Information on the Target

Tyto Athene, LLC, a federal systems integrator headquartered in Reston, Virginia, specializes in mission-focused digital transformation solutions. As a portfolio company of Arlington Capital Partners, Tyto has successfully acquired stackArmor, Inc., a distinguished provider of compliance acceleration solutions such as FedRAMP, FISMA/RMF, and CMMC/DFARS, tailored for government agencies and the industrial base. This acquisition aligns with Tyto's strategy to enhance its offerings in cyber security and cloud automation.

StackArmor has established itself since 2016 as a trusted global provider of compliance-based cloud solutions for the public sector. Its flagship products, including the ATO for AI™ and ThreatAlert® Security platforms, have proven instrumental in helping government agencies reduce the time and cost of obtaining Authority to Operate (ATO) by 40%. Joining Tyto will empower stackArmor to expand its operations and further contribute to the mission success of government clients.

Industry Overview in the Target’s Specific Country

The federal IT and cybersecurity services industry in the United States is witnessing rapid growth, driven by increasing government investment in digital transformation and cybersecurity initiatives. As agencies face evolving threats and operational challenges, the demand for secure, agile technologies is burgeoning, making compliance-driven solutions highly sought after.

With an emphasis on cloud solutions, the U.S. government is keen on migrating to cloud-based infrastructure to enhance efficiency and reduce costs. Compliance with various standards such as FedRAMP and NIST remains paramount, especially in protecting sensitive government data and ensuring operational integrity. Companies that can navigate these compliance requirements while providing innovative solutions stand to benefit significantly.

Moreover, the public sector's shift towards automation and cloud management is reshaping the landscape, paving the way for strategic acquisitions like that of stackArmor by Tyto. This trend is supported by federal agencies' pressing need to modernize their IT infrastructure and adopt robust cybersecurity measures in the wake of rising cyber threats.

As federal organizations continue to prioritize resilience and compliance, the industry is expected to grow in both size and scope, with leading integrators enhancing their existing capabilities through acquisitions, partnerships, and internal development of technologies.

The Rationale Behind the Deal

The acquisition of stackArmor is a strategic move for Tyto, as it reinforces the latter's position in the federal IT and cybersecurity services market. By combining Tyto's extensive capabilities with stackArmor's innovative cloud and compliance solutions, the newly formed entity can deliver a more comprehensive range of services to meet the complex needs of government and defense clients.

This integration is anticipated to enhance time efficiency and cost-effectiveness for customers, enabling Tyto to accelerate mission success through automation and advanced technology solutions. Furthermore, as both companies are dedicated to public sector innovation, this acquisition paves the way for continued growth and operational excellence in delivering reliable, secure digital infrastructure.

Information about the Investor

Arlington Capital Partners is a prominent private investment firm based in the Washington, D.C. area, with a specialized focus on government-regulated industries. Since its establishment in 1999, Arlington has formed partnerships with a range of founders and management teams to cultivate strategically vital businesses across sectors including government services, technology, aerospace and defense, and healthcare.

With a robust portfolio of over 175 companies and currently operating out of its $3.8 billion Fund VI, Arlington demonstrates a firm commitment to investing in and supporting the growth of enterprises that serve critical government needs. By investing in companies like Tyto, Arlington seeks to enhance their strategic capabilities within the industry, ultimately driving innovation in government services.

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The acquisition of stackArmor by Tyto Athene is poised to be a strategic investment that could yield significant returns as the demand for compliant cloud solutions continues to rise within the public sector. The integration of stackArmor’s leading solutions enhances Tyto's portfolio, positioning it favorably within a growing market.

Furthermore, with stackArmor’s established reputation in compliance and security automation, Tyto stands to benefit from increased competitiveness against its peers. The synergy between the two companies fosters an environment conducive to innovation, enabling them to tackle complex government challenges effectively.

Moreover, as federal agencies are increasingly committed to digital transformation initiatives, this acquisition enhances Tyto's capabilities to service government clients better. This progression reflects the broader trend of consolidation and investment in the tech solutions space targeting government needs.

Overall, this carefully considered acquisition aligns with Tyto's growth strategy while addressing critical gaps in the federal IT and cybersecurity services landscape, potentially leading to a favorable long-term return for investors.

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