Q2 2021 M&A Insider Report

Q22021QUARTERLYM&AREPORT

The McLean GroupPremier middle market investment bank

The McLean Group | 1640 Boro Place | 4th Floor | McLean, VA 22102 | (703) 827-0200 | www.mcleanllc.com© 2021 The McLean Group. All rights reserved.Securities transactions conducted through McLean Securities, member FINRA/SIPC

M&A Insider ReportQ2 2021

Physical&CyberSecurity

CriticalInfrastructure

MaritimeTransport&Facilities

Defense,Government&Intelligence


The McLean GroupPremier middle market investment bank 2

Our trusted team of financial professionals provides middle-market clients with transaction advisory services, business valuationservices, and growth capital to help them reach their short and long-term goals.

Sell-Side AdvisoryBuy-Side Support

Corporate DivesturesLeveraged Transactions

ESOPsExit Strategy Plans

Mergers & Acquisitions

Business ValuationsComplex Securities Valuations

ESOP ValuationsEstate & Gift Valuations

Impairment TestingPortfolio Valuations

Purchase Price AllocationsTangible Asset Valuations

Transaction OptionsTransaction Valuations

Valuation Advisory

Capital Infusion

Growth Capital

COREBUSINESS KEYSTATISTICS

25Years Supporting Our Clients

> $6BTotal Transaction Value Since

2010

5Dedicated Offices

130+Closed M&A Engagements Since

2010

400+Annual Valuation Clients

6Growth Capital Investments

TMGOVERVIEW

HIGHLYSPECIALIZEDBOUTIQUEINVESTMENTBANK

The McLean Group is a 25-year-old boutique investment bank and financial services firm focused on the Defense, Government &Intelligence (DGI); Physical & Cyber Security; Critical Infrastructure; and Maritime Transport & Facilities markets. Our 60+ professionalsbring deep industry experience and relentless execution to every client engagement. We provide solutions that blend financialcreativity with operational expertise. Whether we are providing transaction advisory, valuation opinions, or growth capital, our servicesare unmatched in these core markets.

Our clients are special, and their missions are often vital to national security. They are required to be excellent at all times, and theyexpect the same from their transaction advisor.



Sources: White House

RELEVANTNEWS&COMMENTARY

FY2022FederalBudget FY2021Estimatevs.FY2022Estimate

─ DGI: The FY 2022 Budget highlighted investments in technologyas a continued key focus of the government. This focus is beingsupported by various initiatives including the American RescuePlan for the U.S. Digital Services.

─ Security: Recently, there has been a surge in discussionssurrounding cyber security and the nation’s ability to deterforeign threats. $500M of the Budget has been apportioned tothe Technology Modernization Fund to continue operations asthe predominate conduit for enhancements to cybersecuritydefenses. Additional investments include $9.8B in cybersecurityfunding and $15.0M for the Office of the National Cyber Director.

─ Critical Infrastructure: The Federal Budget takes aim to revamp astrategic array of infrastructure with a sizeable focus ontransportation. It calls for the modernization of 20,000 miles ofhighways, roads, and main streets; the repairment of the 10 mosteconomically critical bridges; and the upgrade of ports of entryand other transit lines.

─ Priorities: The top increase to agency funding has been in theeducation sector with the enactment of the American FamiliesPlan which notably includes 4 additional years of education forevery American. Following the Department of Education (EDU),the Department of Commerce (DOC) has seen a close to 30%increase in the Federal Budget - credited to the DOC’s counter-cyber crime initiatives.

-12.9%-4.1%

1.6%1.6%

3.6%5.6%6.6%

8.2%9.4%9.5%9.6%

10.8%12.4%13.3%13.8%

16.7%16.8%

19.8%21.2%

23.6%29.3%29.4%

39.8%

USACEDHS

DEFENSEDOT

TREASDOJ

NASAVA

SBAUSDA

SSASTATE

OPMDOLHUDDOI

DOENSFEPAHHSGSADOCEDU

$703.7B $715.0B

$887.5B $806.0B

$1,591.2B $1,521.0B

FY 2021 (Estimate) FY 2022 (Estimate)

-4.4%

%ChangebyAgency,FY21- FY22



Sources: Defense News, ASD News, Defense.gov, Aljazeera, Wall Street Journal

RELEVANTNEWS&COMMENTARY,CONTD.

─ NATO leaders declared China a global security challenge at Summit inBrussels. China’s goals and recent behavior present issues to the rule-based international order. Global leaders believe that China’s rapiddevelopment of nuclear missiles and use of disinformation poses athreat to global security. To counter the security risks caused by theChinese military buildup in the Indo-Pacific, the U.S. budget hasprovided $5.1B for the Pacific deterrence initiative. The Chinesemilitary buildup has resulted in a shift to submarines as surface shipsare more vulnerable to China’s increasing missile capabilities.Additionally, the “Clean Green Initiative”, originally pushed for byPresident Biden, is a G-7 backed plan with the purpose of rivalingChina’s infrastructure strategy, the “Belt and Road Initiative”. Overall,NATO defense focuses are shifting away from the Middle East andmore towards China.

─ Department of Defense plans to review its missile defense systemsupon growing threats from Iran, North Korea, Russia, and China. Withthese nations maturing their missile technology, the U.S. wants toevaluate the capabilities, strategies, and policies of their missiledefense systems. This review will act as a look into how the U.S canimprove and have effective missile defense for both homeland andregional defense. Results of this review may present opportunities forgovernment services and defense engineering companies.

─ Global Target Drone market value to reach $10.5B by 2031. From 2021 to2031, the market value is expected to grow by a CAGR of 8.8%. The targetdrone market is continuing to grow rapidly, mainly due to the adoption ofunmanned systems for military operations and advancements in militarytraining by companies who are increasing their focus through organic andinorganic growth.

─ In mid-June, Deputy Defense Secretary, Kathleen Hicks, announced the DoDAI and Data Acceleration (ADA) Initiative. Through this initiative, DoD islooking to rapidly advance data and AI dependent concepts. Hicks and herteam are looking to create operational data teams that will be dispatched toall combatant commands. This initiative is part of the Federal Government’scontinued focus on developing and funding technologies of the future.

