market intel report january 2016 january …...market intel report january 2016 january 2016 alper...

SECURITY, DEFENSE & GOVERNMENT SERVICES

MARKET INTEL REPORT JANUARY 2016 JANUARY 2016

Alper Cetingok Managing Director Co-Head of Security, Defense & Government Services John Hagan Managing Director Co-Head of Security, Defense & Government Services


MARKET INTEL REPORT JANUARY 2016

Introducing the Raymond James Security, Defense & Government Services practice

Alper Cetingok Managing Director

Co-Head of Security, Defense & Government Services

John Hagan Managing Director

Co-Head of Security, Defense & Government Services

Illustrative M&A Transactions

We are excited to introduce you to our recently reconstituted Security, Defense & Government Services (SDGS) Investment Banking team at Raymond James and present the Market Intel Report, our new monthly newsletter highlighting the most relevant trends in our coverage markets.

Raymond James Investment Banking has expanded its Security, Defense & Government Services practice through the hiring of several bankers and established a presence in the greater Washington, D.C. area. The reason behind our expansion is twofold: to strengthen our team with experienced and highly regarded bankers and broaden our coverage in the SDGS markets. We were able to accomplish this over the past year by welcoming Managing Directors Sam Maness and Stephan Segouin, and Vice Presidents Andy McEnroe, Ellis Chaplin and Oliver Ardery. These seasoned professionals bring an unparalleled level of industry expertise and substantial experience in a range of strategic and financial advisory services, including mergers and acquisitions, capital market transactions, recapitalization and restructuring advisory, and private placements. As part of the larger Raymond James platform, we are committed to helping our clients make the best possible strategic decisions in order to achieve their desired financial outcome.

Our coverage of the industry is among the broadest in the investment banking community, spanning commercial security, cybersecurity, homeland security, defense technology and government services. As highlighted on the following page and demonstrated through our tombstones below, we have worked with many of the most prestigious firms across a number of disciplines in the SDGS sectors.

This newsletter is one more way we can provide you with valuable information regarding the news and trends in the SDGS markets. Of course, this newsletter will never replace the personalized advice you get from our knowledgeable, experienced team, so we invite you to contact us to see how we can be of assistance in the pursuit of your strategic objectives.

Please feel free to provide us with feedback on the newsletter or contact us if you would like us to add any of your colleagues to our distribution list.

Sincerely,

Has been acquired by

CYBERSECURITY


DEFENSE TECHNOLOGY


IT & SPECIAL COMMUNICATIONS


A wholly owned subsidiary of

BIG DATA / CLOUD

Has acquired

GUARDING


A portfolio company of

MONITORING


ACCESS CONTROL


RISK MITIGATION

* Certain transactions displayed were advised by Raymond James principals while employed at a prior firm.

2

SECURITY SOFTWARE

A business unit of

Has been acquired by Is being acquired by

DEFENSE COMMUNICATIONS / ISR

PENDING

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=https://www.crowdchat.net/tag/csc&ei=tFOEVf6ROczl-AGf-L2YDg&bvm=bv.96042044,d.cWw&psig=AFQjCNEhzf3abQdfgg79jJdK0VD_Ecl_2Q&ust=1434821936331863



SECURITY SECTOR COVERAGE:

Authentication Automation Critical Communications

Includes Access Control, Biometrics and Identification technologies used to identify and authenticate individuals

Fully integrated solutions offering energy efficiency, quality control, and systems control for commercial and residential use

Hardware and software-based solutions that enable management of field operations and incident response, including public safety operations

Detection Technology Guarding Monitoring

Technologies that screen and detect for chemical, biological, radiological, nuclear and explosive threats

Security services including manned guarding, patrol, executive protection and armored transportation

Intrusion, PERS, connected home and video system design, installation, and monitoring for residential and commercial clients

Security & Safety Products Track & Trace Video Surveillance

Physical security and safety products for people, vehicles and buildings, including armor and blast protection technologies

Hardware / software technologies enabling asset tracking, field personnel communications and supply-chain administration

Hardware and software technologies that capture, record and analyze real-time images

Big Data Analytics C4ISR Cybersecurity & Cloud Computing

Analytical services and solutions centered around the capture, organization and analysis of large data sets

Products and services associated with the global Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance market

Services and solutions related to the protection of information systems, the storage and processing of data, and the disruption and misdirection of hostile cyber forces

Defense Communications Defense Technology IT & Engineering Services

Hardware and software-based solutions designed for the unique demands facing widely distributed armed forces, often operating in austere environments

Specialty designed products designed to meet the particular needs and requirements of both the warfighter and the Department of Defense’s various warfare systems

Technologies and services directed toward supporting the broad scope of information technology and engineering services demanded across the federal government

Satellite Communications Simulation & Training Unmanned Systems

Includes offerings across the satellite services and manufacturing market, including the ground equipment and launch industries

Products and services dedicated to both live training and the development and implementation of simulation technologies designed to promote warfighter readiness

Unmanned technologies and solutions including research and development, manufacturing, and various ancillary support services

DEFENSE & GOVERNMENT SERVICES SECTOR COVERAGE:

Security, Defense & Government Services Coverage Overview The SDGS Investment banking team possesses deep domain knowledge and expertise across all major

segments of the security and defense landscape

Experienced and seasoned transaction team with over 95+ years of investment banking experience and over 220 M&A and financing transactions completed, totaling more than $30 billion in value

One of the largest investment banking teams fully dedicated to the SDGS market segment with unparalleled domain expertise

Offices in Washington, D.C., New York, NY, and Memphis, TN

Two award-winning senior research analysts covering approximately 30 companies:

Brian Gesuale, Managing Director, Security & Services

Chris Quilty, Managing Director, Defense Electronics, Satellite & Space

3



80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

115.0%

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

115.0%

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

Multi-Platform Large Contractors Index Defense Technology Index Security Composite Index Government Services Index

Consolidation continued to be a key theme across the security industry in 2015, as evidenced by the significant volume of M&A activity during the year. Included in this activity were a number of large, high-profile transactions involving some of the industry’s most noteworthy participants, such as AlliedBarton, Axis and Protection 1. Among the factors driving the increase in consolidation is the impact of technology. Technology adoption has accelerated across the industry, resulting in a significant degree of disruption and the emergence of “next-generation” business models in many of the sub-segments covered by Raymond James. Among the notable examples are smart home and DIY in residential security and managed services in commercial security.

Financial sponsors have been the most active acquirers in the security industry over the last five years, and 2015 saw a continuation of this trend. During the year, the industry saw several landmark transactions involving new private equity entrants, such as Apollo’s acquisition of Protection 1 and the acquisition of NICE Systems’ Physical Security Business Unit (PBSU) by Battery Ventures. Raymond James served as financial advisor to Protection 1 and NICE Systems, respectively, in those transactions. Going forward, it is anticipated that private equity interest in the space will remain strong.

Security IPO activity in 2015 was scarce, with the majority of investment exits aimed towards sales to financial sponsors or strategic acquirers. The June IPO of Alarm.com (ALRM), a cloud-based home security platform, served as a landmark transaction given the company’s leadership position within the smart home and Internet of Things sectors. ALRM priced its IPO at $14 per share and currently trades above its IPO price, highlighting investors’ confidence in the prospects of the company’s target markets as well as its business model and competitive position.

The end of 2015 showcased a number of transformational deals in the Government Services & Defense Technology markets. One such transaction was Cubic Corporation’s announced agreement to acquire Huntsville, Alabama-based GATR Technologies, Inc. (GATR), a manufacturer of next-generation deployable communication and ISR products. GATR bolsters Cubic’s C4ISR offering while significantly increasing its scale and ability to compete for Program of Record level opportunities with the synergistic fit between GATR, the recently acquired TeraLogics, and its 2014 acquisition of DTECH Labs. Raymond James served as the exclusive financial advisor to GATR in its sale to Cubic.

