You would have to be completely unplugged from the media if you have not seen multiple headlines over the past few years profiling mergers and acquisition activity at record levels and record valuations.  According to the Institute for Mergers, Acquisitions and Alliances, United States M&A volume as measured by transaction value was over $1.9 Trillion in 2018 up from almost $1.8 Trillion in 2017.  Year to date through May, 2019 there was approximately $800 Billion in transaction value.  2018 Middle-market M&A volume in the U.S. hit $427.9 Billion up from $372.7 Billion in 2017.

Valuations are experiencing record levels as well.  U.S. private equity backed buyouts were executed at an average EBITDA multiple of 11.6x in 2018, down a bit from the 11.9x multiple in 2017, but still above the average post-financial crisis multiple of 9.9x (2010 – 2016).

Unprecedented liquidity is driving all this activity.  A few anecdotes:

• Private capital dry powder is approximately $2 Trillion;
• Private debt funds (non-bank, private lenders) have over $300 Billion of dry powder; and,
• Corporate America is holding almost $1.7 Trillion of cash.

Working with middle-market companies, our investment banking teams at Evergreen Advisors Capital are consistently interfacing with private equity and strategic buyers and our activity levels and outcomes are reinforcing the statistics and anecdotal evidence – It is a great time to be a seller.  Across several industries such as business services, software, healthcare, cyber,  government contractors, and diversified industrials, we are seeing strong, consistent interest in our sell-side mandates from both financial and strategic buyers.  That being said, it is not a one size fits all market. To ensure success and best manage time and resources, entrepreneurs considering liquidity alternatives need to access and evaluate the appropriate audiences for their particular fact pattern.

Scale continues to be a factor in generating interest from strategic buyers.  During more than one sell-side engagement, we have seen potential strategic buyers show initial interest in a target only to back away when a higher priority (i.e. larger target) opportunity became available.  Even though we found other buyers, the message has been clear that corporate America’s human resources are constrained when it comes to M&A causing transaction timelines to stretch a bit.  We have been successful in guiding middle-market companies that may be sub-scale to larger strategic buyers, in generating interest from smaller strategic buyers that are backed by private equity.  In almost all of these PE-backed strategic transactions, we encountered a counterparty that was able to act quickly and decisively, generating a great outcome for our client. [Read more…]

2019 continues to be another robust year for cyber M&A transactions. The first half of 2019, M&A deal volume is up 31% over the first half of 2018.¹ We all remember last’s years IPO of locally based Tenable Software and the activity continues with this month’s debut of software maker, Crowdstrike Holdings, a cloud-native endpoint protection platform built to stop breaches, going public with a valuation of $6.6 billion, raising $612 million in their debut.

Locally, BlueRidge AI, Fulton MD just received a $1.9 investment from Datatribe. BlueRidge is integrating Internet of Things (IoT), machine learning (ML), and predictive analytics to help the industrial and manufacturing sector target electric motor failure modes, providing manufacturers with the ability to schedule prescriptive maintenance and minimize downtime. That being said, in order to ensure that its products and services are misra compliant, a number of software development guidelines must be adhered to. Above all, in case you were not aware, the MISRA standard provides a comprehensive set of guidelines to protect against security vulnerabilities and program failures. Furthermore, Datatribe announced this year it raised $50 million for fund two to invest in an additional 12 companies. Inner Loop Capital announced in June that they raised $2.6 million to invest in early-stage cybersecurity and enterprise technology companies in the region. The fund aims to make approximately eight seed-stage investments over eighteen months, with typical initial investments of $300-400k.

Evergreen Capital is working on several projects in this space and seeing some key trends including:

Key Trends:

Digital Expansion
Security Threats continue to grow, along with the volume, variety, velocity, and data. The Digital Expansion includes IOT and Critical Infrastructure. [Read more…]

Kathy Warden was born and grew up in the small town of Smithsburg, Maryland.  She graduated from James Madison University in 1992 and in the early part of her career she worked for GE, Verizon, and General Dynamics.  She joined Northrop Grumman in 2008 as Vice President and General Manager of the Cybersecurity division.  In 2016 Kathy became President of the Mission Systems Test Sector, COO of the Corporation in 2017, and this past January 1^st was named Chief Executive Officer.