─ Pentagon ends the JEDI cloud project amid Amazon court battle. The JEDIcontract was awarded to Microsoft and valued at up to $10.0B over 10 years.Amazon had been battling for the contract in court since 2019. The legaldispute between Amazon and the courts officially concluded on July 6th withthe cancellation of the JEDI cloud project by Pentagon officials. The fall of theJEDI project has brought light to a new project named “Joint WarfighterCloud Capability”. This project aims to target similar cloud computingcapabilities as the JEDI project intended, but with multiple vendors ratherthan a single vendor award. In addition to Microsoft and Amazon, officialshave said qualified bidders could include Alphabet Inc.’s Google, Oracle Corp.and IBM Corp. Contract protests have been increasing in recent years and arebeginning to hamper the government’s ability to efficiently procure goodsand services as well as contractors ability to efficiently win work.

Defense,Government&IntelligenceOverview



Source: S&P Capital IQ1. For composition of indices, see pages 9-10

TMGCUSTOMINDICES

─ The Defense Primes index has made significant headway in their recovery from the COVID-19 pandemic, but still trail the S&P 500 by 29.2%over the last 12 months. The drag on Defense Primes stock performance was directly associated with their exposure to the aerospaceindustry, which has subsided and given way to hampering exposure to troop draw downs in the Middle East.

─ With the confirmation of last quarter’s anticipated flattening of DoD budget, Defense Primes and Defense Systems indices are expected tohave limited opportunities for growth. Yet with a rapidly changing political landscape and ever-increasing global threats, both indices willremain ever so important for the protection of the United States.

─ The Middle Market Government Services and Government Contractors indices have remained relatively steady due to existing strategicinitiatives by the Federal Government including those focusing on cybersecurity and IT modernization.

MarketCommentary

Defense Primes MM Gov’t Services Gov’t Contractors Defense Systems S&P 500

-25%

-15%

-5%

5%

15%

25%

35%

45%

Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21

18.8%

27.1%

15.9%

20.0%

48.0%

TRAILINGTWELVEMONTHS(TTM)PUBLICEQUITYINDEXCHART1



Sources: DACIS, S&P Capital IQ(A) – announcement date

TRANSACTIONSBYMONTHNotablePrecedentTransactions

DEFENSE,GOVERNMENT&INTELLIGENCE

Deal volume in 2021 Q2 was relatively flat as many buyers moved toalign their capabilities with the Biden administration’s new spendingpriorities through inorganic growth.

Although deal volume remained strong, there were fewer mega dealsthis quarter. Deal volume was fueled primarily by the middle market,which has remained extremely active as many small and mediumbusiness owners attempt to exit before a potential capital gains taxincrease at the end of the year. We expect the remainder of 2021 to bestrong from a deal volume perspective as tax considerations continue.

Date: 5/28/2021

EV: $1, 4B

EBITDA Multiple: ND

Subsector: Government

Services

KeyStatistics

Date: 6/11/2021

EV: $725.0M

EBITDA Multiple: ND


Services

KeyStatistics

Date: 6/1/2021

EV: $84.2M

EBITDA Multiple: 11.00x

Subsector: Defense

Supplier

KeyStatistics

Date: 6/10/2021 (A)

EV: $203.0M

EBITDA Multiple: ND


Services

KeyStatistics

acquired by

Date: 6/1/2021 (A)

EV: $1.0B

EBITDA Multiple: ND


Services

KeyStatistics

acquired by

Date: 6/2/2021

EV: $250.0M

EBITDA Multiple: ND


Services

KeyStatistics

acquired by acquired by

acquired byacquired by



ClosedDate Acquirer(s) Target(s) TargetDescription

EV EV/($M) Rev. EBITDA

4/1/2021 Elbit Systems BAE Systems Rokar International Develops, manufactures, integrates, and supports GPS receivers and guidance systems

$31.0 NA NA

4/2/2021 ENSCO Exostrategies Implements proactive and disruptive processes, strategies, and solutions

NA NA NA

4/2/2021 General AtomicsCommonwealth Computer Research

Provides a variety of advanced analytical techniques and render solutions in software

NA NA NA

4/8/2021 McNally Capital; Nio Advisors Orbis OperationsProvides situational awareness and tactical training, advisory, and cybersecurity services

NA NA NA

4/12/2021 Raptor Scientific TestVonics Manufactures and sells air data calibrators and pitot static test equipment

NA NA NA

4/16/2021 (A)International Marine & Industrial Applicators

Main Industries Operates as a surface preparation and painting company NA NA NA

4/21/2021 Unison Software PRICE Systems Offers solution implementation, business case analysis, and research & development

NA NA NA

RECENTM&AACTIVITY






5/3/2021 Noblis McKean Defense Group Provides IT and enterprise management solutions

NA NA NA

5/5/2021 A4 Defense Systems Thermal Dynamics International Manufactures transmission, power steering, fuel, and engine cooling solutions

$7.6 NA NA

5/10/2021 (A) OneWeb TrustCommProvides managed satellite communications and professional services

NA NA NA

5/11/2021 Brightstar Capital Partners ERCProvides independent assessments, IT, and operations & maintenance support services

NA NA NA

5/13/2021 Integrity Management Consulting

MHM Innovations Delivers cyber security, secure networking, and cloud computing services

NA NA NA

5/17/2021 TechCORE Management Solutions Services

ArchiTECH Solutions Provides operations improvement, modernization, and automation solutions

NA NA NA

5/17/2021 ANSYS Phoenix Integration Develops software for model-based systems engineering

NA NA NA

5/18/2021 Smartronix C2S Consulting GroupOffers cloud consulting services to the government

NA NA NA

5/25/2021 Tetra Tech The Kaizen CompanyProvides development advisory and management consulting services

NA NA NA

5/26/2021 Gcom Software Qlarion Develops business intelligence and data management services and solutions

NA NA NA

5/27/2021 Mercury Systems Pentek Designs computer boards and recording systems

$65.0 NA NA

5/27/2021 Belcan Victor42Provides integrated information technology solutions to USSOCOM, DTRA, VA, etc.