2015 marked the return of the mega-deal to the Defense & Government Services market. Notable transactions included Computer Sciences Corporation’s acquisition of SRA International and subsequent spin-off of CSRA, Harris Corporation’s acquisition of Exelis, Inc., and CACI’s acquisition of L-3’s National Security Solutions business, to name a few.

On the contract front, the move toward the use of large scale Multiple Award Contracts (MAC) and Government Wide Acquisition Contracts (GWAC) continued. In 2015, Responsive Strategic Sourcing for Services (RS3), Energy Savings Performance Contract (ESPC), and Human Capital and Training Solutions (HCaTS) were three major RFPs released. With ten RFPs worth an estimated $268 billion expected to be released in early 2016, companies should be mindful of this peak buying cycle over the next several months. This peak buying cycle occurs every ten years and is not expected to recur until 2025/2026.

Security Spotlight

Defense & Government Services Spotlight

4

Source: Capital IQ, DACIS / Infobase, Bloomberg Government, Washington Technology; Data as of 12/31/2015 Note: Companies included are those tracked internally by Raymond James – Individual assets disclosed on pages 7, 8, and 11

Last Twelve Months Public Equity Index Chart



Security Overview & Key Trends

Source: Capital IQ; Data as of 12/31/2015 Note: Sector returns are weighted by market capitalization as of 12/31/2015

5

2015 was a record year for M&A activity in the security sector with respect to not only transaction volume but also valuation levels. Among the most active sub-segments during the year were guarding, monitoring and video surveillance, which collectively experienced over $10 billion in transactions. Valuations paid on many transactions were at cyclical highs, boosted largely by the availability of low-cost debt financing, scarcity of assets with scale and solid business fundamentals. Examples of notable transactions in these segments include: FLIR Systems’ acquisition of DVTEL; Universal Services of America’s acquisitions of Guardsmark and the guarding business of ABM Industries; and Imperial Capital’s acquisition of Ackerman Security Systems.

In terms of key trends, 2015 reinforced the importance of technology as a differentiator in the marketplace and core component of market participants’ strategies to improve their competitive positioning. The smart home segment serves as a prime example of this trend with numerous new market entrants leveraging technology to provide security solutions directly to consumers (e.g., Canary and Ring) or via partnerships (e.g., Arrayent). There were several M&A transactions completed that also underscored this trend, notably Securitas AB’s $350 million acquisition of Diebold’s North America Electronic Security Business, a provider of commercial electronic security solutions, and Canon’s $2.8 billion acquisition of Axis AB, the industry pioneer in network video solutions.

Another key trend in 2015 was the entry of private equity mega-funds into the security sector. Two of the more significant examples were Apollo Global Management’s entry into the security monitoring industry through the simultaneous acquisitions of Protection 1 and ASG for an aggregate purchase price of approximately $2.0 billion, and Warburg Pincus’ acquisition of two of the guarding industry’s largest participants, Universal Services of America and Guardsmark, for a total of $1.6 billion. The security sector has drawn significant attention from financial acquirers due to a number of highly attractive characteristics, including stable cash flows, strong growth prospects and consolidation opportunities. With substantial levels of “dry powder” available, private equity interest remains high and will continue to serve as a major catalyst of industry M&A.

One-Year Change One-Month Change

Change in Stock Prices

Authentication Automation Critical Communications

Detection Technology Guarding

Security & Safety Products Monitoring Track & Trace Video Surveillance

27.1%

(5.3%)

26.3%

5.7%

31.7%

(4.2%) (4.6%)(1.8%) (3.1%) (2.1%)

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

(11.1%)(4.3%)

(17.3%)

53.2%

(7.3%)(0.9%)

(5.3%)

1.8%

(30.0%)

(20.0%)

(10.0%)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

27.1%

(4.2%) (5.3%) (4.6%)

26.3%

(1.8%)

5.7%

(3.1%)

31.7%

(2.1%)

(11.1%) (7.3%)

(4.3%) (0.9%)

(17.3%)

(5.3%)

53.2%

1.8%



Detection Technology

8.6x

12.2x 12.9x

29.4x

7.2x

11.7x

15.2x

19.8x

6.4x

11.4x12.6x

22.1x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

35.0x

13.6x

11.3x

19.2x

11.0x

8.8x

15.8x

11.5x

21.3x

12.4x

9.7x

15.9x

11.3x

24.2x

11.9x10.8x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

Source: Capital IQ; Data as of 12/31/2015 (1)Total enterprise value is defined as equity value plus total debt less cash. Past performance is no guarantee of future results. Note: Companies included are those tracked internally by Raymond James – Individual assets disclosed on pages 7 and 8. Sector EBITDA multiples are weighted by market capitalization as of 12/31/2015

Security EBITDA Valuation Multiples1

6

Guarding Authentication Critical Communications Automation

Monitoring Security & Safety Products Track & Trace Video Surveillance

12/31/2013 12/31/2014 12/31/2015

12/31/2013 12/31/2014 12/31/2015

13.6x

15.8x 15.9x

11.3x 11.5x 11.3x

19.2x

21.3x

24.2x

11.0x 12.4x 11.9x

8.8x 9.7x

10.8x

8.6x 7.2x

6.4x

12.2x 11.7x 11.4x 12.9x

15.2x

12.6x

29.4x

19.8x

22.1x



$ in millions (except for stock price)Market Data Financial Performance Valuation Multiples Valuation Multiples

LTM TEV / LTM TEV / CY 2016 (P)

Stock Price at % of Equity Enterprise Total EBITDA Total Total Company Name Ticker 12/31/2015 52-Week High Value Value Sales EBITDA Margin Sales EBITDA Sales EBITDA

ASSA ABLOY AB OM:ASSA B $21.09 94.2% $23,422 $26,063 $7,824 $1,422 18.2% 3.3x 18.3x 3.1x 16.8x

Avery Dennison Corporation NYSE:AVY $62.66 94.0% $5,708 $6,573 $6,117 $692 11.3% 1.1x 9.5x 1.1x 8.7x

Brady Corp. NYSE:BRC $22.98 79.3% $1,162 $1,302 $1,145 $136 11.9% 1.1x 9.6x 1.2x 8.9x

De La Rue plc LSE:DLAR $6.54 73.1% $659 $821 $701 $126 17.9% 1.2x 6.5x 1.2x 6.6x

Digimarc Corporation NasdaqGS:DMRC $36.51 74.1% $309 $266 $23 ($14.8) (64.1%) 11.5x N.M. 9.9x N.M.