Recently I met with Kathy at Northrup Grumman’s headquarters in Falls Church, Virginia.  We discussed a wide range of topics, but what stood out as I reflected on our conversation, was her thoughtfulness and passion for people and mission.  Enjoy!

Mike Gill
Chairman, Evergreen Advisors

Interview with Kathy Warden

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Small Town Girl

 

MG: You went to school in Smithsburg, a town of 3,000. It keeps being named the safest city in Maryland. What’s the secret?

KW: There’s only 3,000 people, and they all know one another.

MG: From a small town to CEO of Northrop Grumman: Is there some part of you that was shaped by that experience in terms of character and values? Have you ever thought about that?

KW: I have actually thought about that quite a bit. I’m still just that small town girl. I think values and character are very much shaped in those early stages of one’s life. Being in an environment that was so small, where people knew one another and trusted each other and understood their character based on what they did, not just what they said – that shapes you as you become older.  You realize how important character is to building relationships with people.

MG: In high school, were you part of clubs and organizations?

KW: Interestingly, when I was in high school, I was involved, but also looking at what was next. I finished high school by going to the local junior college to get some college credits in my senior year. I interned in a law firm, trying to get exposed to new things. That really helped to shape my thinking about what I was going to study in college. Then I abandoned all of that when I got to James Madison and switched majors. I decided to go in a completely different direction, switching from pre-law into computer systems.

MG: Tell me about your family.

KW: I come from a very humble background, with my parents working traditional blue collar jobs.  They taught me the value of setting goals and working hard to achieve them. [Read more…]

Evergreen Advisors Capital, a middle market Investment Bank is pleased to announce that it has been named a 2019 Moxie Award finalist. The Moxie Award program honors the accomplishments and achievements of growing businesses, nonprofits, and associations in the DC metro community. Organizations are recognized for having demonstrated boldness and innovation as an integral part of their growth strategy.

“I want to congratulate our team for being nominated as a Finalist for the 2019 Moxie Award enabling us to be recognized among the boldest and most innovative organizations in the D.C. metro community” Rick Kohr, Chief Executive Officer said. Our team has a proven track record in providing innovative and strategic solutions to meet our clients’ evolving business needs and implementing winning strategies for our clients.”

Finalists were recently announced by Sarah Cody, the 2019 Moxie Award executive chairwoman.  “We received an unprecedented number of entries,” Cody said. “We look forward to revealing the winners at the 2019 Moxie Award celebration on Nov. 5, 2019, at The Ritz-Carlton in Tysons Corner.” [Read more…]

In this Entrepreneur Spotlight, we are highlighting Attila Security located in Fulton, MD with Datatribe. 

Attila Security is the leader in portable IP security.  Their award-winning GoSilent technology was originally developed at NSA designed to protect government and enterprises from advanced cyber attacks, zero-day threats, and data theft. Built for the cloud world where traditional network perimeters have disappeared, GoSilent helps global enterprises protect their most precious asset— DATA —wherever it resides. By providing visibility, control and threat defense across physical, virtual, and cloud applications, Attila protects connected devices from the tidal wave of cyber activity estimated to cost the global economy more than $400 billion annually. Their people, products, and partners are committed to protecting the nation state.

For this feature, we interviewed Gregg Smith, a cyber industry veteran who previously led several cybersecurity companies including OptioLabs and Silent Circle on how they got their name and how they have been so successful at having their technology adopted. [Read more…]

Although ESOPs are complex, highly regulated, and expensive to administrate, they can offer owners a tax-advantaged way to obtain liquidity.  The following are characteristics that may indicate your company is a good candidate for an ESOP:

