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Accounting Ops & Controls Bookkeeping Cash Mgmt. & Banking

Customer Relations Public Affairs Long-range business planning Marketing Partnership development

Knowledge Mgmt. Branding Public Image Mgmt. Strategic Planning

Human Resources Staffing Benefits Compensation & Payroll Training & Dev. Travel Support

Board of Directors (Advisors)

High-Level Contacts (Advisors & Consultants)

CEO/President (Managing Director)

Portfolio Manager (LIFESTYLE)

Portfolio Manager (REAL ESTATE)

Portfolio Manager (CYBER)

Consultants, Staff, 1099 Contractors, Advisors

Portfolio Manager (HEALTH IT)

Research Deal Analysis Financial Modeling Presentation Prep

HEALTH CO. 1

HEALTH CO. 2

HEALTH CO. 3

CYBER CO. 1

CYBER CO. 2

CYBER CO. 3

LIFESTYLE CO. 1

LIFESTYLE CO. 2

LIFESTYLE CO. 3

REAL ESTATE CO. 1

REAL ESTATE CO. 2

REAL ESTATE CO. 3

HEALTH CO. 4 CYBER CO. 4 REAL ESTATE CO. 4

LIFESTYLE CO. 4

Capital Partners (Advisors & Consultants)

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OV E R V I E W

District Equity is a multinational investment firm with a diversified portfolio and

a strong track record of reconstructing and improving both public and private

sector companies. We are dedicated to growing small and lower middle-market

companies within information technology, cyber, intelligence and healthcare

information management sectors.

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TM

A S S E T M A N A G E M E N T &I N V E S T M E N T A P P R OA C H

District Equity provide solutions to complex challenges with a client-driven

approach, use of steady capital, a focus on long-term growth and value

creation. Our goal is to treat our valued clients with honesty, fairness, and first-

class service. We are the partner of choice for those who seek holistic, strategic

solutions from a trusted firm recognized for both its performance and principals.

C U R R E N T C A PA B I L I T I E S &W H AT W E D O

CORPORATEDEVELOPMENT

STRATEGICCONSULTINGRESTRUCTURING1 32

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C O R P O R AT ED E V E L O P M E N T

R E S T R U C T U R I N G

S T R AT E G I CC O N S U LT I N G

Building and investing in business that will achieve long-term competitive

advantage and capital growth.

Turnarounds, corporate restructuring, carve outs and special situation investing

in the private and public sectors.

Taking an active role in investments, and partnering with experienced managers

to deliver superior performance.

S E L E C T P O R T F O L I OC O M PA N I E S

S E L E C T PA RT N E RC O M PA N I E S

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L E G A L F I N A N C I A L TA X A D V I S O R Y

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ME D I C A L I N F O R MA T I O N S E R V I C ES

F I N A N C I A L TA X

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PUBLICATIONSM&A Integration: How To Retain Key PersonnelThe Market Mogul

Why So Many M&A Deals Fail And The Recipe For SuccessThe Market Mogul

In 2011, Aon Hewitt surveyed 123 organisations from around the globe across various industries to learn more about M&A integration. What they found was that a major cause of M&A failure is paying too little attention to workforce needs, which in turn creates problems integrating company cultures.

In a separate survey, the Hay Group reported that more than one-third of business leaders it surveyed had expressed dissatisfaction with the post-merger climate. 20% described the early months as “culture shock” and 16% percent went as far as to label them as “trench warfare”. Assertions like these illustrate how critical it is to get the people process right and that in the end, employees must come first in M&A. Too often management’s excitement overshadows the anxiety felt by employees, who worry that their needs are being overlooked.

Veterans of M&A put a premium on keeping productive employees; they cite higher rates of collaborations and buyout success as justification. Moreover, they recognise that key employees stay when they are engaged, paid well, mentored, promoted, respected, and trusted. To the contrary, M&A that is devoid of cultural understanding leads to high employee turnover, which in turn damages morale, slows productivity and destroys enterprise value.

There are five crucial tenets to successful cultural integration in M&A.

The CEO is Critical

80% of surveyed CEOs who sell their company leave within two years. Many walk away from parts of their earn-out and cite a lack of leadership support, authority, and opportunity to make additional money as reasons why they left.

