2005 sees busy, rich M/A activity in government security services sector

new buyers are especially interested in homeland security, defense, and information technology in the federal, state, and local governments. Already, two SPACs, Fortress America Acquisitions and Federal Services Acquisition have gone public.

An 18 October 2005 issue of Red Herring reports that, as of 13 October 2005, SPAC IPOs across all industries had raised nearly $1.2 billion. That figure is nearly a three-fold increase over the 2004 figure, when 11 SPAC IPOs raised $475 million. The average capital raised in 2005 was $60 million, up from $40 million in 2004.

Fortress America Acquisition went public in July 2005 and raised $42 million in its IPO. The company is looking at about five candidates in the homeland security market, said Thomas McMillen, chairman of the company and a former Maryland congressman. He declined to name the companies they are pursuing (see more below). In October 2005 Federal Services Acquisition raised $126 million through its IPO. The New York company was founded by Joel Jacks, chairman and CEO, and Peter Schulte, the company’s president and secretary as well as managing partner at private equity firm CM Equity Partners. Another key officer, Edward Bersoff, vice chairman and director, founded BTG Inc., a government contractor that went public in the 1990s and was sold in 2001 to Titan Corp. Director Arthur Money was assistant secretary of defense for command, control, communications, and intelligence from 1996 to 2001.

-read more in Roseanne Gerin’s Washington Technology report

Fortress America

The company enjoys the services of director Don Nickles, the former Republican senator from Oklahoma, and special adviser Asa Hutchinson, the former head of the Drug Enforcement Administration (DEA) and former undersecretary for border and transportation security at the Department of Homeland Security. Tom McMillen, the company’s chairman, served three terms in the House, representing the East Shore section of Maryland. At 6”11’, he holds the record of being the tallest congressman in American history. A University of Maryland basketball star and Rhodes scholar, McMillen played for eleven years in the National Basketball Association, primarily with the Atlanta Hawks and the Washington Bullets (now Washington Wizards).

-for more on Fortress America and Tom McMillen, see Terence O’Hara’s Washington Post report; and this scathing Daniel Gross’s Slate critique