• Consistent Earnings and Cash Flow – When a company sells to an ESOP, owners will typically finance the transaction with debt due to the unique tax advantages associated with ESOP debt.  However, annual debt service can be a significant drain on an ESOP company’s annual cash flow.  Therefore, to ensure the long-term feasibility and success of the ESOP, it is critical that the company not only be able to meet its debt obligations, but also have enough cash flow to fund future capital expenditures and working capital.  Companies with high-profit margins and consistent revenue streams generally make good ESOP companies.
• Adequate Size and Employee Base – Statutory requirements limit the amount of stock benefits that can be concentrated among shareholders.  Additionally, annual ESOP contributions are limited based on participants salary.  Therefore, a company with a large employee base is a better candidate for an ESOP than a company with a small employee base.  A good mix of “seasoned” and junior level employees is also helpful to smooth out the Company’s repurchase obligation as participants retire.
• Strong Entrepreneurial Culture – Companies that have a strong entrepreneurial culture are usually good ESOP candidates.  Employees that understand the connection between their jobs, the company’s profit, and ultimate value will be incentivized to increase that value as they become owners.
• Desire for Partial Sale – One advantage of selling to an ESOP versus sale to a third party is the option of a partial sale.  In most cases, strategic buyers and private equity firms are only interested in buying a controlling interest.  This is because these types of buyers want to influence the business operations to enhance their return on investment.  In the case of an ESOP, partial sales of at least 30% are allowed.  Owners may prefer a partial sale initially to retain control, continue legacy operations, and keep leverage levels reasonable.  The remaining interest can be sold gradually, over time depending on the cash flow of the business.  This structure offers a level of flexibility many owners are attracted to.

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Evergreen Advisors, a middle market Investment Bank and Corporate Advisory Firm, with offices in both Columbia, MD and McLean, VA, is pleased to announce the addition of Todd Nelson, Director Business Valuation.

“We are delighted to welcome Todd to Evergreen Advisors. Todd has a unique blend of business valuation, consulting and litigation experience and is highly respected as an expert within the business valuation community. Todd’s background fits very well with Evergreen’s platform as we look to expand and grow the valuation practice in the Washington/Northern Virginia area.” stated Pat Lowry, Managing Director of Evergreen’s Business Valuation Practice. [Read more…]

After four incredible years serving the Hogan administration, I made the difficult decision to return to the private sector. I left with my head held high for all that our great state was able to accomplish during my time as Maryland’s first Secretary of Commerce. The past four years were filled with plenty of challenges following Gov. Hogan’s spectacular rise to office. Click here to read more at the Baltimore Business Journal. 

Evergreen’s Rick Kohr, Chief Executive Officer to be featured on AHA Business Radio

Tuesday June 11^th, 2019

6-7 pm on 1300 WJZ-AM

AHA! Business Radio provides information to help you run your business and guide your decision making. The more you know the better decisions you make. This show is produced by Allan Hirsh Advisors. Allan T. Hirsh III, Executive Leadership Advisor, is an experienced business owner, CEO, entrepreneur and a community leader with a passion for strengthening and growing organizations and developing leaders.

Listen live each Tuesday from 6PM – 7PM on CBS 1300 WJZ-AM.  You can also listen to previous shows and view show videos by:

Follow AHA Business Radio on twitter @AHABizRadio and “like” on Facebook. Call 410-481-1300 to join the conversation.

Evergreen Advisors Capital is pleased to announce the publication of our Q1 2019 Digital Health Market Update. The update provides industry and insights on notable transactions, a detailed look at M&A and private placement activity, and data on valuation metrics and stock price performance.

Read More or Download here:

Digital Health Market Update Spring 2019

Join Evergreen Advisors and thousands of other industry professionals at the RSA Conference 2019 in San Francisco, California. The conference will be held at the Moscone Center and will take place March 4^th -8^th 2019.

Top information security professionals and business leaders will discuss emerging cybersecurity trends and formulate best strategies for tackling current and future threats. At this year’s event, attendees will have access to more than 500 exhibitors, more than 400 expert-led sessions, and invaluable networking opportunities to learn more about new approaches to info security discover the latest technology and interact with top security leaders and pioneers.About Evergreen Advisors

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Evergreen Advisors, a middle market Investment Bank and Corporate Advisory Firm, with offices in both Columbia, MD and Mclean, VA, is pleased to announce the addition of Steve Prichett as a Managing Director in our Columbia office.

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Evergreen Advisors Capital, a middle-market investment bank, is pleased to announce that Global Technology Associates, LLC (“GTA”) has been acquired by Kelly Services (“Kelly”).  Evergreen Advisors Capital acted as the exclusive financial advisor to GTA. Lacki & Company, LLC provided legal advice to GTA.