Just as a franchise quarterback can ensure success in the NFL, so too in M&A, can keeping (or finding) a good CEO. The CEO is the most important position to start with and dramatically increases the odds of a successful acquisition. A stable CEO steadies the environment, sets the tone for the merger and establishes the culture for the newly combined entity. He or she communicates the vision, stresses a sense of necessity, has the authority and capacity to build partnerships, and the capability to remove barriers that are a hindrance to success.

Make Communication Clear, Candid and Consistent

It is no secret that when employees feel in the know, their work satisfaction is higher. In the world of M&A, uncertainty presents employees with questions, breeds contempt and the unknowns lead to a loss of talent. Instability is the catalyst for uncertainty, and the sense of instability is worsened when people are kept in the dark.

Video conferencing and town hall-style meetings are important aspects that allow managers to be accessible, eliminate uncertainty and be responsive to employee concerns. These meetings become platforms to gather information and help avoid pitfalls by acting as an organisational scan that can confirm or invalidate what managers believe about their company’s culture so they may take action accordingly. By contrast, communication that runs counter to a well-thought out plan causes confusion, kills employee morale, and can greatly affect the flow of production.

Create a Merger and Integration Office (MIO)

A strong transition team can be a catalyst for M&A success. Typically, there is an oversight committee of senior executives who monitor the two companies’ integration and keep the process on track. Other teams report to the oversight committee and are made responsible for tasks such as integrating divisions, technology, and human resources.

Creating an MIO structure is a highly sophisticated retention tool, in part because it keeps key people active and motivated. Supplementing the structure with outside guidance can add objectivity, reinforce processes and messaging, and help to reduce team conflict and keep key people.

Identify Cultural Differences Early On

68% of firms surveyed during M&A had lost critical talent at higher-than-normal rates because there was no specific approach to how to understand and deal with culture.

Charles Schwab & Co. Inc.’s $2.7B merger with US Trust Corp., in January of 2000 is a not-so-subtle reminder of the inherent risks of failing to identify divergent organisational cultures. Schwab’s libertarian and thrifty environment was a driving force in helping it win customers in the competitive discount brokerage space. When that culture was mixed with US Trust’s white glove relationship-oriented environment it became dysfunctional, internal conflict ensued and talented employees left in droves.

Contrast that with the Abitibi-Price Inc. merger with Stone Consolidated Corp. in May of 1997. Abitibi’s CEO, Ron Oberlander, created an internal auditing index. The Merging Cultures Evaluation Index (MCEI) was a questionnaire used to identify cultural orientations such as concentration versus diffusion of power, innovation versus tradition, wide versus narrow flow of information, consensus versus authoritative decision-making. The index became the foundation upon which Abitibi-Price merged with Stone Consolidated thus creating the world’s largest paper and pulp firm.

When Possible, Make Decisions Quickly

In M&A, things move quickly and employees are looking for guidance and stability. By making timely decisions, merging companies reduce periods of uncertainty and lessen degrees of anxiety, thus they increase retention rates. Moreover, a strategy that enables the transition team to make decisions quickly will help the business to continue running smoothly.

Because of the continually changing and highly chaotic environment, contingency planning amongst the transition team is crucial. To help offset chaos, establishing digital libraries and periodic azimuth checks create a sharing environment. These steps better equip a team to know which decisions require consensus and which need only minimal input.

Successful M&A Integration

These are but a few tactics that have generated scores of successful mergers and when put into practice help to increase the odds of a successful acquisition. Effectively integrating two separate businesses requires communication and flexibility. Both nurture organisational learning and the ability to draw on the knowledge of key employees.

Using what employees already know helps to anticipate and prevent conflicts as well as quell struggles quickly when they do occur. A collegial working environment is created when each part of the two firms participates in every phase of the merger. Clearly, the levels to which employees participate will vary, but in the end, it doesn’t matter if they worked directly on the deal or not, their participation in the overall process will build commitment. ---

It has become progressively more difficult to generate growth through organic strategies alone. Therefore, more and more companies are turning to mergers and acquisitions (M&As) to drive growth. The Atlantic reports that in 2015, nearly $5trn worth of M&A deals were announced, eclipsing the previous record set in 2007.

A combination of low interest rates, cash-heavy balance sheets, and pressures to increase shareholder value has buoyed these high levels of M&A activity. Despite that growth, multiple studies put the failure rate of M&A deals at a staggering 70 to 90%.