NA NA NA

5/28/2021 MAXIMUS Federal Services Veterans Evaluation ServicesProvides reports through health evaluations performed by trained professionals

$1,400.0 NA NA

5/31/2021 CEVA IntrinsixDesign services company specializing in high-integration semiconductor design

$33.0 NA NA

RECENTM&AACTIVITY






6/1/2021 (A) Accenture Federal Services Novetta SolutionsProvides analytics software and solutions that detect threat / fraud and protect networks

$1,000.0 NA NA

6/1/2021 Cerberus Capital Management Red River Technology Provides security, network, and cloud solutions NA NA NA

6/1/2021 Graham Corporation Barber-Nichols Designs and manufactures specialty turbo machinery in the United States

$84.2 1.50x 11.00x

6/2/2021 Versar BayFirst SolutionsProvides organizational management and strategy consulting services

NA NA NA

6/2/2021 SAIC Halfaker and AssociatesA professional services and technology solutions company to VA, DoD, CMMC, etc.

$250.0 1.51x NA

6/3/2021 COMSovereign Innovation Digital Provides digital signal processing solutions to overcome the limitations of analog systems

$8.6 NA NA

6/7/2021 GAP Solutions Quadel Consulting & TrainingProvides outsourced management, consulting, and training solutions to the housing industry

NA NA NA

6/10/2021 (A) Parsons Government Services BlackHorse Solutions Provides cyber solutions to the national security and critical business community

$203.0 NA NA

6/10/2021 JHNA Technology Security Associates Offers digital engineering solutions to the nation's defense and federal communities

NA NA NA

6/11/2021 (A) SS8 Networks Assets of Bivio NetworksOffers network security products for federal and commercial network operators

NA NA NA

6/11/2021 Booz Allen Hamilton Liberty IT Solutions Provides technology solutions including Agile, DevSecOps, APIs, and LCNC solutions implem.

$725.0 2.26x 15.10x

6/15/2021 Oneida Research ServicesInternal Gas Analysis (IGA) division of Atlantic Analytical Laboratory

Engages in sampling and analysis of gas cylinders and liquefied gas

NA NA NA

6/16/2021Integrated Polymer Solutions Group

Swift Textile MetalizingDesigns and develops electrically conductive and reflective metalized fabrics

NA NA NA

RECENTM&AACTIVITY




CAPITALMARKETSDATA

StockPrice Ent. CY2021E CY2022E TEV/2021E TEV/2022E6/30/21 Value Revenue EBTIDA Margin Revenue EBITDA Margin Revenue EBITDA Revenue EBITDA

DefensePrimesLockheed Martin 378.35 114,407.3 68,333.0 10,498.6 15.4% 70,895.4 10,885.5 15.4% 1.67x 10.90x 1.61x 10.51x

Northrop Grumman 363.43 68,726.1 35,810.2 6,660.9 18.6% 37,547.5 5,047.8 13.4% 1.92x 10.32x 1.83x 13.61x

General Dynamics 188.26 65,788.9 39,060.4 5,003.0 12.8% 40,728.1 5,277.2 13.0% 1.68x 13.15x 1.62x 12.47x

L3Harris 216.15 51,263.3 18,738.8 3,990.5 21.3% 19,620.2 4,246.8 21.6% 2.74x 12.85x 2.61x 12.07x

Average $286.55 $75,046.4 $40,485.6 $6,538.3 17.0% $42,197.8 $6,364.3 15.9% 2.00x 11.80x 1.92x 12.17x

MiddleMarketGov’tServicesPAE 8.90 1,794.8 3,095.2 210.0 6.8% 3,214.6 221.1 6.9% 0.58x 8.55x 0.56x 8.12x

VSE 47.59 719.0 1,705.5 85.2 5.0% 1,907.6 99.1 5.2% 0.42x 8.44x 0.38x 7.26x

Vectrus 49.51 906.8 699.8 81.0 11.6% 797.1 97.8 12.3% 1.30x 11.20x 1.14x 9.27x

Average $35.33 $1,140.2 $1,833.5 $125.4 7.8% $1,973.1 $139.3 8.1% 0.77x 9.39x 0.69x 8.22x

Gov’tContractorsLeidos 101.10 19,372.6 13,940.6 1,487.7 10.7% 14,970.4 1,588.8 10.6% 1.39x 13.02x 1.29x 12.19x

Jacobs Engineering 133.42 21,104.0 14,809.2 1,302.4 8.8% 16,082.2 1,498.5 9.3% 1.43x 16.20x 1.31x 14.08x

Booz Allen Hamilton 85.18 13,255.9 8,248.3 864.5 10.5% 9,065.3 974.2 10.7% 1.61x 15.33x 1.46x 13.61x

CACI 87.73 7,595.8 7,319.4 650.8 8.9% 7,615.7 687.2 9.0% 1.04x 11.67x 1.00x 11.05x

SAIC 255.12 8,188.9 6,168.9 659.5 10.7% 6,551.0 729.0 11.1% 1.33x 12.42x 1.25x 11.23x

Parsons 39.36 4,549.6 3,940.1 362.4 9.2% 4,164.4 393.6 9.5% 1.15x 12.55x 1.09x 11.56x

ManTech 86.54 3,635.1 2,670.5 246.2 9.2% 2,803.6 260.0 9.3% 1.36x 14.76x 1.30x 13.98x

Average $112.64 $11,100.3 $8,156.7 $796.2 9.7% $8,750.4 $875.9 9.9% 1.33x 13.71x 1.24x 12.53x

Source: S&P Capital IQ

PUBLICLYTRADEDCOMPANIES



CAPITALMARKETSDATA


DefenseSystemsHEICO 139.42 18,089.2 1,978.0 526.0 26.6% 2,224.3 621.7 28.0% 9.15x 34.39x 8.13x 29.10x

Teledyne 418.83 19,370.9 4,434.7 902.4 20.3% 5,502.3 1,208.7 22.0% 4.37x 21.47x 3.52x 16.03x

Elbit Systems 129.48 6,784.7 4,980.0 521.0 10.5% 5,223.0 592.0 11.3% 1.36x 13.02x 1.30x 11.46x

