look at each of these markets and technologies separately, and look at some of the specific deals that Aronson Capital Partners cites as examples of this trend.

A federal scramble for security
With increasingly sophisticated cyber attacks continuing to threaten the country, President Obama announced the Cybersecurity National Action Plan (CNAP), which requests an additional 35% ($19 billion) in funding for cybersecurity programs to be implemented by the beginning of 2017.

This increased spending on cybersecurity has accelerated and increased mergers and acquisition activity, as enterprises are looking to add new cyber skill sets, technologies and solutions to their portfolios in an effort to compete for federal cybersecurity dollars. According to the report by Aronson Capital Partners, some of these deals in Q2 2016 included:

  • The acquisition of Counterintelligence and Intelligence Business Units of Intelligent Decisions, Inc. by Federal Data Systems, Inc. (FedData) 
  • The acquisition of Prime Solutions, LLC – which specializes in system vulnerability analysis, reverse engineering, CNO software development, network engineering and defense, malware analysis, and defensive vulnerability analysis – by Altamira Technologies Corp. 
  • ManTech International Corporation’s acquisition of the Cyber Business Unit of Oceans Edge, Inc., which will add additional vulnerability research, development and analysis capabilities to ManTech, and will position the Company to provide advanced CNO capabilities with sophisticated intelligence and analytics.

The Department of Defense awarded over 30 contracts with a cybersecurity focus in Q2 of 2016 alone. And that doesn’t include contracts from the intelligence community, which are not disclosed to the public. With this much government spending and interest on cybersecurity, it’s clear to see why enterprises are scrambling to better position themselves to get a piece of the pie.

To read the full report by Aronson Capital Partners, detailing area growth and deal trends during Q2 2016, click the photo above.

To read the full report by Aronson Capital Partners, detailing area growth and deal trends during Q2 2016, click the photo above.

Government looks for insight from big data
Government agencies continue to collect large amounts of both structured and unstructured data. This is driving demand for solutions and services that can help them store, share, process and analyze information as a tool towards making sounder, more proactive and more informed decisions.

Similar to the cybersecurity market, this demand for big data and data analytics solutions has driven significant market growth and deal activity. The need for predictive analytics services and advanced modeling has resulted in multiple M&A deals designed to help enterprises compete for this government business. Aronson cited the following deals as examples of this trend:

  • The acquisition of Van Dyke Technology Group, Inc. – an industry leader in identity and access management, threat mitigation and other cybersecurity solutions primarily for the Intel Community. – by Jacobs Engineering Group, Inc. 
  • IBM Closes its Acquisition of Truven Health Analytics, Inc., a leading provider of cloud-based healthcare data, analytics and insights.

And with the number and density of connected devices and sensors increasing, it’s possible that this focus on data and data analysis will only grow along with it.

C4ISR continues to drive investment and growth
Continuing the trend, a number of notable contracts were awarded in the Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) space in the second quarter of 2016.

And this focus on C4ISR technologies and solutions also sparked investment, growth and deal activity in the National Capital region. Some of the deals that resulted from C4ISR contracts and demands included:

  • Arlington Capital Partners acquires advanced C4ISR IT provider, EOIR Technologies, Inc. from The White Oak Group, Inc.
  • DC Capital Partners, LLC acquires RF hardware and software provider, QRC Technologies, Inc.

Although the National Capital Region is home to many companies that aren’t government contractors, federal spending continues to have a huge influence on the area’s economy and deal activity. The government’s current IT priorities and focus on improving its cybersecurity, gaining valuable insight from data and keeping warfighters informed and connected has spurred some exciting deal activity during Q2 2016, and should continue to do so into the future.

To read the full report by Aronson Capital Partners, detailing area growth and deal trends during Q2 2016, click HERE.