Low Success RateThe high failure rate is not surprising. At best, one acquirer in five has a clear rationale for a transaction or truly understands that deal’s impact on their company’s long-term financial future. Too often, there’s a misguided sense of why the buyer should be making acquisitions at all, and there’s far too little time spent defining how the acquisition enables them to beat competitors and increase enterprise value.

For an acquisition to be successful it is critical, in the pre-deal phase, to carefully identify, capture, and price the potential cost and revenue synergies. While valuing synergy requires one to make assumptions about future cash flows and growth, the lack of exactness in the process should not be a deterrent. With due diligence, one can obtain an unbiased estimate of value.

Moreover, when assessing a deal’s assigned value (market value plus the premium) it is important to understand that pricing should be set based on the impacts that are both operational—e.g. cost savings and economies of scale—and financial—e.g. lower cost of capital, higher return on investment potential, potential for lower tax base, and potential for a lengthier growth period from increased competitive advantages.

Understanding Synergies And ValuationThere is a potential for reducing the cost of operations in many acquisitions. In general, it is much easier to cut costs than to attempt to increase the revenue of a company on its own. When similar companies merge, the acquiring firm is presented with an opportunity to improve savings through expense reduction strategies like optimising operations and lowering redundancies. Skilful cost cutting measures and combining redundant departments — such as recruiting, sales, accounting, HR, etc. — can reduce training and turnover expenses while also helping to promote employee loyalty.

Arguably the biggest error in M&As is overconfidence in projected revenue synergies, which, in turn, leads to overpaying for a target. It is hard to project revenue synergies because in most cases they are matters of conjecture, and manifest themselves in so many different ways.

Ideally, the addition of a new platform should help improve market reach and allow for quicker market access. The new company now casts a larger geographic shadow, where revenue increases can be realised by cross-selling different goods and services, which in turn can boost productivity in the long run.

Despite these benefits, projected synergies must be carefully considered and priced before any transaction, as overly rosy visions of the combined company’s future can lead both managers and investors astray.

A Costly MisstepIn December of 2004, Sprint Corp announced plans to acquire Nextel for $35bn, and the resulting acquisition promptly went down as one of the worst M&A deals

In the history of the wireless industry. Far behind AT&T and Verizon, Sprint sought to build scale by adding Nextel’s business subscriber base.

Desperate for growth, Sprint failed to accurately analyse and value the combination of the two firms. The gross oversight occurred when Sprint improperly assessed Nextel’s products, technologies, and product pipelines, and thus miscalculated whether there would be real synergies.

Their respective network technologies had no overlap. Therefore, they lost valuable cost savings. As the first generation of the iPhone came to market in June of 2007, the combined SprintNextel was late to adapt to market demand.

Furthermore, there were major cultural clashes, and naturally, executives began to leave, and serious customer service issues ensued. As a result of these missteps, Sprint was forced to write down roughly $30bn in losses related to its merger with Nextel and beleaguered CEO Gary Foresee was forced to resign.

A Model Of ExcellenceWashington DC-based Danaher Corp. has been a model of M&A excellence. The company has a long track record of buying businesses and boosting their performance through meticulous management oversight. The Danaher motto is one of kaizen-style continuous improvement and is evident in their Danaher Business System (DBS) model, which company executives attribute to its remarkable record of success.

The DBS model has been developed and refined over many years and is referred to internally as the four Ps: people, plan, process, and performance. DBS or the four Ps are installed, run, and monitored in every business unit without exception and uses a combination of management training, quality assurance, lean manufacturing skills, and sector knowledge to increase competitive advantage and drive growth. DBS cuts across its distribution and operations chain and is central to the company’s ability to capture cost synergies.

As a result, the DBS process serves as a manual on how to operate the different Danaher business units in an efficient, coordinated manner. Therefore, as Danaher makes acquisitions, it stresses DBS training methodologies for the acquired firm around these functions, which in turn, enable Danaher to capture cost synergies that pay multiple, long-term benefits. Beyond the “hardware” aspects of a merger, DBS serves as useful “software” for the combined firms.

ConclusionTo be sure, there will always be uncertainty surrounding future synergies. However, as an investor, one is obligated to make the best estimate of how much value cost and revenue synergies will create in any acquisition before deciding how much to pay for a target.