Mercury Systems 66.28 3,843.3 989.7 211.9 21.4% 1,092.9 237.6 21.7% 3.88x 18.13x 3.52x 16.18x

Kratos 28.49 3,543.1 837.4 86.5 10.3% 964.4 111.7 NA 4.23x 40.98x 3.67x 31.71x

Average $156.50 $10,326.2 $2,644.0 $449.6 17.8% $3,001.4 $554.3 20.7% 4.60x 25.60x 4.03x 20.90x

Low $8.90 $719.0 $699.8 $81.0 5.0% $797.1 $97.8 5.2% 0.42x 8.44x 0.38x 7.26x

Mean $148.59 $22,786.3 $12,513.7 $1,807.9 13.1% $13,209.0 $1,830.4 13.3% 2.24x 15.76x 2.03x 13.97x

Median $101.10 $8,188.9 $4,980.0 $650.8 10.7% $5,502.3 $687.2 11.2% 1.43x 13.02x 1.31x 12.19x

High $418.83 $114,407.3 $68,333.0 $10,498.6 26.6% $70,895.4 $10,885.5 28.0% 9.15x 40.98x 8.13x 31.71x


PUBLICLYTRADEDCOMPANIESCONTD.


The McLean GroupPremier middle market investment bank

─ On May 6, a criminal organization used a ransomware attack todisrupt network assets and steal data from Colonial Pipeline, whichprovides 45% of gasoline, jet fuel, and other petroleum to the EastCoast.

─ Facing the threat of its data being released and unable to billcustomers, Colonial paid 75 bitcoin (~$4.4M) in ransom one daylater (5/7). Unfortunately, Colonial’s network was too damaged,and the decision was made to shut down operations for repairs.

─ Operations were restarted six days later on May 12. On June 7, theFBI announced that it had recovered 63.7 of bitcoins from theransom which had decreased in value to $2.2M.

─ This attack evidences the increasing sophistication ofcybercriminals and the vulnerability of our national infrastructureto cyberattacks.

12

Sources: Wall Street Journal, FBI, IBM, Fortinet


Physical&CyberSecurityOverviewCOLONIALPIPELINEBREACHTIMELINE

─ A main focus of President Biden’s at the June 16, G7 summit wasthe delineation of boundaries with international cyber crimes –particularly relating to incidents surrounding criticalinfrastructure (Food, Energy, Healthcare and Telecom). Thisaction comes as numerous politicians, including Senator Schumerand Gillibrand, push for increases to cybersecurity budgets. Theinflux of attention to cybersecurity threats may drive furtheractivity in the space.

─ Lawmakers reintroduced a bill on June 15 that would ban federalagencies from using biometric technology, including facialrecognition systems, and withhold funding for state and local lawenforcement agencies that use such technology. Proponents ofthe technology, including law enforcement, claim that it is aninvaluable tool, especially for tracking down suspects thatotherwise might be tough to identify.

─ Cyber criminals have recently begun targeting the infrastructuresector and interfering with operations. Sizeable breaches include:

─ On May 30, the largest meatpacking company in the world,JBS, paid $11.0M in ransom to cybercriminals after an attackshut down plants that process a fifth of U.S.’s meat supply.

─ Puerto Rico’s primary power distributor suffered a cyberattack that left >900,000 people without power. The denial-of-Service (DoS) attack flooded servers with close to 2million hits per second.

─ Up to 1,500 companies were compromised by a ransomware attack onKaseya. On July 2nd, REvil, a Russian cyber-criminal group usedransomware to attack Kaseya, an IT software company. This sameRussian cyber-criminal group has been linked by the FBI to the attackin May on JBS USA. The Kaseya attacks directly impacted nearly 60 ofKaseya’s customers which then compromised an additional 1,500 smallto medium-sized businesses that are associated with Kaseya’s directcustomers. The attacks did not impact any critical infrastructurecompanies but did result in the directing of all government resourcesto assist in the response by President Biden. As these cyber-attackscontinue to grow in frequency, the United States government shows apressing need for continued cyber-security capabilities.



Source: S&P Capital IQ1. For composition of indices, see pages 18-19

TMGCUSTOMINDICES

33.9%

38.4%

55.0%

45.0%

-15%

-5%

5%

15%

25%

35%

45%

55%

Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21

Security Services Security Solutions Cyber Security S&P 500

MarketCommentary

─ The Security Services index is slowly rebounding from the adverse affects of COVID-19. While the companies comprising the index have nottrended as high as the S&P 500, their Security Services divisions have seen substantial growth. Despite auxiliary segments dampening thegrowth figures of the overall companies, the index closely trailed the S&P 500 this quarter.

─ Personal security concerns have deepened as reports suggest 2020 having the largest one-year increase in homicides – leading to an uptickin home security systems. The demand for these systems is further fueled by the ongoing activity in the real estate market.

─ With global cyber-crime rates increasing exponentially, companies and governments are vamping up investments in digital security tocombat the orchestrated attacks that aim to interrupt critical operations.

TRAILINGTWELVEMONTHS(TTM)PUBLICEQUITYINDEXCHART1




PHYSICAL&CYBERSECURITY

The M&A deal flow during 2021 Q2 in the physical and cyber securitysector has moderately decreased relative to last quarter. Despite theshift in volume, the focus on investing in cybersecurity is incessant –potentially fueling the next several quarters.

The most prominent deal during Q2 was the announcement of ThomaBravo’s acquisition of Proofpoint. Not only does this deal make historyas the largest private equity cloud purchase, but it also highlights thegrowing market size of the cybersecurity industry.

acquired by

Date: 4/26/2021 (A)

EV: $12.4B


Subsector: Cybersecurity

KeyStatistics

acquired by

Date: 5/12/2021

EV: ND

EBITDA Multiple: ND


KeyStatistics

acquired by

Date: 5/6/2021 (A)

EV: $9.6M

EBITDA Multiple: ND


KeyStatistics

acquired by

Date: 5/20/2021

EV: ND

EBITDA Multiple: ND

Subsector: Security

Solutions

KeyStatistics

acquired by

Date: 6/9/2021

EV: $850.0M

EBITDA Multiple: ND


KeyStatistics

acquired by

Date: 4/1/2021

EV: $213.0M

EBITDA Multiple: ND

Subsector: Security Services

KeyStatistics

Q3 2020

33

Q4 2020

48

Q1 202146

Q2 202133

1213

8

21

8

17

21

1512

8

1312

Jun. 2

1

May

21

Apr. 21

Mar.

