FOCUS Newsletter

Vol. 7, No. 4, April 2009

FOCUS CELEBRATES ROBUST FIRST QUARTER: “Good deals are still getting done,” according to Douglas E. Rodgers, Chief Executive Officer, FOCUS.

In the feature article below, “FOCUS Closes Four Deals in First Quarter 2009,” FOCUS CEO Doug Rodgers observes that the firm’s performance reflects a special FOCUS brand of client service that delivers solid results in spite of the economic challenges encountered.

Please feel free to forward this newsletter to friends, colleagues and networking contacts. (Go to www.focusbankers.com for newsletter archives.)

Active FOCUS Deals

Operating nationally and internationally, FOCUS is currently working with buy- and sell-side corporate clients, private equity groups, holding companies and late stage venture capital firms in the following areas:

• Advertising & Marketing
• Building Materials
• Business Consulting Services
• Business Process Outsourcing
• Call Center Services
• Distribution
• Education and Human Capital
• Electronics
• Energy
• Engineering
• Financial Services
• Food, Beverage and Restaurant
• Government, Aerospace & Defense
• Healthcare & Life Sciences
• Information Technology
• Manufacturing
• Media
• Parking Operations
• Retail Franchising
• Semiconductor Equipment
• Telemarketing
• Warehouse Distribution

We have executed dozens of transactions in a range of market segments, but the same fundamentals apply across all of them. Our on-going transaction process provides us with up-to-the-minute market knowledge in these sectors that may be of corporate development interest to you.

Inquiries should be addressed via e-mail to info@focusbankers.com, by telephone to 202-470-1973 or by fax to 202-785-9413.

FOCUS Closes Four Deals in First Quarter 2009: “Good Deals Are Still Getting Done!”

By Douglas E. Rodgers, Chief Executive Officer and Managing Partner, FOCUS

Despite the worst economic conditions in recent memory, FOCUS’ merger, acquisition and divestiture business was surprisingly robust during the first quarter of 2009. On average, the firm serves 50 to 60 clients in any given month. In part, the current success of FOCUS, as demonstrated by a growing assignment list, reflects a special FOCUS brand of client service that delivers results even during difficult economic times.

FOCUS Closes Four Deals in the First Quarter 2009

In the first quarter of 2009, FOCUS completed a number of M&A, corporate sale, consulting and strategic partnering assignments. Below, we briefly describe the four publicly announced deals, and note that three of the four buyers were public companies making strategic acquisitions, a theme we expect to continue throughout 2009.

Performance Pathways Inc. Was Sold to SunGard Public Sector’s K-12 Education Business Unit

FOCUS initiated this transaction, assisted in the negotiations, and acted as exclusive financial advisor to Performance Pathways, Inc., a leading provider of instructional management software for K-12 school districts. Frank Lavelle, president of SunGard Public Sector’s K-12 business unit, noted, “Integrating Performance Pathways products with the PLUS Solutions suite will allow SunGard to offer a unique value proposition to our K-12 school district customers — a unified system for student, instructional and financial management.” 

“In spite of a challenging economic environment, we expect strong companies to augment their solutions through selective acquisitions,” stated Bill Bavin, a Managing Director at FOCUS and Team Leader of the Education and Human Capital Group, who managed the transaction.

Newtek International, Inc. Was Sold to Zantech

FOCUS initiated this transaction, assisted in the negotiations, and acted as financial advisor to Newtek International, Inc. Newtek, an IT services firm based in Reston, VA, supplies expertise in the areas of software engineering, IV&V, and program management to federal defense and civilian customers. Zantech IT Services, Inc., based in McLean, VA, is a newly formed information technology services firm that is 8(a) certified.

“Given the new small business regulations that went into effect in 2008, it has limited the options for owners. However, we were pleased to see the amount of interest despite this limitation,” according to Manan Shah, who leads the Government Aerospace and Defense Group (GAD) at FOCUS.

Global Software Corporation Was Sold to Harris Computer Systems, a Division of Constellation Software, Inc.

FOCUS initiated this transaction, assisted in the negotiations and acted as financial advisor to Global Software Corporation, a leading provider of law enforcement records management, computer aided dispatch and jail management software solutions to the public safety market. Harris Computer Systems, a wholly owned subsidiary of Constellation Software, Inc., is a leading provider of financial management and customer information systems software solutions.