Gemalto NV ENXTAM:GTO $60.03 64.8% $5,284 $5,823 $3,154 $515 16.3% 1.8x 11.3x 1.6x 8.7x

Median: 76.7% $3,223 $3,563 $2,149 $325 14.1% 1.5x 9.6x 1.4x 8.7x

Average: 79.9% $6,091 $6,808 $3,160 $479 1.9% 3.3x 11.0x 3.0x 9.9x

ABB Ltd. SWX:ABBN $17.94 81.0% $39,748 $42,482 $36,585 $5,385 14.7% 1.2x 7.9x 1.2x 8.6x

Alarm.Com Holdings, Inc. NasdaqGS:ALRM $16.68 82.4% $760 $640 $198 $30 15.1% 3.2x 21.5x 2.8x 28.5x

Cognex Corporation NasdaqGS:CGNX $33.77 64.3% $2,865 $2,513 $511 $157 30.7% 4.9x 16.0x 5.4x 16.4x

Honeywell International Inc. NYSE:HON $103.57 96.4% $79,821 $80,463 $38,865 $7,222 18.6% 2.1x 11.1x 2.0x 9.6x

Numerex Corp. NasdaqGS:NMRX $6.42 52.2% $124 $131 $96 $6 6.5% 1.4x 21.1x 1.5x 13.1x

Sensata Technologies Holding NV NYSE:ST $46.06 78.0% $7,839 $10,248 $2,954 $691 23.4% 3.5x 14.8x 3.1x 11.9x

Schneider Electric SE ENXTPA:SU $57.08 69.8% $32,783 $40,238 $29,058 $4,297 14.8% 1.4x 9.4x 1.4x 9.0x

Telit Communications PLC AIM:TCM $3.15 59.7% $361 $362 $312 $25 8.0% 1.2x 14.4x 0.9x 6.2x

Median: 73.9% $5,352 $6,381 $1,732 $424 14.9% 1.7x 14.6x 1.8x 10.7x

Average: 73.0% $20,538 $22,135 $13,572 $2,227 16.5% 2.3x 14.5x 2.3x 12.9x

CalAmp Corp. NasdaqGS:CAMP $19.93 91.3% $729 $643 $279 $41 14.6% 2.3x 15.8x 2.1x 11.6x

Constellation Software Inc. TSX:CSU $415.78 96.5% $8,811 $9,024 $1,767 $314 17.8% 5.1x 28.7x 4.2x 16.6x

Harris Corporation NYSE:HRS $86.90 96.8% $10,811 $15,573 $5,739 $1,232 21.5% 2.7x 12.6x 2.0x 9.8x

Motorola Solutions, Inc. NYSE:MSI $68.45 93.8% $11,914 $14,113 $5,836 $1,261 21.6% 2.4x 11.2x 2.5x 9.9x

NIC Inc. NasdaqGS:EGOV $19.68 94.2% $1,291 $1,169 $287 $74 25.8% 4.1x 15.7x 3.7x 13.9x

NICE Systems Ltd. TASE:NICE $57.62 85.5% $3,493 $3,059 $1,052 $219 20.8% 2.9x 13.9x 3.1x 11.4x

Tyler Technologies, Inc. NYSE:TYL $174.32 94.7% $5,916 $5,669 $560 $127 22.6% 10.1x 44.8x 7.4x 27.2x

Verint Systems Inc. NasdaqGS:VRNT $40.56 61.0% $2,525 $2,912 $1,161 $165 14.2% 2.5x 17.7x 2.4x 9.4x

Median: 94.0% $4,705 $4,364 $1,107 $192 21.2% 2.8x 15.8x 2.8x 11.5x

Average: 89.2% $5,686 $6,520 $2,085 $429 19.9% 4.0x 20.1x 3.4x 13.7x

American Science & Engineering Inc. NasdaqGS:ASEI $41.38 71.7% $297 $210 $125 $8 6.7% 1.7x 24.9x 1.6x 16.9x

Bruker Corporation NasdaqGS:BRKR $24.27 96.2% $4,074 $3,921 $1,654 $218 13.2% 2.4x 18.0x 2.4x 16.9x

Chemring Group plc LSE:CHG $2.79 78.6% $540 $759 $547 $54 9.9% 1.4x 14.0x 1.3x 8.0x

FLIR Systems, Inc. NasdaqGS:FLIR $28.07 81.5% $3,877 $3,715 $1,554 $351 22.6% 2.4x 10.6x 2.4x 10.2x

Landauer Inc. NYSE:LDR $32.92 76.7% $315 $434 $151 $37 24.5% 2.9x 11.7x 2.9x 11.0x

OSI Systems, Inc. NasdaqGS:OSIS $88.66 91.6% $1,749 $1,723 $940 $156 16.6% 1.8x 11.1x 1.9x 10.6x

QinetiQ Group Plc LSE:QQ. $3.99 98.3% $2,327 $2,058 $1,164 $201 17.3% 1.8x 10.2x 1.8x 10.6x

Smiths Group plc LSE:SMIN $13.85 75.6% $5,474 $6,694 $4,531 $774 17.1% 1.5x 8.6x 1.6x 8.0x

Median: 80.0% $2,038 $1,890 $1,052 $178 16.8% 1.8x 11.4x 1.9x 10.6x

Average: 83.8% $2,332 $2,439 $1,333 $225 16.0% 2.0x 13.6x 2.0x 11.5x

Command Security Corp. AMEX:MOC $2.31 65.1% $23 $28 $135 $1 0.9% 0.2x 24.5x NA NA

G4S plc LSE:GFS $3.33 72.8% $5,138 $7,645 $10,821 $797 7.4% 0.7x 9.6x 0.7x 8.8x

Prosegur Compañía de Seguridad, S.A. CATS:PSG $4.62 75.5% $2,762 $3,574 $4,407 $534 12.1% 0.8x 6.7x 0.8x 7.1x

Securitas AB OM:SECU B $15.40 96.3% $5,622 $6,968 $9,394 $588 6.3% 0.7x 11.9x 0.7x 10.5x

Median: 74.2% $3,950 $5,271 $6,900 $561 6.8% 0.7x 10.7x 0.7x 8.8x

Average: 77.4% $3,386 $4,554 $6,189 $480 6.7% 0.6x 13.1x 0.8x 8.8x

Publicly Traded Security Companies

Source: Capital IQ; Data as of 12/31/2015 Financial projections are sourced from Capital IQ consensus estimates; foreign traded companies are listed in U.S. dollars at 12/31/2015 spot exchange rate

Aut

hent

icat

ion

Aut

omat

ion

Crit

ical

C

omm

unic

atio

ns

Gua

rdin

g

7

Det

ectio

n Te

chno

logy






AlarmForce Industries Inc. TSX:AF $7.50 86.9% $87 $81 $42 $11 25.3% 1.9x 7.6x NA NA

Ascent Capital Group, Inc. NasdaqGS:ASCM.A $16.72 31.5% $209 $1,839 $558 $339 60.8% 3.3x 5.4x 3.1x 5.2x

The ADT Corporation NYSE:ADT $32.98 76.9% $5,440 $10,756 $3,574 $1,382 38.7% 3.0x 7.8x 2.9x 5.6x

Median: 76.9% $209 $1,839 $558 $339 38.7% 3.0x 7.6x 3.0x 5.4x

Average: 65.1% $1,912 $4,225 $1,391 $577 41.6% 2.7x 6.9x 3.0x 5.4x

Allegion Plc NYSE:ALLE $65.92 96.8% $6,323 $7,799 $2,096 $453 21.6% 3.7x 17.2x 3.5x 15.1x

dorma+kaba Holding AG SWX:DOKA $682.67 98.8% $2,856 $2,738 $1,159 $181 15.6% 2.4x 15.1x 1.6x 11.2x

Dragerwerk AG & Co. KGaA DB:DRW3 $77.06 57.5% $1,251 $1,402 $2,849 $191 6.7% 0.5x 7.3x 0.5x 8.1x

Fortune Brands Home & Security, Inc. NYSE:FBHS $55.50 97.4% $8,863 $9,857 $4,394 $567 12.9% 2.2x 17.4x 2.1x 15.4x


MSA Safety Incorporated NYSE:MSA $43.47 79.7% $1,623 $1,835 $1,129 $181 16.0% 1.6x 10.1x 1.6x 10.5x

Stanley Black & Decker, Inc. NYSE:SWK $106.73 96.0% $15,980 $20,103 $11,309 $1,876 16.6% 1.8x 10.7x 1.8x 10.8x

Tyco International plc NYSE:TYC $31.89 72.1% $13,482 $15,203 $9,902 $1,530 15.5% 1.5x 9.9x 1.6x 10.0x

United Technologies Corporation NYSE:UTX $96.07 77.2% $85,216 $104,064 $63,978 $11,574 18.1% 1.6x 9.0x 1.8x 9.4x

Median: 96.0% $8,863 $9,857 $4,394 $567 16.0% 1.8x 10.7x 1.8x 10.5x

Average: 85.8% $23,935 $27,051 $15,076 $2,642 15.7% 1.9x 12.0x 1.9x 11.2x

Cubic Corporation NYSE:CUB $47.25 87.0% $1,274 $1,212 $1,431 $117 8.2% 0.8x 10.3x 0.8x 9.4x

Garmin Ltd. NasdaqGS:GRMN $37.17 65.0% $7,075 $5,948 $2,842 $660 23.2% 2.1x 9.0x 2.1x 10.0x

ID Systems Inc. NasdaqGM:IDSY $4.60 61.5% $62 $58 $44 ($13) (28.5%) 1.3x N.M. 1.4x N.M.

