Under the deal, FSAC will pay $84m in cash, $1m in stock, and as much as $39m in performance-based awards over the next year for the McLean, Virginia-based company.
ATS provides application development, infrastructure maintenance, consulting, and systems integrations for several civilian and defense agencies. The company has more than 600 employees and took in $107.2m in revenue its last fiscal year.
FSAC is an example of what are called special purpose acquisition vehicles, or SPACs, that raise public funds for the intent of buying a firm with the IPO proceeds. FSAC, for example, raised $126m in its IPO last October.
SPACs are typically run by former contracting executives or even government officials – Fortress American Acquisition (these companies don’t hide much with their names), which raised $43m form its IPO last June and counts Maryland congressman C. Thomas McMillen, DEA head and Homeland Security Undersecretary Asa Hutchinson, and former Oklahoma Senator Don Nickles among its management and board.
A handful of similar groups have filed for IPOs with the expressed intent of acquisitions in the defense and homeland security sectors, and more are expected to come on board. These SPACs offer another option for public investment in this space, alongside traditional private equity funds and of course larger services companies in the sector looking to make strategic acquisitions.
Regardless of who wins out for buyouts, the entry of SPACs will likely drive up the premium prices already being paid for acquisitions in the federal IT and defense space.