Performing this synergy valuation is significant despite doing so requiring one to make assumptions about an uncertain future. As buyers go to market for deals, it is imperative that the assigned value of cost and revenue synergies be realistic and measurable.

Otherwise, they are D.O.A—dead on arrival— no matter how they are managed after the deal is complete. Realising these future synergies requires significant management actions, and thus the core driver of an M&A transaction must be a marriage of sound management philosophy and the implementation of projected synergies. Without both, there is no foundation for the M&A transaction. ---

M&A Integration: How To Retain Key Personnel

May 19, 2017

Why So Many M&A Deals FailAnd The Recipe For Success

October 24, 2016

The Market Mogul Page 1 The Market Mogul Page 1 The Market Mogul Page 2The Market Mogul Page 2

AWA R D SDistrict Equity wins the 2015 Business Worldwide Asset Management Firm of the Year, USA

BUSINESS WORLDWIDE

M&A AWARDS 2015

26 Spring 2015

M&A AWARDS 2015

BUSINESS WORLDWIDE 27Spring 2015

Supporting, growing and managing a vast range of companies, teams and portfolios, District Equity puts people first, and works diligently to deploy its exceptional asset management skills.

District Equity is a strategic advisor, counselor, and partner to its continuously growing portfolio of

clients. The firm works diligently to deploy

its exceptional asset management skills

and talent for managing people to the

benefit of the firm’s clients and portfolio

businesses. This enables District Equity to

support, grow and successfully manage

a vast array of companies in different

industries, as well as manage teams and

investment portfolios.

Corporate development practiceThis multinational, independent private capital and corporate development firm was founded with the goal of providing the investment and advisory side services of capital markets to businesses, to help corporations identify and capitalize on market inefficiencies.

District Equity’s combination of operational and investment expertise enables it to provide additional strategic

corporate guidance to its portfolio

company management teams, while also

helping them identify new opportunities

for growth. The firm is also dedicated to

growing its current portfolio of companies

by supporting each of them as a strategic

advisor, and by drawing on its financing

capacity.

The firm has run the gamut when

it comes to enterprise investing. From

corporate workouts and special situation

investing, to growth and expansion

District Equity wins 2015 Business Worldwide

M&A Award:

Asset Management

Firm of the YearM a u r y W . B r a d s h e r , F o u n d e r & C E O : D i s t r i c t E q u i t y L L C

capital investments, District Equity has the expertise to handle each type of situation, and its experienced team has operated, grown, and successfully exited a number of businesses. This team cut its teeth by performing every operational task from negotiating rates with government-affiliated prime and subcontractors, to conducting interviews with potential new hires, to rebranding exercises, and more. District Equity has turned owner-lifestyle businesses with limited scalability into growth-oriented corporations that add tremendous value for a number of partners.

District Equity takes a long-term view of its portfolio companies, and thus invests and reinvests in those companies for their growth. Moreover, the firm looks at holding many of its investments indefinitely. The firm adds additional value with its expertise in capital markets and strategic partnerships with private equity firms, family offices, sovereign wealth funds, and financial institutions. This enables District Equity to negotiate better financing terms and keep the cost of capital low for its portfolio companies. The firm is strategically headquartered in Washington DC, and is well-connected with many legislative relationships that enable the firm to assist its partners in understanding how regulatory changes may impact their businesses.

Advisory and strategic consultingOne key to District Equity’s Advisory business is its ability to provide professional due diligence and valuation support for its capital partners prior to any deal execution. By conducting detailed evaluations of identified target businesses and their potential for long-term sustainability and profitability, the firm is able to readily identify the best potential acquisitions, while avoiding hidden pitfalls. As District Equity’s CEO, Maury Bradsher explains, “When we’re accessing or sponsoring a potential deal, we do an extensive financial scrub of the business and create our own financial models. Because we’ve operated businesses before, we know what to look for, where potential problems may be hiding, where to shave unnecessary costs, and where to invest human capital and monetary assets. We are comfortable with talking to management to ensure strategic alignments exist and that there is a shared vision. Our corporate pedigree

enables us to quickly position the best-suited people in the right places. This proves to be valuable for our capital partners because it saves them time by providing an efficient process for evaluating a potential deal with us.”