Init Innovation in Traffic Systems AG XTRA:IXX $17.92 58.9% $180 $194 $119 $21 17.4% 1.6x 9.3x 1.7x 10.0x

Kapsch TrafficCom AG WBAG:KTCG $40.61 98.9% $528 $556 $518 $63 12.2% 1.1x 8.8x 1.0x 8.3x

Trimble Navigation Limited NasdaqGS:TRMB $21.45 77.7% $5,373 $6,010 $2,295 $372 16.2% 2.6x 16.2x 2.6x 12.4x

Zebra Technologies Corporation NasdaqGS:ZBRA $69.65 58.3% $3,629 $6,434 $3,490 $493 14.1% 1.8x 13.1x 1.8x 10.6x

Median: 65.0% $1,274 $1,212 $1,431 $117 14.1% 1.6x 9.8x 1.7x 10.0x

Average: 72.5% $2,589 $2,916 $1,534 $245 9.0% 1.6x 11.1x 1.6x 10.1x

Avigilon Corporation TSX:AVO $9.87 53.5% $427 $437 $254 $39 15.3% 1.7x 11.3x 1.4x 7.9x

FLIR Systems, Inc. NasdaqGS:FLIR $28.07 81.5% $3,877 $3,715 $1,554 $351 22.6% 2.4x 10.6x 2.4x 10.2x

Hangzhou Hikvision Digital Technology Co., Ltd. SZSE:002415 $5.30 60.9% $21,552 $20,823 $3,656 $847 23.2% 5.7x 24.6x 5.3x 20.8x

IndigoVision Group plc AIM:IND $2.88 52.1% $21 $22 $49 $2 3.2% 0.4x 13.9x 0.5x 110.3x

Mobotix AG DB:MBQ $15.77 93.1% $207 $224 $89 $9 9.8% 2.5x 25.5x 2.5x 21.4x

Shenzhen Infinova Limited SZSE:002528 $2.09 65.3% $1,489 $1,461 $239 $7 2.9% 6.1x N.M. NA NA

Vivotek Inc TSEC:3454 $2.34 76.5% $179 $159 $118 $17 14.5% 1.3x 9.3x 1.3x 9.1x

Median: 65.3% $427 $437 $239 $17 14.5% 2.4x 12.6x 1.9x 15.5x

Average: 69.0% $3,965 $3,834 $851 $182 13.1% 2.9x 15.9x 2.2x 29.9x

Publicly Traded Security Companies (Cont.)

Source: Capital IQ; Data as of 12/31/2015 Financial projections are sourced from Capital IQ consensus estimates; foreign traded companies are listed in U.S. dollars at 12/31/2015 spot exchange rate

Secu

rity

& S

afet

y Pr

oduc

ts

Trac

k &

Tra

ce

Vide

o Su

rvei

llanc

e

8

Mon

itorin

g



Select M&A Activity – Security

Source: Capital IQ, Company Materials and Raymond James Research; Data as of 12/31/2015

9

Closed Date Target Name and Location Target Description Sector Classification Acquirer(s) Seller(s)

Pending Diebold Electronic Security

HQ: North Canton, OH

Diebold's electronic security business in North America includes a full portfolio of intrusion, fire, video, access control and systems integration services, as well as monitoring, maintenance and other security-related services for commercial and financial markets.

Automation / Monitoring / Video Surveillance

Securitas AB Diebold Incorporated

12/21/2015 OpSec Security Group plc

HQ: Washington, United Kingdom

OpSec Security Group combats brand, transaction card, government document and currency counterfeiting through advanced physical security technologies, supply chain track and trace services and e-commerce monitoring and analysis solutions.

Authentication Investcorp Bank B.S.C. OpSec Security Group plc, Employee Trust

12/4/2015 HERE Holding Corporation

HQ: Chicago, IL

HERE Holding Corporation provides maps and other location content used in automotive navigation systems, portable and wireless devices, mobile advertising, Internet-based mapping applications, and government and business solutions.

Track & Trace Daimler AG; Bayerische Motoren Werke

Aktiengesellschaft; AUDI AG

Nokia Corporation

12/2/2015 AlliedBarton Security Services LLC

HQ: Conshohocken, PA

AlliedBarton Security Services is a security officer services company providing trained and responsive security personnel to Fortune 500 companies and other organizations in the United States.

Guarding Wendel The Blackstone Group L.P.

11/30/2015 DVTEL, Inc.

HQ: Ridgefield Park, NJ

DVTEL develops and distributes integrated video management system (VMS) software, advanced video analytics software, visible and thermal security cameras, and related servers and encoders.

Video Surveillance FLIR Systems, Inc. Selway Capital, SCP Partners, Torch Hill Investment Partners,

ORIX Ventures, Seacost Capital, Egis Capital Partners

11/16/2015 New World Systems Corporation

HQ: Troy, MI

New World Systems designs, develops, markets, supports and implements software solutions, including computer aided dispatching, records management, mobile computing and decision support for public safety and public administration organizations.

Critical Communications Tyler Technologies, Inc. Private

10/26/2015 ABM Industries Inc., Security Business

HQ: New York, NY

The Security Business of ABM Industries Incorporated offers a range of security services, including staffing, mobile patrol, investigation and security consulting services for a range of government and commercial end markets.

Guarding Universal Services of America, Inc.

ABM Industries Incorporated

9/21/2015 NICE Systems Ltd., Physical Security Bus. (n/k/a Qognify Inc.)

HQ: Ra’anana, Israel

Qognify delivers enterprise class video management, video analytics and situation management software which collectively allow clients to maintain business continuity and optimize operations through the capture and analysis of data sourced from a variety of sensors.

Video Surveillance Battery Ventures NICE Systems Ltd.

8/3/2015 Capital Safety Group S.à.r.l.

HQ: Luxembourg

Capital Safety Group manufactures fall protection wear such as safety belts, bags and pouches for construction safety applications.

Security Products 3M Company KKR & Co. L.P.

7/28/2015 Universal Services of America, Inc.

HQ: Santa Ana, CA

Universal Services of America provides fire safety and security services through systems such as access control, CCTV, intrusion detection, fire alarm management and visitor management systems and performs a range of customized cleaning and maintenance services.

Guarding Warburg Pincus LLC Princess Management Limited; Partners Group Holding AG

7/28/2015 Guardsmark, LLC

HQ: New York, NY

Guardsmark delivers uniformed security officers and individualized protection services, such as investigations, consulting, background screening, facility design and specialized services for commercial clients.

Guarding Universal Services of America, Inc.

Private

7/1/2015 Protection 1, Inc.

HQ: Romeoville, IL

Protection 1 is a leading full-service, national provider of comprehensive security monitoring systems and services to 1.5 million residential, commercial, national accounts and wholesale customers.