21

Feb.

21

Jan. 2

1

Dec. 20

Nov. 2

0

Oct. 20

Sep.

20

Aug. 20

Jul. 2

0

Sources: S&P Capital IQ(A) – announcement date



RECENTM&AACTIVITY



4/1/2021 The Brink's Company Payment Alliance InternationalProvides ATM solutions to businesses and financial institutions

$213.0 NA NA

4/1/2021 Converge Technology Solutions Dasher Technologies Provides information technology (IT) solutions to public, private, and nonprofit organizations

$48.5 0.28x 4.84x

4/2/2021 MS Solutions Equipment Fxti Offers IT security and cloud solution services NA NA NA

4/5/2021 Automotive Keys Group International Key SupplyDistributes security products serving locksmiths and security professionals

NA NA NA

4/8/2021 (A) ORBCOMM GI ManagerProvides IoT solutions to enhance security for various assets

$1,187.0 4.67x 23.21x

4/14/2021 Grade A; Convergence Networks Application Specialist Kompany Provides IT consulting, managed security, and managed IT services

NA NA NA

4/16/2021 Pye-Barker Fire & Safety Haines City Fire Extinguisher Service

Provides fire protection services NA NA NA

4/22/2021 B-Safe BH Securities Offers residential and commercial security and life safety solutions

NA NA NA

4/23/2021 Pye-Barker Fire & Safety T&S Fire and SecurityManufactures fire alarm and suppression systems and provides fire and security services

NA NA NA

4/26/2021 (A) Thoma Bravo ProofpointOffers protection against advanced and targeted cyber threats

$12,372.0 10.56x 258.47x

4/26/2021 Digital Fuel Capital First Impression Security Doors Manufactures doors and security panels NA NA NA




RECENTM&AACTIVITY



5/3/2021 Convergint Technologies Custom VaultDesigns, manufactures, and installs vault systems and complementary solutions

NA NA NA

5/3/2021 iON United Wirefire Designs enterprise secure network solutions NA NA NA

5/4/2021 LiveAction CounterFlow AI Develops AI-backed cybersecurity platforms for security operation centers

NA NA NA

5/4/2021American Alarm and Communications

Phoenix Security SystemsOffers security, access control, fire alarm, and video surveillance systems and services

NA NA NA

5/6/2021 (A) Forcepoint CyberincProvides solutions to prevent web, email, and document-based threats

$9.6 NA NA

5/11/2021 HelpSystems Beyond Security Designs cloud-based vulnerability management platforms

NA NA NA

5/12/2021 Fidelis Cybersecurity CloudPassage Develops on-demand server and workload security platforms

NA NA NA

5/13/2021 Integrity Management Consulting

MHM Innovations Provides cybersecurity and secure networking NA NA NA

5/13/2021 HelpSystems Agari Data Provides email security solutions NA NA NA

5/17/2021 Twilio Ionic SecurityDevelops and delivers a distributed data protection platform

NA NA NA

5/20/2021 AE Industrial Partners Cross-Fire & Security Designs, installs, maintains, and monitors life safety systems

NA NA NA

5/28/2021 Mitek Systems ID R&D Develops biometric software to increase security of authentication

$49.8 NA NA




RECENTM&AACTIVITY



6/1/2021 Coalfire Systems Denim Group Designs and develops security software NA NA NA

6/1/2021 Microsoft ReFirm Labs Develops platforms to discover domestic and foreign cyber threats

NA NA NA

6/1/2021 Absolute Software NetMotion Software Develops software to monitor, alert, and make decisions with real-time analytics

$340.0 5.67x 18.89x

6/2/2021 PRE 214 Technologies Develops AI-based facial recognition software NA NA NA

6/3/2021 Koniag TecProProvides industrial electrical and security solutions

NA NA NA

6/8/2021 Synopsys Code Dx Develops application security management solutions for software vulnerabilities

NA NA NA

6/9/2021 Mastercard Ekata Develops digital identity verification solutions $850.0 NA NA

6/10/2021 JHNA Technology Security Associates Offers digital engineering solutions NA NA NA

6/15/2021 Corbett Technology Solutions Collaborative Technology SolutionsOffers security infrastructure, sound masking, and mass notification systems

NA NA NA

6/15/2021 Cerberus Cyber Sentinel Ground Control IT Provides managed security services NA NA NA

6/16/2021 Netwrix New Net Technologies Provides cybersecurity and compliance software solutions

NA NA NA

6/22/2021 LookingGlass Cyber Solutions AlphaWave Develops cyber attack surface management solutions

NA NA NA




CAPITALMARKETSDATA


SecurityServicesSecuritas 15.82 7,487.0 12,492.7 912.2 7.3% 13,087.3 979.0 7.5% 0.60x 8.21x 0.57x 7.65x

The Brink's Company 76.92 6,244.4 4,409.2 702.7 15.9% 4,744.5 772.2 16.3% 1.42x 8.89x 1.32x 8.09x

Prosegur 3.27 3,150.8 4,291.8 514.9 12.0% 4,584.3 595.1 13.0% 0.73x 6.12x 0.69x 5.29x

Loomis 31.67 2,896.0 2,306.1 456.7 19.8% 2,458.4 511.4 20.8% 1.26x 6.34x 1.18x 5.66x

Average $31.92 $4,944.6 $5,875.0 $646.6 13.8% $6,218.6 $714.4 14.4% 1.00x 7.39x 0.94x 6.67x

SecuritySolutionsHoneywell International 217.55 159,756.3 34,799.5 8,833.1 25.4% 37,393.5 9,618.4 25.7% 4.59x 18.09x 4.27x 16.61x

Johnson Controls 68.34 57,232.8 24,035.0 3,597.8 15.0% 25,209.7 4,017.3 15.9% 2.38x 15.91x 2.27x 14.25x

