ACG National Capital
Stepping into an executive role at any new company can seem like a daunting task. Now imagine stepping into a company as its CEO immediately after its previous, beloved CEO and founder unexpectedly passed away. That is a scenario that could only come with incredible pressure, unique challenges and almost unattainable expectations.
That is not a scenario that any executive would ever want to see themselves in – and one that Bill Weber not only survived, but flourished in at KeyW.
On November 8, 2019, Mr. Weber will appear in front of the ACG membership and its guests for a special event entitled, “Fresh Perspectives on the Deal Process and Current Market,” where he will dive into the lessons that he’s learned while at the helm of a company that he took over in extremely difficult circumstances, grew to incredible heights and then recently sold at an incredible valuation.
In advance of that special event, we sat down with Mr. Weber to talk about his unique path at KeyW, the lessons that he learned along the way and some of the best practices that he established while shaping and molding the company through acquisitions and divestitures. We also talked about KeyW’s recent acquisition by Jacobs and what attendees can expect to learn at his upcoming event.
Here is what he had to say:
Corporate Growth, Capital Style (CGCS): You took over KeyW at a very difficult time for the company. Can you tell our readers a little bit about the circumstances in which you took over the company, and some of the unique challenges that you faced when you took the helm because of them?
Bill Weber: KeyW was run by an iconic leader in the intel community and government contracting sector in Len Moodispaw. Len was a unique guy that everyone had a different story about, and that everyone agreed was his own person. He truly did things his own way and tried to prove that a successful government contracting company didn’t have to be like all the other large prime contractors.
Unfortunately, Len passed away unexpectedly, catching a broad swath of KeyW employees, customers and competitors by surprise. It was such a surprise that the board didn’t have a succession plan in place that they felt good about implementing at the time of his death.
The company needed leadership, so the newly appointed chair put together a search committee and spoke to a few people about the opportunity. In fact, many of the people that they spoke to were incredible business people with a depth of knowledge and experience in the government contracting industry. By my own assessment, I was not the odds on favorite to be the candidate to get the job. Nonetheless, I’m grateful the board chose me and gave me the chance to lead KeyW.
This was a company that was led by an individual that loved and cared for his people – and was loved by his people in return. This was also a company that was gripped with tragedy. For those reasons, the board felt they needed a certain kind of leader, and I was chosen to be that leader.
It was an interesting challenge that I hope to never have to overcome again – to replace a beloved leader that has passed away. I felt like every decision that we made early in my tenure we were viewed through the lens of what Len would do, and based on what would honor his legacy. We were doing so in hopes that the people that were there for Len’s time at the helm would trust that we were going to do all we could to preserve KeyW as the special place they knew it to be.
However, the company was struggling and needed different viewpoints and perspectives to meet its full potential. The company was underperforming and publicly-traded, so investors were getting impatient. They were looking for significant change in the company so that it could meet that potential, so we had to change our thinking and put a new strategy in place.
CGCS: During your tenure as CEO of KeyW, the company has grown and thrived – winning a large number of government contracts. To what do you attribute the company’s growth and success?
Bill Weber: In all fairness, a lot of that existed before I [became the CEO of KeyW]. I didn’t build this special company with unique capabilities in the market. A lot of that was established before I got there. However, I did help to add new capabilities, streamline our portfolio of capabilities and improve our focus – which was hugely important in our continued success as a company.
One of the problems that we faced was a lack of focus. We had capabilities that were commoditized or were already available from more established players in the marketplace. We needed to make a decision to say, “The places where we’re not unique, we’re going to divest those. We’re going to turn our focus away from those.” We needed to focus on the things that we were uniquely qualified to succeed in and were unique in the marketplace.
We stopped doing a few things early on. For example, we had a commercial cybersecurity company called Hexis Cyber Solutions that we were invested heavily in. It was outside of our core area of focus, so we made the decision to divest that.
