By Agnieszka Opalka
MATCOM International Corporation's ("MATCOM") acquisition of a Virginia engineering services, logistics support and depot maintenance provider to the US Customs Service and US Air Force is a strategic fit for the company and greatly strengthens its presence in the new Department of Homeland Security. Headquartered in Alexandria, VA, MATCOM, focused on national defense programs, provides information technology and engineering services to the Department of Defense and several civilian Government agencies, including the newly formed Department of Homeland Security. The combination enables the resulting company to expand its current service offering and broaden its customer base.
MATCOM's acquisition occurs at a vital time when the Government's need to provide security and intelligence for homeland defense is greatly intensified. MATCOM's expertise in national defense programs and the acquired company's strong niche position within the US Customs Service, along with its unique ability to provide the right, experienced people to work on high-skilled jobs, places the combined company in an excellent position to supply the government's growing sophisticated information technology needs, especially within the new Department of Homeland Security.
The acquisition was closed on November 22, 2002. American Capital Strategies Ltd. (Nasdaq: ACAS) provided $15 million in senior secured term notes and senior secured subordinated notes to fund the acquisition and refinance a portion of MATCOM's existing debt. Citizens Bank, N.A., remained as MATCOM's revolving credit facility provider. The shareholders of MATCOM include DFW Capital Partners, Westbury Equity Partners and the management of MATCOM. The former shareholders of the acquired company also retained an equity interest in the combined company.
"MATCOM has built a strong market position in its niche within the Federal Government contracting industry, distinguishing itself by its deep-seated functional and technical expertise and delivery of robust and versatile integrated solutions," said American Capital Managing Director and Principal Darin Winn. "MATCOM has a strong track record of growth, both internally and via acquisition. The company has also proven skilled at leveraging acquired customers and skills across its existing business base. The company's most recent acquisition further strengthens MATCOM's position within both the Air Force and the newly-created Department of Homeland Security."
Founded in 1983 in Alexandria, VA, MATCOM International Corporation is a provider of information technology and engineering solutions serving the outsourcing needs of the various military and civilian agencies of the Federal Government. Through its 31 offices and over 600 employees, MATCOM offers services in a number of different areas, including the design, development, procurement, implementation, operation, testing and maintenance of systems for its clients. The company's cultivated expertise in advanced technology, and especially national defense programs, have won it contracts with defense agencies including the Department of Defense and the branches of the armed forces, for which it has developed training and war game simulations, upgraded weapons systems and supported defense agency communications and intelligence systems. MATCOM's services in areas such as integrated logistics support, enterprise re-engineering, and the development of e-Government solutions have benefited customers such as the Federal Retirement Thrift Investment Board, Department of Agriculture, Department of Commerce, and National Institutes of Health.
The acquired company specializes in delivering services in engineering, logistics support, depot maintenance, information technology and training. Its dedication to quality and service, along with its 89 employees and four offices, has enabled the company to serve longtime notable customers such as the US Customs Service and the US Air Force.
The acquisition greatly complements MATCOM's line of services. Matcom will now have the opportunity to supply its current customers with the acquired company's unique services in areas such as depot maintenance and X-Ray system design.
The $88 billion Government contracting industry is the largest consumer market of information technology products and services, with annual spending exceeding $37 billion. Federal Government spending on information technology has increased steadily since 1980 and as a result of the tragedies of September 11th, has increased dramatically as the Government and specifically the Department of Defense dedicate more funds to intelligence and security, the Government's most effective weapons against terrorism. The recently approved formation of the Department of Homeland Security, which will integrate parts of 22 agencies, further creates a demand for Government contractors specializing not only in the area of information technology, but also with expertise in defense programs and the capability to support the integration of numerous information systems, and thereby creating a coordinated system of intelligence sharing. Furthermore, there has been a steady increase in Government outsourcing of advanced technology services, due to numerous factors, such as the shortage of skilled human capital as technology becomes increasingly complex, an aging and retiring workforce, antiquated proprietary computer systems which need to be modernized, the need for unified systems and the recent passing of the Paperwork Elimination Act encouraging greater utilization of computer systems.
With a broader line of services, greater customer base and favorable market conditions, MATCOM is in a great position to continue to grow and become a significant player in supporting the technical and defense needs of the US Government. In an era when the nation's security is threatened, MATCOM is ready, willing and able to provide the Government with the necessary services to protect the nation and its citizens.