Monitoring Apollo Global Management, LLC

GTCR, LLC

7/1/2015 Alarm Security Group, LLC

HQ: Beltsville, MD

Alarm Security Group provides residential and commercial security systems, including home automation, lighting and temperature control, electronic locks, alarm monitoring, video surveillance, access control and intrusion detection solutions.

Monitoring Apollo Global Management, LLC

Parthenon Capital Partners

6/11/2015 Fire & Life Safety America, Inc.

HQ: Richmond, VA

Fire & Life Safety America designs, installs, inspects and services a broad range of commercial fire and life safety systems, including sprinklers, fire alarms, wet/dry suppression, backflow prevention and special hazards systems.

Monitoring PNC Riverarch Capital KRG Capital Partners

5/29/2015 Exelis Inc.

HQ: McLean, VA

Exelis is a leader in Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR)-related products and systems and information solutions, supplying military, government and commercial customers in the United States and globally.

Critical Communications Harris Corporation NA (Going-private transaction)

5/5/2015 Axis AB (publ)

HQ: Lund, Sweden

Axis is an information technology company providing network video surveillance, monitoring and data management solutions for professional installations in Europe, the Middle East, Africa, the Americas and Asia.

Video Surveillance Canon Inc. Swedbank Robur Fonder AB; Grenspecialisten AB; Inter Indu (Luxembourg), SARL

3/31/2015 Guardian of Georgia, Inc. (d/b/a Ackerman Security Systems)

HQ: Atlanta, GA

Ackerman Security Systems delivers custom-built security systems, home automation solutions and alarm monitoring services to residential and small commercial customers in Georgia, Washington, D.C., Maryland and Virginia.

Monitoring Imperial Capital Group Ltd.; OPTrust Private

Markets Group

Bariston Partners, LLC; Sverica International; Sverica

International Fund I, L.P.

3/24/2015 Mirion Technologies, Inc.

HQ: San Ramon, CA

Mirion Technologies provides radiation detection and protection instruments, in-plant and safety monitoring systems, cameras for extreme environments, radiation monitoring services and nuclear reactor sensing systems in partnership with customers in nuclear power plants, military and civil defense agencies, hospitals, universities and other specialized industries.

Detection Charterhouse Capital Partners LLP

American Capital, Ltd.; American Capital Equity

Management LLC; American Capital Equity III, LP

2/27/2015 Industrial Safety Technologies, LLC

HQ: Woodlands, TX

Industrial Safety Technologies offers wireless technology products; fixed and portable gas detection solutions; gas and flame detection systems; control systems; and pipeline analyzers in addition to designing and manufacturing consumables for brands of explosives and narcotics trace detectors.

Detection Scott Technologies, Inc. Battery Ventures; Battery Ventures IX, L.P.

2/6/2015 CompuDyne - Public Safety & Justice, Inc.

HQ: Pleasanton, CA

CompuDyne - Public Safety & Justice provides computer aided dispatch, mobility, records management and corrections management solutions to law enforcement and corrections agencies.

Critical Communications TriTech Software Systems Inc.

The Gores Group LLC; CompuDyne Corporation;

Gores Capital Partners II, L.P.



7.3x

9.2x

8.1x

10.2x

8.9x

10.3x10.7x

10.3x10.1x10.5x

11.1x10.6x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

9.3%

5.3%

1.6% 0.8%

(3.9%)

(0.9%) (1.2%)(2.5%)

(6.0%)

(4.0%)

(2.0%)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Defense & Government Services Overview and Key Trends

(1)Total enterprise value is defined as equity value plus total debt less cash. Past performance is no guarantee of future results. Note: Companies included are those tracked internally by Raymond James – Individual assets disclosed on page 11. Sector EBITDA multiples are weighted by market capitalization as of 12/31/2015. Source: Capital IQ; Data as of 12/31/2015

Last year marked the return of the mega-deal to the Defense & Government Services market. There were six deals of over $1 billion in transaction value in 2015, which was greater than the previous three years (2012-2014) combined. Notable transactions included Lockheed Martin’s purchase of Sikorsky Aircraft, Computer Sciences Corporation’s (CSC) acquisition of SRA International and follow-up spin-off of CSRA, Harris Corporation’s acquisition of Exelis, Inc., and Engility’s acquisition of TASC, Inc., to name a few.

Transaction activity is expected to continue to accelerate in 2016 as both acquirers and targets look to capitalize on the visibility of a two-year federal budget and the prospect of a new administration in the White House following the upcoming election, which most believe can only be more supportive of the government contracting community. This year is already off to a strong start with a few major deal announcements. Most notably, CACI’s $550 million announced acquisition of L-3 Communications’ National Security Solutions (NSS) business unit and Cubic Corporation’s $232.5 million acquisition of GATR. CACI’s acquisition of the $1.2 billion revenue L-3 NSS unit adds additional capability and scale in the intelligence and cyber security markets, building upon the beachhead it established through the Six3 Systems acquisition in 2013. Cubic’s acquisition of GATR and TeraLogics adds additional capabilities to the Company’s C4ISR business unit that was stood up last year through the acquisition of DTECH Labs. GATR and TeraLogics will enhance Cubic’s secure and expeditionary communications, and ISR processing capabilities. Raymond James served as the exclusive financial advisor to GATR and DTECH in their respective sale processes.

Portfolio shaping continues to be a major theme for the Defense & Government Services market as we enter the New Year. Rumors continue to swirl around the potential divestitures coming out of BAE Systems and Lockheed Martin following the successful completion of the L-3 NSS transaction. Additionally, CSRA’s successful separation from CSC through a tax-free spinoff has market participants engaging advisors possessing a full suite of capabilities when evaluating strategic alternatives. We expect that government contractors will continue to focus on core business units while looking to exit ancillary businesses through divestitures or tax-free spinoffs in 2016. Opportunities abound for informed private equity firms to secure new platform portfolio companies as we enter the next growth cycle in government contracting.

One-Year Change One-Month Change Note: Sector returns are weighted by market capitalization as of 12/31/2015. Source: Capital IQ; Data as of 12/31/2015.

10

Change in Stock Prices

EBITDA Valuation Multiples1

Government Services Multi-Platform Large Contractors Defense Technology Commercial IT

Commercial IT Government Services Defense Technology Multi-Platform Large Contractors

12/31/2013 12/31/2014 12/31/2015

9.3%

(3.9%)

5.3%

(0.9%)

1.6%

(1.2%)

0.8%

(2.5%)

7.3x

8.9x

10.1x

9.2x

10.3x 10.5x

8.1x

10.7x 11.1x

10.2x 10.3x 10.6x



Publicly Traded Defense & Government Services Companies

Source: Capital IQ; Data as of 12/31/2015 Financial projections are sourced from Capital IQ consensus estimates; foreign traded companies are listed in U.S. dollars at 12/31/2015 spot exchange rate; TEV / Total Sales and TEV / EBITDA valuation multiples greater than 4.0x and 25.0x, respectively, are considered N.M.

