Overseas Civilian Contractors

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Carlyle to Cerberus Lead Private Equity Federal-Contracting Push

Bloomberg  August 29, 2012

After investments in food, telecommunications and cleaning-product companies in the early 1990s, CM Equity Partners bet on a little-known U.S. government contractor that would shape the firm’s future.

It bought Intermetrics Inc., which designed software forNASA, in 1995 and sold the company five years later after more than quadrupling its revenue. Following that success, the New York-based private equity firm in 2004 dropped its“generalist” investment philosophy to concentrate exclusively on federal contractors, said Peter Schulte, a founder and managing partner.

CM Equity is now one of at least 38 private equity firms backing companies that sell primarily services to the federal government, an increase from fewer than 10 a decade ago, according to investment firm Stifel Nicolaus Weisel. Carlyle Group LP (CG) and Cerberus Capital Management LP, the two biggest private equity firms in federal contracting, own or control companies that had $8.9 billion in U.S. awards last fiscal year, government procurement data compiled by Bloomberg show.

“It’s a sign of the maturity of the sector,” said Charles Chappell, president of Chantilly, Virginia-based Caliber Consulting LLC, which advises firms seeking to buy federal contractors. “You’ve finally had some companies reach a size”that commands the attention of private equity investors, he said.

August 29, 2012 Posted by | Civilian Contractors, DynCorp, Government Contractor | , , , , , | Leave a comment