GTA is a leading provider of high-value engineering, technology, and business consulting services to the telecommunications industry – assisting clients with maximizing infrastructure potential and evolving networks and services to address market opportunities.   Bridging the gap between business and technology, GTA provides a wide range of services tailored to address client needs across the telecommunications value chain – from the network edge to the network core, and the enabling technologies being developed and deployed to deliver next-generation services.

“We explored several strategic alternatives to address our future growth opportunities. Kelly’s brand recognition and size support GTA’s growth objectives,” said Farzad Ghassemi, Executive Chairman of GTA, “The partnership with Kelly is a great outcome for our employees and clients. ”

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The Cybersecurity Association of Maryland Inc (CAMI) has elected its 2019 Executive Committee and Board of Directors with Gina Abate, President & CEO of woman-owned, Elkridge-based Edwards Performance Solutions, serving a second term as Chairperson. The 2019 slate of officers are as follows: [Read more…]

Evergreen Advisors, LLC is pleased to announce that Shelley Lombardo, Chief Operating Officer, has been elected to the board of the Cyber Association of Maryland (CAMI). CAMI was established in 2015 to generate sales and jobs through Maryland’s cybersecurity industry. CAMI is Maryland’s only organization dedicated 100% to the growth of Maryland’s cybersecurity industry.   [Read more…]

Cybersecurity is a constantly evolving subject matter for businesses. Like the computer viruses that are generally associated with the term, the issue itself has proven infectious for corporations both in its reach and impact as it grows over time.

Many organizations have learned the hard way that it is also a very costly subject matter. A study produced by IBM and the Ponemon Institute suggests that the average cost of fixing or resolving a data breach is more than $3.86 million. That number is only expected to grow. [Read more…]

Evergreen Advisors Capital, a middle-market investment bank, is pleased to announce that Dunbar Cybersecurity  (“Dunbar”) has been acquired by ControlScan.  Evergreen Advisors Capital acted as the exclusive financial advisor to Dunbar.

Founded in 2012, Dunbar Cybersecurity offers tailored solutions to enable the safety and enhanced protection of client networks, cloud infrastructure, and end users. The acquisitions includes their well-established Security Operations Center (SOC) and powerful SIEM platform, Cyphon.  The Cyphon platform streamlines incident management through a single platform. It receives, processes and triages events to provide an all-encompassing solution for analytic workflow — aggregating data, bundling and prioritizing alerts, and empowering analysts to investigate and document incidents. These advanced capabilities add to the best-in-class service ControlScan delivers to their mid-level enterprise clients.    [Read more…]

Evergreen Advisors Capital, a middle-market investment bank, is pleased to announce that Chesapeake Electrical Systems, Inc. (“Chesapeake”) has been acquired by Aldridge Electric (“Aldridge”).  Evergreen Advisors Capital acted as the exclusive financial advisor to Chesapeake.

Chesapeake provides the full range of electrical contracting services to a wide variety of clients in the commercial and industrial sectors. Founded in 1993, Chesapeake has completed contracts on some of the region’s most recognizable landmarks, including Dulles and Reagan International Airports, the Raven’s M&T Bank Stadium, D.C.’s Walter E. Washington Convention Center, and the Washington Beltway Express Lanes. [Read more…]

Evergreen Advisors, LLC is pleased to announce that industry leader and financial services veteran Sam DiPaola will be joining the firm as president. DiPaola recently departed his position as SunTrust Bank’s Maryland market president.

DiPaola brings more than twenty years of experience working in financial services, corporate development, and strategic sales to Evergreen. He excelled in SunTrust Bank’s Investment Banking, Aerospace, Defense and Government Services sector for 7 years before becoming the bank’s Maryland market president in 2013. Throughout his career, he has successfully closed investment banking transactions ranging between $50 million and $1 billion. During his time as Maryland market president, he led his team to produce four consecutive years of growth, and while increasing the average transaction size and asset quality.

Evergreen Advisors is a middle market investment bank and corporate advisory firm focused on excellence in servicing and supporting organizations throughout their financial life cycles to drive successful outcomes. DiPaola’s extensive network of professional relationships, comprehensive sector knowledge, and deal experience will help to accelerate Evergreen’s burgeoning growth.