Gov

ernm

ent S

ervi

ces

Mul

ti-Pl

atfo

rm L

arge

C

ontr

acto

rs

Def

ense

Te

chno

logy

C

omm

erci

al IT

11




Booz Allen Hamilton Holding Corporation NYSE:BAH $30.85 98.4% $4,580 $5,994 $5,321 $494 9.3% 1.1x 12.1x 1.1x 10.5x

CACI International Inc. NYSE:CACI $92.78 89.1% $2,249 $3,231 $3,321 $301 9.1% 1.0x 10.7x 0.9x 9.5x

CSRA Inc. NYSE:CSRA $30.00 89.7% $4,918 $5,088 $3,928 $574 14.6% 1.3x 8.9x 0.9x 6.0x

Engility Holdings, Inc. NYSE:EGL $32.48 66.3% $1,193 $2,282 $1,868 $181 9.7% 1.2x 12.6x 1.0x 10.0x

ICF International Inc. NASDAQGS:ICFI $35.56 81.3% $684 $1,010 $1,128 $111 9.9% 0.9x 9.1x 0.8x 8.2x

Leidos Holdings, Inc. NYSE:LDOS $56.26 94.5% $4,056 $4,566 $5,063 $418 8.3% 0.9x 10.9x 0.9x 10.4x

ManTech International Corporation NASDAQGS:MANT $30.24 85.8% $1,136 $1,095 $1,559 $117 7.5% 0.7x 9.4x 0.7x 9.0x

NCI, Inc. NASDAQGS:NCIT $13.65 79.5% $182 $194 $324 $27 8.4% 0.6x 7.2x 0.6x 6.7x

Science Applications International Corporation NYSE:SAIC $45.78 81.8% $2,081 $3,020 $4,196 $295 7.0% 0.7x 10.2x 0.7x 9.1x

Vectrus, Inc. NYSE:VEC $20.89 61.9% $221 $305 $1,155 $41 3.6% 0.3x 7.4x 0.3x 7.0x

VSE Corp. NASDAQGS:VSEC $62.18 74.0% $334 $604 $484 $70 14.4% 1.2x 8.7x N.M. N.M.

Median: 81.8% $1,193 $2,282 $1,868 $181 9.1% 0.9x 9.4x 0.9x 9.1x

Average: 82.0% $1,967 $2,490 $2,577 $239 9.2% 0.9x 9.7x 0.8x 8.7x

BAE Systems plc LSE:BA. $7.37 91.0% $23,323 $26,147 $25,647 $2,493 9.7% 1.0x 10.5x 1.0x 8.3x

General Dynamics Corporation NYSE:GD $137.36 89.3% $43,423 $43,464 $32,022 $4,660 14.6% 1.4x 9.3x 1.3x 9.0x


Lockheed Martin Corporation NYSE:LMT $217.15 95.3% $66,729 $71,841 $45,745 $5,948 13.0% 1.6x 12.1x 1.5x 10.0x

Northrop Grumman Corporation NYSE:NOC $188.81 97.3% $34,436 $39,671 $23,940 $3,618 15.1% 1.7x 11.0x 1.6x 11.2x

Raytheon Company NYSE:RTN $124.53 95.8% $37,496 $40,313 $23,062 $3,290 14.3% 1.7x 12.3x 1.7x 10.9x

The Boeing Company NYSE:BA $144.59 91.0% $96,873 $96,116 $97,009 $9,914 10.2% 1.0x 9.7x 1.0x 8.7x

United Technologies Corporation NYSE:UTX $96.07 77.2% $85,216 $104,064 $63,978 $11,574 18.1% 1.6x 9.0x 1.8x 9.5x

Median: 93.2% $55,076 $57,653 $35,444 $5,304 14.4% 1.6x 10.7x 1.5x 9.5x

Average: 91.7% $58,415 $62,760 $43,784 $6,090 14.2% 1.5x 10.6x 1.5x 9.7x

AeroVironment, Inc. NASDAQGS:AVAV $29.47 96.2% $687 $481 $267 $18 6.6% 1.8x N.M. 1.7x N.M.

Cobham plc LSE:COB $4.18 81.1% $4,729 $6,554 $3,249 $556 17.1% 2.0x 11.8x 2.0x 9.8x

Cubic Corporation NYSE:CUB $47.25 87.0% $1,274 $1,212 $1,431 $117 8.2% 0.8x 10.3x 0.8x 9.4x

FLIR Systems, Inc. NASDAQGS:FLIR $28.07 81.5% $3,877 $3,715 $1,554 $351 22.6% 2.4x 10.6x 2.3x 9.6x

Harris Corporation NYSE:HRS $86.90 96.8% $10,811 $15,573 $5,739 $1,232 21.5% 2.7x 12.6x 2.0x 9.8x

Kratos Defense & Security Solutions, Inc. NASDAQGS:KTOS $4.10 57.6% $242 $655 $777 $50 6.5% 0.8x 13.1x 0.9x 12.1x

L-3 Communications Holdings Inc. NYSE:LLL $119.51 89.9% $9,368 $13,069 $11,531 $1,216 10.5% 1.1x 10.7x 1.3x 11.2x

Mercury Systems, Inc. NASDAQGS:MRCY $18.36 91.8% $638 $559 $239 $39 16.1% 2.3x 14.5x 2.2x 11.1x

Teledyne Technologies Inc. NYSE:TDY $88.70 79.3% $3,144 $3,785 $2,320 $382 16.5% 1.6x 9.9x 1.6x 9.6x

Median: 87.0% $3,144 $3,715 $1,554 $351 16.1% 1.8x 11.3x 1.7x 9.8x

Average: 84.6% $3,863 $5,067 $3,012 $440 14.0% 1.7x 11.7x 1.6x 10.3x

Accenture plc NYSE:ACN $104.50 95.1% $65,617 $63,074 $31,165 $5,195 16.7% 2.0x 12.1x 1.9x 11.6x

CGI Group Inc. TSX:GIB.A $39.93 93.3% $12,315 $13,629 $7,679 $1,311 17.1% 1.8x 10.4x 1.8x 9.2x

Ciber, Inc. NYSE:CBR $3.51 83.4% $279 $291 $812 $25 3.1% 0.4x 11.4x 0.4x 6.7x

Cognizant Technology Solutions Corporation NASDAQGS:CTSH $60.02 86.0% $36,496 $33,396 $11,926 $2,373 19.9% 2.8x 14.1x 2.4x 11.6x

International Business Machines Corporation NYSE:IBM $137.62 78.1% $133,507 $163,756 $83,795 $21,410 25.6% 2.0x 7.6x 2.0x 7.5x

MAXIMUS, Inc. NYSE:MMS $56.25 80.4% $3,675 $3,815 $2,100 $311 14.8% 1.8x 12.3x 1.5x 10.5x

Navigant Consulting Inc. NYSE:NCI $16.06 89.5% $764 $907 $821 $121 14.7% 1.1x 7.5x 1.0x 7.2x

Perficient Inc. NASDAQGS:PRFT $17.12 79.4% $605 $657 $450 $54 12.1% 1.5x 12.1x 1.3x 7.7x

Tyler Technologies, Inc. NYSE:TYL $174.32 94.7% $5,916 $5,669 $560 $127 22.6% N.M. N.M. N.M. N.M.

Unisys Corporation NYSE:UIS $11.05 37.1% $552 $588 $3,131 $129 4.1% 0.2x 4.6x 0.2x 11.7x

Xerox Corporation NYSE:XRX $10.63 75.1% $10,762 $17,927 $18,425 $1,689 9.2% 1.0x 10.6x 1.0x 7.6x

Median: 83.4% $5,916 $5,669 $3,131 $311 14.8% 1.6x 11.0x 1.4x 8.5x

Average: 81.1% $24,590 $27,610 $14,624 $2,977 14.5% 1.4x 10.3x 1.4x 9.1x



Date Customer Winning Bidders Amount ($ millions) Description

12/21/2015 U.S. Defense Information Technology Contracting Organization, Scott (DITCO-Scott)

ARTEL, Inc.; AT&T Government Solutions, Inc.; BT Federal Inc.; Global Telecom & Technology Americas, Inc.; Harris Cap Rock Government Solutions, Inc.; Level 3 Communications, Inc.; Qwest Government Services Inc., dba CenturyLink QGS; Verizon Business Network Services - Government Markets

$4,300.0 DITCO Scott Awards Eight Contracts for Global Network Services (GNS) with Primary Focus on Regions Outside of the Continental United States

12/21/2015 Israeli Defense Force - Air Force; Japan Air Self Defense Force; Republic of Korea Air Force; Royal Australian Air Force; Royal Netherlands Air Force; Royal Norwegian Air Force; Turkish Air Force; U.S. Air Force LCMC, Wright-Patterson AFB; U.S. Marine Corps Systems Command; U.S. Naval Air Systems Command, Headquarters; UK Royal Air Force

Lockheed Martin Aeronautics Co., Fort Worth Operation; BAE Military Air & Information; BAE Systems E&IS, Electronic Combat Solutions; Lockheed Martin Missiles and Fire Control - Orlando; Northrop Grumman Combat Avionics Systems; Northrop Grumman Strike and Surveillance Systems Div..