Doug Rodgers, who lead this transaction, noted that “Deals like this illustrate that good deals can still be completed, despite the difficult economic environment. We believe strategic buyers, both public and private, will be the buyers in the majority of transactions in 2009.”

Allin Corporation’s Microsoft Business Was Sold to Dell

FOCUS initiated this transaction, assisted in the negotiations and acted as financial advisor to Allin Corporation. The acquisition involved Allin’s Microsoft IT consulting and solutions segments located in Pittsburgh and Philadelphia, PA and San Jose and Walnut Creek, CA. Approximately 100 Allin employees joined Dell’s expanding services business.

“Dell’s focus is on helping customers simplify their IT environments to deliver more flexibility and faster returns,” said Stephen Murdoch, vice president, Global Infrastructure Consulting Services, Dell. “Allin’s capabilities and customer focus fit perfectly in this strategy.”

Signs of Improvement Emerging

Signs of improvement are beginning to appear as we enter spring 2009. According to The Conference Board, six of the ten leading economic indicators in the US increased. The positive contributors—beginning with the largest positive contributor—were the interest rate spread, index of supplier deliveries (vendor performance), building permits, real money supply, manufacturers' new orders for consumer goods and materials and manufacturers' new orders for nondefense capital goods.

The negative contributors—beginning with the largest negative contributor—were average weekly initial claims for unemployment insurance (inverted), stock prices, the index of consumer expectations, and average weekly manufacturing hours. As we enter April, stock prices have trended upward for the past four weeks.

We expect middle market merger, acquisition and corporate sale activity to increase over Q1 levels, driven by acquirers utilizing M&A strategies both for growth and strategic capability/customer acquisition. We also are seeing deals driven by lenders who are forcing borrowers to reduce the level of leverage on their balance sheets.

Bruce Holmes Joins FOCUS’ Washington, DC office as a Senior Advisor

Dr. Bruce Holmes has joined FOCUS as a Senior Advisor in the Washington, DC office, bringing years of experience to the firm in the government, aerospace and defense industries. According to Manan Shah, leader of the FOCUS Government Aerospace and Defense (GAD) Group, “We are delighted Bruce has joined FOCUS. His experience in the government and aerospace sectors elevates the level of knowledge and contacts available to our clients.”

About Dr. Bruce Holmes

Dr. Holmes is the principal in Holmes Consulting, LLC and co-founder of NextGen Sciences, LLC. In 2007, Holmes joined DayJet Corporation, supporting the launch of the industry’s first per-seat, on-demand air carrier. Prior to joining DayJet, Dr. Holmes retired from 33 years with the National Aeronautics and Space Administration as their Chief Strategist. Holmes is a commercial, multi-engine, Citation type-rated pilot and former flight instructor with forty years civil aviation experience. Read more...

John Schmidt Joins FOCUS’ Chicago Office as a Senior Advisor

John Schmidt has joined FOCUS as a Senior Advisor in the Chicago office, bringing to the firm over twenty years of experience as a senior executive with a proven track record of profitable growth and increasing shareholder value. According to Fred Floberg, FOCUS Regional Managing Director, “John brings FOCUS a wealth of experience and relationships in industries where we already have presence as a firm. We expect that his contribution to the firm and its clients will be immediate and significant.”

About John Schmidt

Mr. Schmidt’s primary areas of industry expertise are health sciences, aerospace and defense, environmental services and business services. He most recently was President, UL Life and Health Sciences. From 2005 to 2008, he served as Chief Development Officer and Senior Vice President for Underwriters Laboratories Inc. Prior to joining UL, Mr. Schmidt was a Partner at Accenture with 18 years of experience developing strategies, leading engagements, and managing consultant teams for Fortune 500 client companies. Read more...

FOCUS Web Watch
New FOCUS Information Technology Group Winter 2009 Report Available

Despite current economic conditions, 2009 promises to be active in the information technology (IT) sector. The premiere issue of the FOCUS Information Technology Winter 2009 Report—highlighting the IT segment—is now available. This edition of the quarterly Focus IT Report includes:

• The Acquisition Climate for M&A
• M&A Activity in the IT Sector
• Recently Closed FOCUS IT Transactions
• IT Q4 2008 M&A Transactions
• IT Q4 2008 Private Placement Transactions
• FOCUS IT Team

To obtain a copy of the FOCUS IT Winter 2009 Report, click here.