While there are times when new management needs to be injected into a business, District Equity prefers to maintain and develop current management teams. Regardless of the way this ends up working, the firm will work to come to an agreement with the management team, by outlining goals for the company and emphasizing how those goals will be measured and benchmarked. Maury Bradsher explains, “The preference is to work with the existing management and use that institutional knowledge to build out the business. What that very often may entail is repositioning management into different roles in the business. In such situations we try and alleviate uncertainty by communicating early and often. So we work with management on a very clear set of metrics and use them as part of our performance and compensation plan. This gets them engaged and helps assuage many employment-related fears, and people will know exactly where they stand and what’s in it for them. This also provides us with something that we can consistently refer back to and use to ensure accountability for everyone, including ourselves.”

Going further, and looking deeper into the functionality and internal structure of a business is key to District Equity’s approach, even if it sometimes can require what some might call ‘tough love.’ “Making structural changes to a distressed business is very challenging, to say the least,” Bradsher tells Business Worldwide. “Very often it’s met with internal resistance because: 1) as creatures of habit, people often are used to doing things in a certain way, even when it may not be in the best interest of the business, and 2) the perception of an acquirer as a ‘corporate raider’ or ‘Wall Street guy’ can present its own set of challenges.” As he explains further, “it’s paramount for us to be upfront, to communicate consistently, and to provide as much detail as is appropriate about some very tough decisions that need to be made. Our ultimate objective is to create value, which means that our day-to-day goal is to be a true value-adding partner to the businesses that we own and the people that we work with. Change can be scary but it does not have to be difficult.

For these reasons cultural fit is a very important part of our diligence process.”

Focus of firm and the regulatory environmentDistrict Equity currently is evaluating a pipeline of companies in industries as diverse as media, real estate, healthcare, cyber innovation, infrastructure investments, and traditional C&I (Commercial and Industrial). “The bidding market remains very competitive,” Maury states. “There’s a tremendous amount of capital going after a lot of the same opportunities, and that’s a big reason why multiples continue to increase.

“While the economy certainly is still in a time of easy money, the impacts of new regulations on financial institutions can be felt. Banks have become more discriminatory because of regulatory compliance; in turn these new regulations contribute to a higher cost of capital. This creates an avenue for alternative lenders to step in and fund these deals that banks are turning away from. The market place is still flooded with capital, enabling debt and equity multiples to be driven higher and higher. So the sources of funding and the correct amount of leverage in an acquisition have to be in harmony. Thus, the key is to be able to look at each opportunity and identify the ideal structure and sources of capital. Additionally, we have to understand government regulations, and their impacts on our banking partners and portfolio companies.”

It’s clear to see why the firm stands out and has taken the gong for the 2015 Business Worldwide M&A awards, winning ‘Asset Management Firm of the Year, USA 2015’. “District Equity is honored and humbled to receive this award,” says Maury, “it’s always a rewarding experience when you put in hard work and get recognized by your peers for it.”

TM

THE KEY IS TO BE ABLE TO LOOK AT EACH OPPORTUNITY AND

IDENTIFY THE IDEAL STRUCTURE AND SOURCES OF CAPITAL

SECTOR SPOTLIGHT:Introducing 2014’s Most Regarded Insolvency Practitioners

Maury W. Bradsher is Chairman and CEO of District

Equity, LLC, a multinational investment company

with interests in a diversified portfolio of companies.

Maury explains more about the firm and what sets it

aside from the rest.

--------------------------------------------------------------

“We own and operate government contracting

businesses,” he begins. “Some of our portfolio firms

have been doing business with the government for

over 30 years, so we understand the government

environment and we’re comfortable with the pace

of government contracting. Additionally, through

surface level relationships we are in a strong

position, which allows us to gain added insight

into the industry. We take that positioning and

insight and use it to help our portfolio companies

restructure and recover from difficult periods.”

“We’ve invested in businesses that were losing

accounts and had falling revenue. We helped

refinance them, reposition them and re-deploy them

into the commercial and government contracting

spaces. In taking those steps we are able to get

companies major partnerships, clearances, contract

vehicles and help companies develop Intellectual

Property they can use to continue to grow their

business.”