$1,171.2 NAVAIR HQ Contracts With Lockheed Martin for 93 F-35 Low Rate Initial Production (LRIP) Lot 11 Aircraft Long Lead Materials and Associated Equipment/Services

12/14/2015

Qatari Army; Republic of Korea Army; Royal Saudi Land Forces; U.S. Army Aviation and Missile Life Cycle; Management Command, PEO for Missiles & Space

Lockheed Martin Missiles and Fire Control – Dallas; Boeing BMC3 & Strategic Systems; Lockheed Martin Missiles and Fire Control - Orlando; Lockheed Martin Space Systems, Missile Defense Systems;

$1,095.0 Army AMCOM Mods Contract With Lockheed Martin for PAC-3 Production for Korea, Saudi Arabia and Qatar

12/30/2015 U.S. Air Force LCMC, Wright-Patterson AFB Lockheed Martin Aeronautics Co., Marietta Operations

$1,060.9 AFLCMC Wright-Patterson Mods Contract With Lockheed Martin for 32 C-130J Aircraft

12/17/2015 U.S. Army Space & Missile Defense Command

Aegis Technologies Group, Inc.; Decisive Analytics Corp.; Quantum Research International, Inc.; Radiance Technologies, Inc.

$1,058.0 SMDC/ARSTRAT Awards Four Contracts to Provide Technical and Research Support Services under Domain 3 - Enhanced Warfighter Capabilities of the D3I Program

12/1/2015 Republic of Singapore Air Force; U.S. Air Force LCMC, Wright-Patterson AFB

Lockheed Martin Aeronautics Co., Fort Worth Operations

$914.0 AFLCMC Wright-Patterson Contracts With Lockheed Martin to Upgrade F-16 Aircraft for Singapore

12/8/2015 Japanese Ministry of Defense; U.S. Missile Defense Agency

Raytheon Missile Systems - Air and Missile Defense Systems

$543.3 MDA Mods Contract With Raytheon for 17 SM-3 Block IIA Missiles

12/21/2015 U.S. General Services Administration Accenture Federal Services, LLC; Acumen Solutions, Inc.; Capgemini Government Solutions, LLC; Deloitte Consulting LLP; Phase One Consulting Group, LLC; PricewaterhouseCoopers LLP

$503.0 GSA Awards Six BPA Contracts for Salesforce Implementation, Integration and Support Services (SIISS)

12/29/2015 U.S. Space and Naval Warfare Systems Command, Headquarters; UK Royal Navy

Raytheon Integrated Communication Systems; Raytheon Naval & Maritime Systems - St. Petersburg

$466.6 SPAWAR HQ Contracts With Raytheon for Navy Multiband Terminals (NMTs) for U.S. Navy and UK

12/30/2015 U.S. Naval Sea Systems Command Bechtel Plant Machinery, Inc., Plant Apparatus Div.; Bechtel Plant Machinery, Inc., Machinery Apparatus Operation

$393.1 NAVSEA Contracts With Bechtel Plant Machinery for CVN 78 Gerald R. Ford Class A1B Nuclear Reactor Components

12/15/2015 U.S. Navy Strategic Systems Programs; UK Royal Navy

Charles Stark Draper Laboratory, Inc.; General Dynamics Mission Systems - Maritime Digital Systems; Raytheon Space & Airborne Systems Co., LLC

$393.0 Navy SSP Contracts With Charles Stark for Trident II (D-5) MK6 Guidance Engineering and Support

12/17/2015 Republic of Korea Army; Royal Saudi Land Forces; U.S. Army Aviation and Missile Life Cycle Management Command, PEO for Missiles & Space; United Arab Emirates Army

Lockheed Martin Missiles and Fire Control - Dallas $360.7 Army AMCOM Mods Contract With Lockheed Martin for PAC-3 Modification Price Requirements and Additions for UAE, Saudi Arabia and Korea

12/28/2015 Belgian Air Force; Royal Moroccan Air Force; Royal Saudi Air Force; Turkish Air Force; U.S. Naval Air Systems Command, Headquarters; United Arab Emirates Air Force and Air Defense

Boeing Missiles and Unmanned Airborne Systems; Advanced Industries, Inc.; Boeing Global Strike; EFW, Inc.; Honeywell Missiles and Munitions; L-3 Fuzzing & Ordnance Systems, Inc.; Woven Electronics, Inc.

$357.9 NAVAIR HQ Contracts With Boeing for Lots 4-8 JDAM DSU-38A/B Precision Laser Guided Sets (PLGSs)

12/18/2015 U.S. Air Force Life Cycle Management Center, Air Logistics Center

General Atomics Aeronautical Systems, Inc. (GA-ASI) - Aircraft Systems $338.2 AFLCMC Warner Robins Contracts With General Atomics for CY16 MQ-1/MQ-9 Predator/Reaper CLS

12/7/2015 Egypt Air Force; Indian Air Force IAF; Indonesian National Defense - Air Force; Iraqi Air Force; Pakistani Air Force; Republic of Korea Air Force; Republic of Tunisia Air Force; Royal Saudi Air Force; U.S. Air Force LCMC, Wright-Patterson AFB; U.S. Army Aviation and Missile Life Cycle Management Command, PEO for Missiles & Space

Hellfire Systems, LLC; Lockheed Martin Missiles and Fire Control - Orlando

$318.3 Army AMCOM Mods Contract With Hellfire Systems for Hellfire II Missile Hardware/Component for U.S. Armed Forces and FMS Customers

12/4/2015 Air Force Life Cycle Management Center, Air Armament Center; Finnish Air Force; Portuguese Air Force

Lockheed Martin Missiles and Fire Control - Orlando $302.2 AFLCMC Eglin Contracts With Lockheed Martin for JASSM Production to Include FMS to Finland and Poland

12/17/2015 Australian Department of Defense; Azerbaijan Ministry of Defense; Bain; Norwegian Ministry of Defense; South Korean Ministry of National Defense; Swedish Ministry for Defense; U.S. Air Force Space Command, 45th Contracting Squadron; UK Ministry of Defense

BAE Systems Technology Solutions & Services (TSS), Integrated O&M Solutions

$278.5 USAF AFSPC 45 CONS Awards Re-Compete Contract to BAE Systems for the Instrumentation Radar Support Program (IRSP)

12/1/2015 NASA Goddard Space Flight Center ASRC Federal Technical Services $273.7 NASA GSFC Selects Arctic Slope Technical Services, Inc. (ASTS) for Software Engineering Services II (SES II) Contract

12/16/2015 U.S. Naval Sea Systems Command Ingalls Shipbuilding $242.0 NAVSEA Contracts With Ingalls Shipbuilding for LPD 17 Life Cycle Engineering and Services (LCE&S)

12/16/2015 Indian Air Force IAF; U.S. Army Contracting Command - Rock Island (ACC-RI)

Lockheed Martin Missiles and Fire Control - Orlando $215.8 Army ACC-RI Contracts With Lockheed Martin for AH-64E Modernized Target Acquisition Designation/Pilot Night Vision Systems (M-TADS/PNVS) For India

Top 20 Largest Federal Contracts Awarded In December 2015

Source: DACIS / Infobase; Data as of 12/31/2015

12



Select M&A Activity – Defense & Government Services

Source: Capital IQ, DACIS / Infobase; Data as of 12/31/2015

Closed Date Target Name Target Description Acquirer Seller

Government Services

Pending L-3 National Security Solutions, Inc. Virginia-based L-3 National Security Solutions, Inc. (L-3 NSS) provides enterprise and mission IT solutions, cyber operations support, intelligence operations support, integrated security, and big data solutions to the U.S. Government military, intelligence, and federal civilian agencies and foreign governments.

