The ideal merger between government contractors? When ‘one plus one make three’
The demand for technology expertise is fueling mergers and acquisitions, particularly among defense contractors. For The Business of Defense podcast, ASMC’s R...
December 6, 20221:15 pm
4 min read
Establishment and Acquisition of Alta Via Consulting
“Our growth pattern was outpacing our ability to keep up with our infrastructure.”
Chief Capability Officer and President of cBEYONData
After almost 25 years in business, the three principal partners at Alta Via Consulting began thinking about acquisition. A merger was not on the table — at least that’s what the company’s leaders thought initially.
Often throughout its decades helping Defense Department agencies modernize financial processes and adopt enterprise resource planning systems, the small Alta Via team was often its “own worst enemy,” acknowledged Alta Via President Dawn Sedgley.
That’s not uncommon for small businesses: Clients come first. Running and implementing Alta Via’s own financial and other IT systems often took a back seat to delivering on the mission needs of the DoD agencies it supported, she told Rich Brady, CEO of the American Society of Military Comptrollers, during ASMC‘s The Business of Defense podcast on Federal News Network.
That act of balancing the business’s own infrastructure needs against the needs of clients prompted the company to begin considering possible acquisitions as a way to swiftly and effectively grow its team. Alta Via Consulting had begun looking into funding, and “there were some firms that we were interested in,” Sedgley said.
Meanwhile, during the same timeframe, someone who was aware of Alta Vista’s deep SAP experience — it has been a SAP development partner since its founding in 1998 — reached out and suggested a possible merger with cBEYONData. Initially, the Alta Via team rejected the idea, but cBEYONData persisted in at least having a meeting to discuss a possible merger.
That meeting changed everything because there were synergies and additive benefits too, Sedgley said. “We were like, ‘OK, let’s do this instead.’ This is great. One plus one does make three.”
Similar strengths, broader audience
While both companies have business intelligence, data warehousing, data lake and data analytics skill sets — built on foundational SAP technologies and their own products — the two businesses had distinct federal client bases. “They were all in the Department of Justice, and we were in the DoD,” she said.
The continuing data modernization and digital transformation taking place across the government, which in part drove the initial focus and adoption of ERP systems back in the 1990s, continues to make the core services the companies offer desirous, Sedgley said. And for Alta Via, the need for a more extensive infrastructure was critical, she added.
“Our growth pattern was outpacing our ability to keep up with our infrastructure,” Sedgley said. “And so we needed to have a much larger infrastructure because the demand for these type of services has just continued to grow and grow.”
Brady noted that “over the last year, it seems there’s a lot of mergers and acquisitions going on” within the federal contracting space, particularly involving defense contractors.
Sedgley said she expects M&As will continue to pick up because of the needs of the government for technology upgrades. “Large-scale modernization has to occur technically” within the government, she said. “Because of the technology boom, you’re going to see large amounts of acquisitions and mergers because of the sheer demand and limit on the resources that are available to fulfill that demand.”
Admittedly, there are some other factors at play too, Sedgley said. For instance, the COVID-19 pandemic showed companies that the federal market remains fairly stable even in times of crisis. That said, the government has large numbers of legacy systems that are at or near their end of life, said added. “It’s time for them to be modernized.”
“Because of the technology boom, you’re going to see large amounts of acquisitions and mergers because of the sheer demand and limit on the resources that are available to fulfill that demand.”
Chief Capability Officer and President of cBEYONData
Focused on a federal future
Interestingly, Alta Via had an almost 100% commercial focus initially. That changed after SAP asked the business during its first year to write a book on costing and cost analytics inside of an SAP platform. That drove interest among federal agencies, Sedgley said.
“Activity-based costing and costing still is a governmentwide problem, like understanding what does it cost to do their products and services?” she said. “Once we wrote that book, that’s how we became a part of the federal market. Because in the ’90s, that was a big push with the CFO Act.”
For its first half-dozen years, the company still split time between commercial ERP implementations worldwide and federal work. But since around 2005, when the company began working with the Army, it has shifted all its resources into federal and particularly DoD “because the demand was there,” Sedgley said, adding “and that’s where we have continued to stay.”
To listen to the full discussion between Dawn Sedgley, president of Alta Via Consulting, a cBEYONData company, and Rich Brady, CEO at the American Society of Military Comptrollers, click the podcast play button below:
Discover other The Business of Defense podcasts here.