Insolvency trends have shown a 2% increase in corporate insolvencies in 2013 due to the

“For us it starts with the people. It doesn’t matter

who you know or what your capabilities are; if

you’re not good at the people process and putting

the right people in the right place, the business will

ultimately stall and a lot of times fail. So in order

for us to ensure success, as part of the business

evaluation, we start with making sure there’s a skill-

set and cultural match. We do an extensive financial

scrub and then we deploy our internal resources

(HR/ Financial/ Proposal Writing/ IT/ Business

Development). So we focus on the right people

doing the right things in order to be successful

and some of that takes time. For instance, it can

make for a challenging process when you partner

with businesses and founder’s who are used to

doing things a certain way and are a bit resistant

to change. So what we try to do there is assuage

the fear of the founder and let him or her know

that by getting the right people in; the business

gets a shot in the arm and the business is ultimately

successful.”

Maury also has predictions for the insolvency jurisdiction in terms of insolvency for the coming 12 months.

“With shrinking budgets throughout the US

government it leads to the cancellation and

non-renewal of certain contracts which means

it becomes harder for middle and lower middle

market businesses to convince their banks and

investors to increase lines of credit. By doing this

Company: District Equity, LLCName: Maury W. BradsherEmail: info@districtequity.comWeb Address: www.districtequity.comAddress: 1100 17th Street, NW Suite 1140 Washington, DC 20036Telephone: (202) 822-8100

TM

Introducing 2014’s Most Regarded Insolvency Practitioners

Acquisition International is a monthly magazine

brought to you by AI Global Media Ltd, a publishing

house that has reinvigorated corporate finance news

and reporting. As an editorially driven magazine, its

topical news articles make it a highly enjoyable read,

and this readability ensures that advertisers will benefit

greatly from their investment.

AI works alongside leading industry analysts to ensure

we publish the most up to date figures and analysis.

Through our regular features including the Deal Diary,

the Deal Guru, Cover Stories and our regional, sector

and specialist reviews, we thoroughly research and

publish today’s corporate finance news in cooperation

with the leading professionals in the industry.

AI has a global circulation, which brings together all

parties involved in deal making and in an increasingly

global deal market we are uniquely positioned to reach

District Equity is recognized as one of the 2014 Most Regarded Insolvency Practitioners

AWA R D S

www.acquisition-intl.com

2014 M&A Awards | 33

District Equity LLCAs a multinational investment firm engaged in unlocking value, District Equity is dedicated to growing small and lower middle market compa-nies. Its investments are currently heavily focused within information technology, cyber, intelligence community and healthcare information management. Below, Maury W. Bradsher, CEO of District Equity, shares his ideas from corporate culture to the future of the industry.

Multinational Investment Firm of the Year - USA

On receiving the award... We are truly honoured to receive such an accolade from a highly regarded publication such as Acquisition International. It’s very rewarding to be recognized by your peers and it’s a testament to the hard work of the good folks at District Equity.

On the whole, M&A doesn’t always enjoy a likeable public profile so this form of recognition helps to validate that what we’re doing really adds value. So awards like these can help shift the public consciousness and ultimately have a positive impact in the invest-ment industry. From a business point of view, it raises our profile as a successful firm and better positions us, and firms like ours, for future investment opportunities and partnerships.

We have really solid people that we work with. Attracting the right personnel leads to a shared culture, better execution, a solid reputation and eventual-ly you get recognized for your efforts, but it all starts with selecting the right people. So this is a shared award because of the contributions of many.

On dealing with clients and corporate culture... That is to say, when dealing with clients we want to make sure that our long-term interests are in alignment and that we have the same end game. So when buying a business we look for cultural synergies, we confirm the deliverability of the operational team and we look to see if we can successfully integrate our project plan to unlocking value.

Internally we really try to put forth a collegial working environment where we embrace executing and getting things done, the right way. That approach is rooted in our business principles and we use those principles as a baseline for everything we do at the firm.

On industry outlook... Granted, as our industry continues to evolve, there will be changes – and with them opportunities and challenges. There’s a lot of liquidity in the marketplace and it’s all chasing some of the same deals. There are a number of private equity firms that have sprung up in the last 10 or 15 years which either manage or represent capital. So valua-tions get spiked because there’s fresh capital out there pushing price points higher and money is relatively cheap. With so much capital at play everyone is looking for yield and that can present a problem when you’re trying to come to a reasonable price point for a business.