Motorola Solutions 216.79 41,183.6 8,081.0 2,378.8 29.4% 8,564.6 2,597.3 30.3% 5.10x 17.31x 4.81x 15.86x

ADT 10.80 18,795.9 5,213.3 NA NA 5,407.1 NA NA 3.61x NA 3.48x NA

Allegion 139.25 13,656.3 2,847.5 667.6 23.4% 2,995.2 722.4 24.1% 4.80x 20.46x 4.56x 18.90x

Vivint Smart Home 13.15 5,358.3 1,416.0 651.1 46.0% 1,570.8 719.4 45.8% 3.78x 8.23x 3.41x 7.45x

Alarm.com Holdings 86.70 4,199.8 684.1 127.1 18.6% 743.9 148.1 19.9% 6.14x 33.03x 5.65x 28.36x

Napco Security Technologies 37.21 665.5 119.3 24.9 20.8% 135.2 33.6 24.9% 5.58x 26.76x 4.92x 19.78x

Arlo Technologies 6.85 409.5 412.8 (12.6) (3.1%) 456.8 2.8 0.6% 0.99x NA 0.90x NA

Average $88.52 $33,473.1 $8,623.2 $2,033.5 21.9% $9,164.1 $2,232.4 23.4% 4.11x 19.97x 3.81x 17.32x

PUBLICLYTRADEDCOMPANIES




CAPITALMARKETSDATA


Cyber-SecurityFortinet 241.53 37,831.9 3,113.3 892.2 28.7% 3,608.8 1,044.4 28.9% 12.15x 42.40x 10.48x 36.22x

Check Point 116.19 11,768.5 2,139.5 1,043.1 48.8% 2,203.3 1,079.5 49.0% 5.50x 11.28x 5.34x 10.90x

Proofpoint 173.52 10,241.0 1,212.0 204.2 16.8% 1,411.9 264.3 18.7% 8.45x 50.16x 7.25x 38.76x

SolarWinds 16.97 7,033.8 1,058.0 453.8 42.9% 1,148.1 512.6 NA 6.65x 15.50x 6.13x 13.72x

Varonis Systems 58.70 5,848.8 370.3 19.6 5.3% 452.6 43.0 9.5% 15.79x NA 12.92x NA

FireEye 20.24 4,985.6 1,021.7 164.3 16.1% 1,102.3 176.7 16.0% 4.88x 30.35x 4.52x 28.21x

Tenable 41.17 4,156.2 522.5 49.7 9.5% 619.0 71.7 11.6% 7.95x NA 6.71x 57.99x

NetScout Systems 28.59 2,076.4 844.1 NA NA 874.3 NA NA 2.46x NA 2.38x NA

SecureWorks 20.55 1,559.5 545.2 NA NA 560.3 0.6 0.1% 2.86x NA 2.78x NA

Average $79.72 $9,500.2 $1,203.0 $403.8 24.0% $1,331.2 $399.1 19.1% 7.41x 29.94x 6.50x 30.97x

Low $3.27 $409.5 $119.3 ($12.6) (3.1%) $135.2 $0.6 0.1% 0.60x 6.12x 0.57x 5.29x

Mean $74.63 $18,479.0 $5,088.0 $1,141.1 21.0% $5,424.2 $1,195.5 19.9% 4.89x 19.94x 4.39x 19.63x

Median $39.19 $6,046.6 $1,777.8 $514.9 18.6% $1,887.0 $553.9 18.7% 4.69x 16.61x 4.40x 15.86x

High $241.53 $159,756.3 $34,799.5 $8,833.1 48.8% $37,393.5 $9,618.4 49.0% 15.79x 50.16x 12.92x 57.99x

PUBLICLYTRADEDCOMPANIESCONTD.




Sources: Wall Street Journal, GlobeNewswire, Engineering News-Record, WWD


BIPARTISANINFRASTRUCTUREBILL

─ The EPA has announced the opening of fifth-round fundingapplications for infrastructure financing. The Water InfrastructureFinance and Innovation Act (WIFIA) program aims to reduce thehigh cost of capital as it pertains to water infrastructureupgrades. A total of $6.5B will be available to eligible borrowers.

─ The U.S. Dept. of Transportation has selected 24 transportationinfrastructure projects in 18 states to share $905.3M of fundingin the latest round of its popular Infrastructure for RebuildingAmerica, or INFRA, grant program. These grants provide a portionof the project costs and are further funded by local governments.This round of grants targeted areas of historical investment, suchas rural areas which received 44% of the funding.

─ On June 29, the Supreme Court ruled in favor of Penn East, ajoint venture of several energy companies who since 2014 havebeen seeking to build a 116-mile pipeline through PA and NJ. Theruling restores a status quo giving the energy industry, underFERC oversight, power to use eminent domain to help buildpipelines that cross state lines.

─ A heat wave this month has 9.8% of the country in “exceptionaldrought” - the most severe designation. These conditions havespread beyond the typical areas of the southwest up to statessuch as Washington where water infrastructure has not beendesigned to face these conditions, leading to more state officialsconsidering conservation as part of their water infrastructure.

─ On June 24, a group of ten bipartisan senators reached a deal onthe framework for an infrastructure package that totals nearly$1.2T over 5 years.

─ The plans includes $400.0B in baseline transportation spendingthat is renewed by Congress and $579.0B in new spending, ofwhich $312.0B will go towards transportation projects and$266.0B will go towards utility infrastructure projects.

─ The bill is expected to be paid for in part by repurposing existingfunds, public-private partnerships, and enhancing collectionenforcement at the Internal Revenue Service.

CriticalInfrastructureOverview

Roads/Bridges$109.0M

Rail$66.0M

Mass Transit$49.0M

Other$32.0M

Airports$25.0M

Marine$16.0M

EV. Infra.$15.0M

Grid Infra. $73.0M

Broadband$65.0M

Water Infra.$55.0M

Resiliency$47.0M

Env. Remidiation $21.0M

Other$5.0M

UtilityInfrastructure TransportationInfrastructure




CRITICALINFRASTRUCTURE

M&A deal flow in the second quarter of 2021 has relatively stabilized,when compared to the past twelve months. Albeit the decrease involume of transactions since the fourth quarter of 2020, severalenvironmentally-conscious water companies have been acquired. Thefollowing quarter will likely see a similar trend in tandem with Biden’spush towards reducing emissions.