For DiPaola, it was Evergreen’s community involvement, focus on long-term relationships, and proven track record of sustainable growth that attracted him to the firm. The local community is of the utmost importance to DiPaola, and Evergreen Advisors is deeply rooted in it, with involvement in organizations such as the Economic Alliance of Greater Baltimore, ETC (Emerging Technology Centers), Howard County Economic Development Authority, University of Maryland System, bwtech@UMBC, and the Salvation Army. [Read more…]

Evergreen Advisors is a proud sponsor of TEDCO’s 8th Annual Entrepreneur Expo & Stem Cell Symposium on October 30, 2018. The event will bring together all of Maryland’s entrepreneurial resources from across the state into one place, at one time.

You can expect to see 800+ of the region’s top entrepreneurs, small and large business executives, angel and venture capital investors, federal and state economic development officials, university leaders and legislators. Speaker include: Steve Case, Chairman and CEO of Revolution, LLC; Freeman Hrabowski, President UMBC; Julie Lenzer, Chief Innovation Officer at the University of Maryland; Cyndi Gula, Managing Partner Gula Tech Adventures; Deborah Tillet, President Emerging Tech Centers.

Evergreen Advisors is a proud sponsor of Howard County Economic Development Authority’s Annual Meeting and celebration of 25 years as an organization! The Howard County Economic Development Authority (HCEDA) is a public-private partnership whose primary goal is to promote economic growth and stability by supporting existing businesses, targeting new businesses and attracting corporate and regional headquarters. Its role, central to its mission, is to be a catalyst for economic growth and sustainability in Howard County. Quality economic development is critical to the County’s future to ensure an adequate tax base that will maintain and sustain the high quality of life that its residents have come to expect and deserve. 

 

This year, the meeting will look at the history of Howard County’s economy, share an update on the current economy, and look at the new technologies on the horizon that will transform our future.

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Evergreen Advisors Capital is pleased to announce that it was the exclusive financial advisor to Four V Systems LLC, an SRC Company, and cybersecurity firm in connection with its sale to OPAQ Networks.

FourV Systems, located in Baltimore, MD, is dedicated to helping organizations manage business risk aligned with IT operations. risk.  OPAQ Networks is the premier network security cloud company that enables partners to deliver security-as-a-service to midsize enterprise customers. OPAQ Networks’ cloud-based platform empowers organizations to simplify security management, centralize policy enforcement, and reduce costs. Based in Northern Virginia, OPAQ is privately held and is funded by Columbia Capital, Harmony Partners, and Zero-G, Inc.

Terms of the transaction were not disclosed.

 

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Rick Kohr, the founding member and Chief Executive Officer of Evergreen Advisors LLC, has been named Board Chair of the Economic Alliance of Greater Baltimore (EAGB).

Kohr will serve a two-year term and succeeds August J. Chiasera, President, Greater Baltimore/Chesapeake, M&T Bank, who has served as EAGB Chair since 2015.

“I am honored to succeed Augie Chiasera,” says Kohr. “We are participating in a fast-paced and ever-changing world which requires a new way of thinking and solving problems. Thanks to Augie and our Board Directors, we are confident in our ability to drive inclusive growth opportunities throughout Greater Baltimore.”

The EAGB is the only public-private organization convening industry, government, education and philanthropic leaders to foster inclusive economic development in Greater Baltimore.  As part of its efforts, EAGB will continue to advocate for a more collaborative leadership model that will drive an effective and simplified approach for economic competitiveness across the region. [Read more…]

Location, location, location.

 

The high value-added services of a location strategy consultant are not reserved for large companies, in fact, middle size companies typically benefit most from the expertise of a location strategy consultant.

 

In addition to the physical real estate, companies rely on location strategy consultants to assist them with:

• optimization of supply chain
• logistics
• cost minimalization
• tax structure
• workforce
• return on investment

A quality location decision is not solely a real estate decision. Whether it is a headquarters, back office, distribution center, manufacturing, laboratory, call center, or data center facility there are many factors to consider before coming to a final location decision. The critical factors of a location project are uniquely tailored to the business needs of the company as it relates to such considerations as the company’s culture, existing network, customer base, workforce, supply chain, and facility type. Making a location decision without consideration to one or more of these critical factors can lead to misalignment between the facility and the community, unexpected costs, high cost operation, underperforming facility and network of facilities, high workforce turnover, and the inability to attract top talent.