With respect to the industry outlook and opportunities there are a number of indications of change. Here in the US we still have a slow growth public sector, however, our private sector continues to drive growth. Healthcare reform has ushered in a number of platforms from which to invest. Our natural resource landscape is ever chang-ing which brings with it the prospects of energy independence in the US, and there are a number of investment opportunities there.

Furthermore, with the struggles in the European financial system we see currency opportunities and long-term real estate oppor-tunities in places like Spain and Greece. We see technological changes having a significant impact on a wide range of areas in the global economy in the coming years.

All things considered, with our market position, our client facing and external relationships, we at District Equity are at the point of idea inception that we expect will provide more opportunities for our clients. We’re also comfortable working with businesses that may not be in the best shape so those situations give us the possibility of a bit more upside and potentially put us in a position to outperform.

Fact File

Company: District Equity, LLCName: Maury W. BradsherEmail: info@districtequity.comWeb: www.districtequity.comAddress: 1100 17th Street, NW Suite 1140 Washington, DC 20036Telephone: (202) 822-8100

“We are truly hon-oured to receive such an accolade from a highly regarded pub-lication such as Ac-quisition International. It’s very rewarding to be recognized by your peers and it’s a testament to the hard work of the good folks at District Equity.”

Maury W. Bradsher

32 private equity international november 2014

The Ridgewood Technology Partners of today is a well-known government technology contractor and consult-ant.

However, it started out as a much smaller telecommunications consult-ant to Sprint Nextel. The transfor-mation began when District Equity CEO Maury Bradsher met the CEO of Ridgewood at an event for their children. From there, the two formed a relationship that would lead to the next phase of Ridgewood Technology Partners – a move into the world of defense contracting.

“We invested because we wanted to invest in smart people, and that’s what we got from the Ridgewood team,” Bradsher tells Private Equity International. When District Equity came in, the company was a small consulting firm nearing the end of several of their contracts. So the real question was how to get the com-pany to the next phase.

“It was definitely a turnaround,” Bradsher says. “We made the decision to move into government contract-ing, which required federal certifica-tions, as well as developing our own software and intellectual property. For me personally, it meant stepping in and actually running the company for a few years.”

From the time of District Equity’s original investment in 2007, through to its realisation in 2014, Bradsher and his team made several invest-ments, eventually increasing top-line revenue by 2000 percent from $300,000 to $6 million. EBITDA

Pentagon: bought Ridgewood’s secret sauce

2000%Increase in revenues

6700%Increase in profits

11xIncrease in headcount

4xExit mutliple

increased as well: up 6700 percent from $30,000 to $2 million.

Bradsher explains that District Equity focused on not only expand-ing the company but also growing the management team from that of a small owner-operated company to that of a corporation. Headcount increased from four employees to 45. The company started taking on con-tract clients from the mid-Atlantic region through to the southeastern US. As an investor and owner, Dis-trict Equity also renegotiated the existing debt in the company and standardised its financial operations.

Once the company was in a stable position financially, they went to market to win its first government contract: a $5.8 million, four-year award providing counter-intelli-gence support to the Department of Defense. Nine months into the first contract, Ridgewood won a

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second one providing logistics sup-port to the Navy Fleet Command in Norfolk, Virginia.

Then, in April of 2010 Ridgewood was able to launch a new ‘software as a service’ (SaaS) offering targeted at the Department of Defense and Department of Homeland Security. With that, they were able to win a pilot programme award to capture next generation technologies used to support counter-ID jamming systems for manned and unmanned vehicles; this added another $1.5 million in revenue.

“We really spent a lot of time learning about the government con-tracting process and what it would take to win, which was the genesis of our software development,” Brad-sher says. “It was a surprising trajec-tory; I never thought I’d be working on systems helping our soldiers in a war. I had to get a top secret clear-ance.”

Ridgewood was able to win another defense contract two years later, and implemented cost-cutting measures throughout 2012 to keep earnings growth in line with previ-ous years. Ridgewood clients now include the Army, Navy, Department of Homeland Security, Freddie Mac, KBR, Sprint and Verizon.

In May of this year, District Equity realised a 4x return on the sale of Ridgewood back to its original owners. n

WINNER — SMALL CAP

District Equity: Ridgewood Technology Partners

AMERICAS

District Equity wins the 2014 Multinational Investment Firm of the Year in the United States

District Equity wins the 2014 Operational Excellence Award in Americas

COMPANYINFORMATION

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District Equity LLC

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