Ultimately, we needed to create a plan centered around a core set of solutions and offerings. We needed to then execute on that plan. And when we started doing that, we started to win and we started to win with great abundance.
CGCS: You oversaw a number of corporate growth activities as CEO, including the acquisition of Sotera Defense Solutions and those key divestitures of parts of KeyW’s business. Can you share any lessons learned from these activities with our readers?
Bill Weber: Whenever you do something of scale – like the Sotera acquisition – or choose to not do something that the company was doing before – like a divestiture – you will always learn something. There is always something that – in hindsight – you think you could have done better or differently.
For KeyW, I think it was the time it took us to make those decisions – to divest or not to divest or to acquire or not to acquire. During my time at KeyW, we could have done things faster and made moves more quickly. It would have benefitted the company more. It would have been better for investors. It even would have benefitted customers more. Instead of moving quickly, I may have been overly and artificially concerned about things like how the employees would react, or how the market would react.
One of the most important lessons that I’ve learned – and that I’ll share with other business leaders – is that, if you have a plan and you know why an acquisition will benefit your company, don’t let “market perception” alone keep you from making that move.
The government contracting marketplace is overly concerned about what the market will think about a merger or acquisition. If the rest of the government contracting industry isn’t in your boardroom and doesn’t know your strategy, then they shouldn’t be commenting on your growth strategy and corporate growth activity. You alone should know your business and your growth strategy – execute on it because it is sound strategy, not because of what your peers in the industry will think.
CGCS: KeyW was recently acquired by Jacobs. Why was this the right decision for KeyW? Why was this a good move for Jacobs?
Bill Weber: It really came down to the timing. In the fall of last year, KeyW won a number of government contracts – including some that we didn’t anticipate winning. The company had divested business that was keeping us from working with some of the agencies and military organizations that were responsible for thinking about putting new capabilities into orbit. We then started working on building capabilities that these agencies needed. We began by working on building terrestrial equipment in formats that could then be put into orbit in the future.
As a result of the success we had with those solutions, KeyW started to win some significant opportunities with agencies and organizations within the government that companies don’t often get to work with unless they’ve really demonstrated their capabilities. When we won those things last Fall, and they were long term contracts, we started to realize that we were competing for business against much larger contractors and that they were starting to pay attention. Those giant government contracting companies started to catch on to why they were getting beat and were working to catch up.
At the same time, KeyW was a publicly traded, small to mid-cap company that was being compared against other government contractors that were 10-20 times larger than the company by investors. At that size, we would often see wide swings in our stock price because of lukewarm news elsewhere in the sector. Things that were happening in the larger global economy – like the ongoing trade war – would impact KeyW far worse than the much larger, more buoyant companies that were more insulated from these market swings.
The time was right to make a move. We realized that KeyW could be more successful inside a larger government contracting company that would give it the resources that would allow it to grow faster. And we knew that we’d start getting calls from the larger companies looking to acquire us. Once those calls started coming in, we had to follow a process that is laid out for publicly traded companies. In the end, there were multiple bidders, but Jacobs was the winner.
Why was it a good move for Jacobs? I don’t want to speak for them directly, bu they’re a company that is in a transformation process as well. They’ve made decisions to take their strong heritage, trade on that and try to move into more technical, differentiated roles. They began to divest their oil and gas business and are looking to move into markets that allow them to leverage technology. KeyW also gave them the ability to move into the intelligence community, which would have taken them a long time to break into.
CGCS: You’ll be addressing the ACG membership and their guests next week. What can attendees expect to learn at this special chapter event?
Bill Weber: I’m an independent contractor, so to speak, so I can take the gloves off and tell the story as it needs to be told without having to worry about too much political fallout. There is an opportunity to share some of the lessons learned from taking over a company in a unique situation and then transacting that company in a way that has pleased its investors.
I’ve learned a lot along the way – been a student of the game – and I’m looking to share what I learned and the things that I did right – as well as the things that I didn’t do right – with the companies and executives in the ACG membership that can benefit from it.