Consolidation Continues: ManTech Buys Cybersecurity Adviser Knowledge Consulting Group

ManTech aims to stay the course in its strategy to turn around its ailing business through acquisitions by purchasing cybersecurity adviser Knowledge Consulting Group (KCG).

This is the second acquisition ManTech has made in less than two months after it acquired Welkin Associates, a CSC subsidiary that provides engineering services to the intelligence community and the U.S. Department of Defense, in late April for $34 million. ManTech CEO George Pedersen said during his company's earnings call April 29 that he plans to turn the business around through acquisitions.

"Certainly in order to keep up with their competitors, ManTech needed to make a play in the cybersecurity market, otherwise they may have been seen in having an incomplete portfolio as compared to their competitors," said Jane Wright, senior analyst at Hampton, N.H.-based Technology Business Research. "Certainly any company in the federal government IT outsourcing space needs to do this. This is a market that is growing exponentially. They see that growth and they want to tap into that growth opportunity."

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TBR estimates the enterprise security market is growing at 12 percent year over year over the next five years. Wright says there is no reason for the market to slow down, with some segments growing at a rate of 30 percen to 40 percent.

"We expect revenues to increase through acquisitions and new business awards with greater certainty around funding in our markets," said Pedersen in a statement in the earnings report. "Contract activity across the industry is starting to increase, and more high-quality companies are becoming available for acquisition. … We are actively looking at other promising acquisition candidates to accelerate ManTech's growth."

ManTech is one of many federal solution providers that have taken a financial hit from the military drawdown in Afghanistan. The Fairfax, Va.-based company, No. 24 on the CRN 2015 Solution Provider 500, reported revenue of just over $370.3 million in the first quarter of 2015, down 18 percent from just over $452 million in the same period last year. In all of 2014, ManTech reported just over $1.77 billion in revenue, down 23 percent from just over $2.31 billion in the year before.

"ManTech is a cyber-leader, and the acquisition of KCG fits with our strategy of expanding into the growing cyber services and homeland security markets," said Pedersen in a statement. "We are excited to add KCG's talented people, trusted capabilities, and important customers to ManTech."

KCG, based in Reston, Va., is a cybersecurity firm focused on anticipating threats and implementing defensive countermeasures for both public and private sectors. The company identifies risk levels and manages solutions for security risks for government agencies and institutions. KCG's biggest government customers include the departments of Homeland Security and Justice and KCG also counts among its customers top commercial solutions providers.

"KCG looks forward to integrating seamlessly with ManTech to create the premiere provider of cyber defense solutions across federal and commercial customers," said Dusty Wince, founder and chief executive officer of KCG in a statement. "KCG's business leaders and I are all excited by the opportunity to leverage the resources of KCG and ManTech to expand our services to current customers and aggressively pursue new opportunities."

The acquisition of KCG brings more than 200 cybersecurity professionals to ManTech's Mission, Cyber and Intelligence Solutions Group. Terms of the deal were not disclosed.

PUBLISHED JUNE 16, 2015