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Evergreen Advisors Capital, a middle-market investment bank, is pleased to announce that Chesapeake Medical Staffing, LLC (“Chesapeake”) has been acquired by American Surgical Professionals (“ASP”).  Evergreen Advisors Capital acted as the exclusive financial advisor to Chesapeake.

Chesapeake Medical Staffing is one of the largest and most respected health care staffing agencies in the mid-Atlantic region. CMS has focused on sourcing the highest quality health care professionals from nurses to administrative personnel to physicians to complete management of the agency process.  The Company is Joint Commission certified and their client list includes hospitals, institutional care providers, management services organizations (MSO), home care and individual patients

“CMS explored numerous options to enhance our future,” said Jeff McClure co-founder and CEO of CMS. “ASP’s combination of business strengths and culture were exactly in line with our intended direction.” Terri Weller, co-founder and CNO said, “We are excited to be teaming with another high quality Joint Commission certified group of established clinicians. Helping our clients by providing experienced clinical professionals in a user-friendly manner has always been my passion. This merging of talent will take us to a new level in meeting the continuum of care needs of our current and future clients.”

Joseph Bradley of Evergreen Advisors Capital noted, “This transaction represents the combination of two outstanding organizations and management teams, with common vision, passion and purpose.”

Terms of the transaction were not disclosed.

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Evergreen Advisors Capital is pleased to announce the publication of our 2018 Cybersecurity Market Update. The update provides industry and insights on notable transactions, a detailed look at M&A and private placement activity, and data on valuation metrics and stock price performance.

Print or Download Report here:

Evergreen Cybersecurity Update 012018

 

 

 

 

 

2018 has the makings for a strong year for venture capital

 

With a robust M&A market, liquidity in the public capital markets, corporate cash, and continuing earnings growth in many sectors, the next two years should turn in strong performance for Venture Capital. As 2017 closes, capital invested is over $44 Billion, up almost 18% from the $37 Billion invested in 2016. For the Mid-Atlantic Region, even though the area saw 1,266 deals funded year to date in 2017 down from the 1,367 deals funded in 2016, total capital invested to date in 2017 reached $9 billion which exceeds the $8.9 billion invested in 2016.

For our region, one of the highlights in 2017 was the opening of AllegisCyber, an affiliate of Allegis Capital, a Silicon Valley venture capital firm that is collocated with DataTribe in Maple Lawn, Maryland. DataTribe applies an investment element to its model, by providing seed financing of up to $1.5 million to its cohort companies. Both firms are expanding their investments into Maryland cyber companies in the coming year.

Two of the most active regional (D.C., Maryland, & Virginia) investors in Cyber overall in 2017 were NEA with 9 cyber investments including local company Zerofox and Blu Ventures who invested in local deals including ID.me, Trackoff, Huntress Labs, NS8, Bandura Systems, DarkCubed, Fischer Block, GroupSense, PFP Cybersecurity, PacketSled, and Cybrary. Gula Tech Adventures also made a number of investments in 2017 working with the next generation of cyber security start-ups assisting with their product roadmaps, participating in their capital raises and helping them build their companies. [Read more…]

Evergreen Advisors announced today that Shelley Lombardo, Chief Operating Officer of Evergreen Advisors, has completed the professional development program dedicated to building a better Maryland by harnessing the strength of its local business and community leaders. Leadership Maryland honored Lombardo, a resident of Ellicott City, and the entire Class of 2017 at its 25^th annual graduation ceremony held December 5 at the Lord Baltimore Hotel. 

Lombardo was one of 52 applicants chosen by committee to complete Leadership Maryland’s eight-month hands-on learning program focused on the state’s most vital social, economic and environmental issues.

“It was an honor to be a part of the Class of 2017. The program is a powerful vehicle to explore Maryland’s challenges and opportunities from healthcare, education, economic development, to the environment with a diverse group of Maryland’s best and the brightest executives.” Remarked Shelley Lombardo. [Read more…]