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The McLean Group Advises Merlin International on the Sale of its Professional Services Group to Xator
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The McLean Group is pleased to announce that we provided advisory services on this completed engagement.

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The McLean Group Advises Merlin International on the Sale of its Professional Services Group to Xator

MCLEAN, VA – December 13, 2017 – Merlin International (Merlin), announced the completed sale of its Professional Services Group (PSG) to Xator Corporation (Xator). Merlin’s PSG is a rapidly growing provider of life-cycle cyber security operations including monitoring and threat assessment, engineering, remediation, hunting and forensics to U.S. federal civilian and healthcare agencies such as the U.S. Department of Health and Human Services and the U.S. Department of Veterans Affairs.   The McLean Group’s Aerospace, Defense & Government Services (ADG) practice served as the exclusive transaction advisor to Merlin.  Terms of the acquisition were not disclosed.

David Scott, CEO of Xator, said, “Merlin International’s Professional Services Group significantly expands our Cyber Security and Network Operations portfolio by adding enhanced capabilities and increased capacity to deliver converged security solutions for our customers. This acquisition expands our client footprint into the health IT critical infrastructure arena. The PSG team shares Xator’s vision of being our customers’ trusted global partner. Consistent with Xator’s culture, PSG personnel are customer-focused and mission-driven, resulting in sustained exceptional results for our customers.”

Jones Tallent, CFO of Merlin, said, “The McLean Group team ran a very efficient and thorough process that enabled us to find the right strategic and cultural fit for the Professional Services Group’s leadership team and employees and customers, while generating maximum competition.  The McLean Group served as a trusted advisor and provided senior level commitment at every step of the process.”

This transaction highlights several trends in the current government services M&A environment, including:

  • The buyer universe continues to have a robust appetite for well-positioned businesses with differentiated capabilities and service offerings.  Cyber Security remains a high-demand sector for acquisitions, however buyers are really drilling down to understand the true nature of potential acquisition targets’ cyber offerings.  Many companies are described as having a cyber presence, but few offer deep technical expertise that can be leveraged by an acquirer.

 

  • Large and mid-tier companies continue to shape their business portfolios by divesting non-core assets to focus on their core businesses.  In addition to freeing management’s attention and corporate resources to focus on higher-growth segments, divestitures generate capital that can be reinvested to accelerate growth.

 

  • There is a growing universe of middle market consolidators actively pursuing M&A opportunities in the government services and defense technology space.  This transaction represents Xator’s fifth acquisition since 2014.  Similarly, companies including Belcan, The Cadmus Group, ECS Federal, and Preferred Systems Solutions (PSS) have each made multiple recent acquisitions.  As these middle market companies position themselves to pursue larger contracts and compete more cost-effectively against larger contractors, M&A increasingly will be utilized to build critical mass.  This has resulted in an attractive M&A opportunity for well-positioned businesses that may not yet have achieved the scale necessary to garner the attention of larger contractors.

ABOUT THE MCLEAN GROUP

The McLean Group is a 25 year-old boutique investment bank and financial services firm focused on the Defense, Government & Intelligence (DGI), Security, Critical Infrastructure and Maritime markets. The firm’s 60+ professionals bring deep industry experience and relentless execution to every client engagement. TMG provides solutions that blend financial creativity with operational expertise. Whether The Firm is providing transaction advisory, valuation opinions or growth capital, its services are unmatched in these core markets.

Merlin acquired by Xator Corporation
The McLean Group