CACI International, Inc. (NYSE: CACI)

L-3 Communications Holdings, Inc. (NYSE: LLL)

12/23/2015 Gleason Research Associates, Inc. Alabama-based Gleason Research Associates (GRA) is a provider of high-end engineering and professional services, focused in the areas of weapon systems and logistics support.

Enlightenment Capital Private

12/11/2015 Cyveillance, Inc. Virginia-based Cyveillance specializes in open-source threat intelligence (OSINT), using a proprietary technology platform and human analysts to identify risks early for prevention and mitigation.

LookingGlass Cyber Solutions, Inc.

QinetiQ plc (LSE: QTQ.L)

12/7/2016 J.L. Patterson & Associates, Inc. California-based J.L. Patterson & Associates, Inc. (JLP) is a consulting and professional services engineering firm specializing in rail planning, environmental permitting, design and construction management.

Jacobs Engineering Group, Inc. (NYSE: JEC)

Private

12/4/2015 Linear Mold and Engineering, Inc. Michigan-based Linear Mold and Engineering, Inc. has 120 employees and specializes in metal additive manufacturing (AM).

Moog, Inc. (NYSE: MOG.A) Private

Defense Technology

Pending GATR Technologies, Inc. Alabama-based GATR, LLC is a manufacturer of next-generation deployable satellite communication terminal solutions.

Cubic Corp. (NYSE: CUB) Private

Pending Ship Modelling & Simulation Centre AS Norway-based Ship Modelling & Simulation Centre AS (SMSC) is a ship simulation and consultancy company which utilizes simulators and competence to provide maritime courses and simulation of marine operations.

Kongsberg Gruppen ASA Private

Pending Brimtek, Inc. Virginia-based Brimtek, Inc. is a provider of state-of-the-art technical surveillance solutions to the US defense, homeland security, federal law enforcement and intelligence communities.

Digital Barriers plc (AIM:DGB) Private

Pending Airwave Solutions Ltd [Macquarie European Infrastructure Fund 2]

England-based Airwave Solutions Ltd. is the largest private operator of a public safety network in the world, delivering mission-critical voice and data communications to more than 300 emergency and public service agencies in Great Britain.

Motorola Solutions, Inc. (NYSE: MSI)

Macquarie European Infrastructure Fund 2

12/21/2015 TeraLogics, LLC Virginia-based TeraLogics, LLC is a provider of real-time Full Motion Video Processing, Exploitation and Dissemination (PED) for the Department of Defense, the intelligence community and commercial customers.

Cubic Corp. (NYSE: CUB) Private

12/16/2015 Lewis Innovative Technologies, Inc. Alabama-based Lewis Innovative Technologies, Inc. (LIT) develops technology necessary to protecting systems critical to national security while meeting strict DoD Program Protection Requirements, with application to a broad range of secure processing needs for several critical military missions.

Mercury Systems, Inc. (NASDAQ: MRCY)

Private

12/15/2015 Aeroflex’�s Diode Business New York-based Aeroflex, a subsidiary of Cobham plc, has sold its diode business which offers a full line of silicon (Si) and gallium arsenide (GaAs), germanium tunnel diodes, HBT amplifiers, resistors, inductors, capacitors, switches, NLTL comb generators and integrated devices.

M/A-COM Technology Solutions Holdings, Inc.

(NasdaqGS: MTSI)

Cobham plc (LSE: COB.L)

12/9/2015 FiBest, Ltd. Japan-based FiBest is a merchant market component supplier of optical sub assemblies.

M/A-COM Technology Solutions Holdings, Inc.

(NasdaqGS: MTSI)

Private

12/8/2015 Eagle Industrial Truck Manufacturing, LLC Michigan-based Eagle Industrial is a leading provider of tow tractors and tugs for commercial aviation and military customers.

Tronair, Inc. [Levine Leichtman Capital Partners]

Private

12/7/2015 Embedded Technology and Systems Business

Alabama-based GE Intelligent Platforms Embedded Systems, Inc. business is a supplier of sophisticated, open architecture computing and electronic systems for aerospace, defense and industrial solutions, currently operating within GE Energy Management (Intelligent Platforms subdivision).

Veritas Capital Fund Management, LLC

General Electric (NYSE:GE)

12/2/2015 N2 Imaging Systems, LLC California-based N2 Imaging Systems, LLC is known to its customers for leading-edge imaging technology and integration capabilities to deliver advanced optical systems for the military and commercial segments.

United Technologies Corp. (NYSE: UTX)

Private

13


MARKET INTEL REPORT JANUARY 2016 Raymond James Select Transactions



$112,700,000

Initial Public Offering Co-Manager


Has acquired



Has been acquired by Has been acquired by Has merged with

A wholly owned subsidiary of


The Engineering Solutions Division of

Has been acquired by Has been acquired by Has been acquired by Has been acquired by


LinQuest Holdings, Inc., a newly formed entity led by

Company Management

Fairness Opinion



With an equity investment to support the transaction provided

by Has been acquired by Has been acquired by

Security, Defense & Government Services Team

Washington, D.C. Office 1818 Library Street, 5th Floor

Reston, VA 20190

New York Office 277 Park Avenue, Suite 410

New York, NY 10172

Memphis Office 50 N. Front Street, 20th Floor

Memphis, TN 38103

*Certain transactions displayed were advised by Raymond James principals while employed at a prior firm

This material is not to be considered an offer or solicitation regarding the sale of any security. This material was prepared within Raymond James & Associates’ Investment Banking Department and is for information purposes only. This material is not a product of Raymond James & Associates’ Research Department; recipients of this report should not interpret the information herein as sufficient grounds for an investment decision or any other decision. The report shall not constitute an offer to sell or the solicitation of an

offer to buy any of the securities mentioned herein; past performance does not guarantee future results.

Raymond James & Associates, Inc., member New York Stock Exchange/SIPC

Institutional Use Only

Alper Cetingok // Group Co-Head Memphis, TN // 901.531.3203

[email protected]

John Hagan // Group Co-Head Washington, D.C. // 571.334.0320 [email protected]

Andy McEnroe // Vice President Washington, D.C. // 703.646.1603

[email protected]

Ellis Chaplin // Vice President Washington, D.C. // 202.487.4273 [email protected]

Oliver Ardery // Vice President Memphis, TN // 901.579.4445

[email protected]

Sam Maness // Managing Director Washington, D.C. // 703.300.2380 [email protected]

Stephan Segouin // Managing Director New York, NY // 212.672.6822

[email protected]

14

A business unit of

Has been acquired by Is being acquired by

PENDING

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=https://www.crowdchat.net/tag/csc&ei=tFOEVf6ROczl-AGf-L2YDg&bvm=bv.96042044,d.cWw&psig=AFQjCNEhzf3abQdfgg79jJdK0VD_Ecl_2Q&ust=1434821936331863

market intel report january 2016 january …...market intel report january 2016 january 2016 alper...

Documents