Information on the Target

On December 21, 2020, Arlington Capital Partners announced the successful acquisitions of Base2 LLC and Fortego LLC by its portfolio company, BlueHalo. BlueHalo is a prominent provider of advanced engineering solutions tailored for the national security sector. Base2 and Fortego are leading Maryland-based firms, recognized for delivering complex, mission-critical cyber and SIGINT (signals intelligence) solutions, essential for the most demanding national security operations. Base2 excels in cutting-edge cyber solutions encompassing Computer Network Operations (CNO), SIGINT, and Quick Reaction Capability (QRC), whereas Fortego specializes in comprehensive SIGINT and cyber operations, offering end-to-end solutions in cyber analytics and vulnerability research.

The integration of Base2 and Fortego’s robust capabilities with BlueHalo positions the company to meet intricate cyber requirements within the national security landscape. BlueHalo plans to accelerate its growth strategy through the establishment of three new state-of-the-art operational facilities, with a fourth currently under construction. Significant investments are anticipated to amplify the growth trajectory in Base2 and Fortego's core markets, while also expanding BlueHalo's offerings in the cyber and SIGINT domains across a diverse portfolio serving manned and unmanned aircraft, missile defense systems, and space assets.

Industry Overview in the Target's Country

The national security industry in the United States is witnessing rapid evolution and growth, driven by an increasing emphasis on technological advancements and cybersecurity. With rising geopolitical tensions and the constant threat of cyberattacks, the demand for cutting-edge solutions in cyber defense and intelligence gathering is at an all-time high. Companies are increasingly required to innovate and adapt their services to counter these threats effectively.

The U.S. government continues to invest significantly in its national defense budget, which includes allocations for cybersecurity and SIGINT capabilities. This investment fosters an environment conducive to the growth of companies like BlueHalo, Base2, and Fortego, who provide integral support to national defense imperatives. Furthermore, the relationship between government agencies and private sector companies is becoming more collaborative, enabling faster implementation of advanced technologies.

Maryland, a strategic location for defense contractors, is home to a rich ecosystem of technology firms focusing on cybersecurity and intelligence solutions. The proximity to key federal agencies and military installations facilitates partnerships and enhances operational synergy among companies in this sector. As threats continue to evolve, Maryland-based firms are positioned to play a critical role in meeting the cybersecurity demands of national security.

The Rationale Behind the Deal

The acquisition of Base2 and Fortego aligns seamlessly with BlueHalo's strategic vision to fortify its position as a leading provider of cyber and SIGINT solutions. By integrating the sophisticated capabilities of both Base2 and Fortego, BlueHalo can enhance its technological portfolio to address the most challenging requirements in national security. This synergy is expected to unlock new growth avenues while effectively responding to the evolving landscape of cybersecurity threats.

The combined expertise of these three companies is anticipated to create a formidable force in the market, expanding BlueHalo's capacity to deliver advanced solutions across various domains. The deal also offers BlueHalo a competitive advantage through established contracts and relationships with government agencies, streamlining access to high-demand cybersecurity and intelligence markets.

Information About the Investor

Arlington Capital Partners is a distinguished private equity firm based in Washington, D.C., currently managing approximately $4.0 billion in committed capital through its multiple investment funds. Arlington specializes in middle-market investments within growth industries, including government services, aerospace and defense, healthcare, and technology sectors. The firm's extensive experience and network enable it to function as a value-added investor, particularly in collaborations with high-quality management teams committed to elevating their company's competitive stance.

Having a notable history in the national security sector, Arlington Capital Partners understands the unique challenges and opportunities in this market. The firm's investment strategy emphasizes seasoned professionals with operational and private equity expertise, allowing Arlington to identify promising companies poised for growth while driving long-term value creation.

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Examining the acquisitions of Base2 and Fortego by BlueHalo reveals a strategic investment opportunity with significant potential for success. The collaboration not only brings together complementary skill sets but also positions BlueHalo to leverage an extensive talent pool of experts in cyber and SIGINT solutions. This alignment will likely enhance their ability to secure important contracts and drive innovation within the national security sector.

The continuing growth of the national security industry, combined with increasing government expenditures in cybersecurity, reinforces the rationale behind this acquisition. Given the heightened focus on defense capabilities amid global challenges, the demand for advanced engineering solutions in this space is expected to increase. As such, BlueHalo is well-positioned to capitalize on market opportunities arising from these trends.

Moreover, the cultural compatibility between BlueHalo, Base2, and Fortego fosters a conducive environment for collaboration and growth. The emphasis each company places on mission success and employee welfare is likely to yield high levels of morale and productivity, further contributing to their cohesive operational strategy.

In conclusion, the acquisitions of Base2 and Fortego represent a forward-thinking move for BlueHalo, as it continues to lead the transformation of national defense capabilities. As market dynamics evolve, this strategic consolidation is expected to bolster BlueHalo’s market position, resulting in meaningful growth and enhanced capabilities to address the intricate challenges of modern warfare.

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