A prevalent case of expanding operations to further address globalinfrastructure concerns was SEEIT’s $261.0M acquisition of Red-Rochester, who provides comprehensive utilities in Rochester, NY.

acquired by

Date: 5/4/2021

EV: $420.0M

EBITDA Multiple: ND

Subsector: Infrastructure

KeyStatistics

acquired by

Date: 6/23/2021

EV: ND

EBITDA Multiple: ND

Subsector: Environmental Services

KeyStatistics

acquired by

Date: 5/17/2021

EV: $150.0M


Subsector: Water

KeyStatistics

acquired by

Date: 5/21/2021

EV: $261.0M

EBITDA Multiple: ND

Subsector: Power and Water

KeyStatistics

acquired by

Date: 6/9/2021 (A)

EV: ND

EBITDA Multiple: ND

Subsector: Infrastructure

KeyStatistics

acquired by

Date: 4/1/2021

EV: ND

EBITDA Multiple: ND

Subsector: Power

KeyStatistics

Q3 202079

Q4 2020107

Q1 202188

Q2 202166

2022242322

4346

2833

29

21

29

Jun. 2

1

May

21

Apr. 21

Mar.

21

Feb.

21

Jan. 2

1

Dec. 20

Nov. 2

0

Oct. 20

Sep.

20

Aug. 20

Jul. 2

0

Source: S&P Capital IQ(A) = announcement date





4/1/2021 The Solaray Corporation Generator & Power Systems Supplies generators and power systems NA NA NA

4/1/2021 Franklin Electric Puronics Water SystemsManufactures and sells water treatment equipment

$28.0 1.17x NA

4/22/2021 CIRCON Environmental Water Integrated Treatment Systems

Provides wastewater treatment and waste management solutions

NA NA NA

4/30/2021 DXP Enterprises Carter|VerPlanck Distributes water and wastewater treatment industries

NA NA NA

5/4/2021 MasTec INTRENOffers design, construction, and management solutions for electric and gas utilities

$420.0 NA NA

5/7/2021 424 Capital QE Solar Offers full-service solutions to solar systems NA NA NA

5/17/2021 Franklin Electric New AquaManufactures commercial and industrial water treatment products

$150.0 2.21x NA

5/21/2021 SDCL Energy Efficiency Income Trust

RED-Rochester Operates as a power plant and lake water treatment facility

$261.0 NA NA

5/25/2021 Guthrie & Frey Water Conditioning

KH Water Specialists Engages in retail of water treatment systems NA NA NA

6/3/2021 TranSystems CDI-InfrastructureProvides civil and environmental engineering and communication technology services

NA NA NA

6/7/2021 Keystone Clearwater SolutionsNortheast Pennsylvania Water Transportation Unit

Comprises a water transfer and transportation unit

NA NA NA

6/9/2021 (A) Industrie De Nora Calgon Carbon UV Technologies Designs and manufactures wastewater UV disinfection systems

NA NA NA

6/23/2021 Versar Environmental Services Business Unit of Black & Veatch

Provides remediation, investigation, and design for the EPA

NA NA NA

RECENTM&AACTIVITY

Source: S&P Capital IQ(A) = announcement date



Sources: Economic Times, S&P Global, Freightos


2021FREIGHTOS BALTICINDEX(FBX)GLOBALCONTAINERINDEX

─ International shipping backlog due to COVID-19 expected to lastwell into 2022. The Port of Yantian is responsible for 25% of U.S.bound shipments. Following a coronavirus outbreak in early June,the port has only been operating at 30% capacity. Surroundingports have also been backlogged as they have been taking onshipments from the Port of Yantian. Freight rates have beencontinuously increasing, causing businesses to increase the pricesof their products for consumers. In addition to increasing freightrates, businesses are also presented with inventory issues due tothe supply chain problems.

─ Asia-North Europe freight rates climbed to a new high of$11,068/FEU from $7,294 in early April, nearly 600% higherthan last year.

─ Europe-North America rates rose to $5,193/FEU from$2,456 in early April.

─ Asia-US East Coast rates increased to $9,803/FEU from$5,814 in early April - these rates are 250% higher thanrates were a year ago.

─ Transpacific Asia-US West Coast rates rose to $6,588/FEUfrom $5,156 in early April - this rate is 245% higher than thesame time last year.

─ Maersk, an industry shipping leader, is taking action todecarbonize shipping. As sustainability grows on the priority listof many customers, investors, and employees, Maersk hasannounced that they will no longer purchase vessels that do nothold zero-carbon capabilities. In an attempt to decrease thecarbon footprint of the shipping industry, Maersk is planning tohave a carbon-neutral vessel in the water in 2023. With theindustry leader shifting to carbon-neutral vessels, this might bean inflection point in the shipping and ship manufacturingindustries, which could ultimately accelerate the ongoing trendof reducing carbon emissions.

MaritimeTransport&Facilities

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-Jun

2020 2021



Sources: S&P Capital IQ(A) = announcement date


MARITIMETRANSPORT&FACILITIES

In 2021 Q2, there was a 23.5% increase quarter-over-quarter (QoQ) inM&A activity resulting in 21 deals - the largest of which was theacquisition of Diamond S Shipping by International Seaways for $1.0Bwith an EBITDA multiple of 9.04x. Although this mega-merger was doneby two public companies, the vast majority of the 21 deals in Q2 werehandled by private companies.

The growing number of private transactions continues to illustrate thepower of private funding. Market consolidation is expected to continueas the increases in freight rates and shipping costs continue to damagesmall and medium business efforts.

acquired by

Date: 3/31/2021 (A)

EV: $1.1B


Subsector: Petro. Shipping

KeyStatistics

acquired by

KeyStatistics

acquired by

Date: 4/19/2021

EV: $82.0M

EBITDA Multiple: ND

Subsector: Marine Equipment

KeyStatistics

acquired by

KeyStatistics

acquired by

Date: 6/22/2021 (A)

EV: $322.4M


Subsector: Shipping Vessels

KeyStatistics

acquired by

KeyStatistics

Date: 6/01/2021 (A)

EV: $51.3M

EBITDA Multiple: ND

Subsector: Bulk Shipping

Date: 4/16/2021

EV: $100.0M

EBITDA Multiple: ND

Subsector: Logistics

Q3 2020

24

Q4 2020

38

Q1 202117

Q2 202121

Date: 5/3/2021

EV: $63.0M

EBITDA Multiple: ND

Subsector: Shipbuilding

74

1311

8

19

5 4

8

11

5 5

Jul-2

0

Aug-20

Sep-2

0

Oct-20

Nov-2

0

Dec-20

Jan-21

Feb-2

1

Mar-

21

Apr-21

May

-21

Jun-21





6/30/2020 Tianjin Jianghao Logistic Tianjin Haisheng Lanrui Iron and Steel

Tianjin Pacific Container Engages in cargo loading and unloading operations, shipping, and transport

$18.7 162.51x NA

3/31/2021 (A) International Seaways Diamond S Shipping Provides seaborne transportation of crude oil, refined petroleum, and other products

$1,101.5 2.16x 9.04x

3/31/2021 Rhenus Maritime Services GmbH ARKON Shipping & Projects Provides marine transportation services NA NA NA

4/12/2021 (A) Navigator HoldingsFleet and business activities of Ultragas ApS

Comprises marine fleet and business activities $389.9 NA NA

4/12/2021 Jamaica Producers Group Limited; Seatrade Group N.V.

Geest Line Offers water transportation services NA NA NA

4/16/2021 Hidrovias do Brasil South American shipping business of Imperial Logistics

Operates in the freight shipping business $100.0 NA NA

4/19/2021 SPX Corporation Sealite Pty Designs and manufactures navigation equipment

$82.0 NA NA

4/19/2021 Portfolio LegalNovello Law (nka:The Marine Group – Projects)

Provides boat maintenance, repairs, lifting, and servicing facilities

NA NA NA

4/26/2021 (A)RISE Research Institutes of Sweden AB

SSPA Sweden ABProvides ship design, maritime operation, port, and coastal development services worldwide

NA NA NA

5/1/2021 (A) International Container Terminal Services

Manila Harbor Center Port Services

Engages in the handling and storing of international breakbulk and bulk cargo

$51.3 NA NA

5/3/2021 S&B Infrastructure TAI Engineers Provides marine engineering and naval architecture services

NA NA NA

5/3/2021 MarineMax KCS International Offers yacht and boat building and repair services

$63.0 0.84x NA

5/13/2021 Wheelhouse Technologies TruPlugManufactures emergency leak mitigation devices

NA NA NA

5/19/2021European Bank for Reconstruction and Dev.

ICS Danube Logistics SRLInvestor and operator of GiurgiulestiInternational Free Port in Moldova

NA NA NA

RECENTM&AACTIVITY






5/20/2021 Lineage Logistics Crystal Creek Logistics Provides multichannel frozen and dry order fulfillment and shipping services

NA NA NA

5/23/2021 Delmar Systems Vryhof Anchors B.V. Designs, manufactures, and supplies drag anchors and related mooring equipment

NA NA NA

5/27/2021 Argeo ASTeledyne Gavia SeaRaptorAutonomous Underwater Vehicles

Designs and manufactures autonomous underwater vehicles

NA NA NA

5/31/2021 Veritas Petroleum Services B.V. Yxney Maritime ASDesigns and develops a cloud database for vessel management and fuel saving

NA NA NA

6/1/2021 Lineage Logistics UTI Forwarding Arranges exports and imports from various destination worldwide

NA NA NA

6/9/2021 (A) Tangshan Port Industrial Group Tangshan Port Group (Beijing) International Trading

Offers international cargo transportation services

NA NA NA

6/15/2021 (A) OneWater Marine Assets of Stone Harbor Marina Provides boat sales, storage, service and repair NA NA NA

6/15/2021 Supreme Integrated Technology Assets of C.S. ControlsManufactures assets for the marine applications

NA NA NA

6/17/2021 (A) Mitsubishi HC Capital CAI International Operates as a transportation finance company $986.6 NA NA

6/22/2021 (A) MPC Container Ships ASA Songa Container AS Owns and operates a fleet of container feeder vessels

$322.4 6.90x 117.55x

RECENTM&AACTIVITY,CONTD.




CONTACTINFORMATION

MarkBertlerChicago, ILWater & Wastewater(847) 226-0793 [email protected]

MarcGruzenskiLos Angeles, CASecurity & Technology(703) 827-0246 [email protected]

PaulS.KlickIVMcLean, VATech. & Critical Infrastructure(703) 752-9019 [email protected]

BarbaraPapasDallas, TXTechnology(214) 773-7068 [email protected]

MitchellMartinMcLean, VADefense & Gov’t Services(703) 752-9009 [email protected]

JackZollingerSarasota, FLCritical Infrastructure(239) 595-5151 [email protected]

AndySmithMcLean, VAValuation Advisory(703) 827-0233 [email protected]

Mergers&Acquisitions

ScottKendrickMcLean, VADefense & Gov’t Services(215) 370-6128 [email protected]

BusinessValuation

RyanBerryMcLean, VAValuation Advisory(703) 827-0091 [email protected]

TylerHalsteadMcLean, VAValuation Advisory(703) 752-9013 [email protected]

MichaelLoftusMcLean, VAValuation Advisory(703) 827-0200 [email protected]

ShariOverstreetAustin, TXValuation Advisory(512) 687-3485 [email protected]

ScottSieversMcLean, VAValuation Advisory(703) 827-8685 [email protected]

DLSMarine

HarryWardNew Orleans, LADLS Marine(504) 835-8505 [email protected]

NormanDufourNew Orleans, LADLS Marine(504) 835-8505 [email protected]

1640 Boro Place4th FloorMcLean, VA 22102

(703) 827-0200 www.mcleanllc.com

Date post:	21-Feb-2022
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Q2 2021 M&A Insider Report

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