Growth & Diversification A Value Imperative Larry Trammell - - PDF document

The Aerospace & Defense Forum San Diego Chapter October 28, 2014 1

Growth & Diversification A Value Imperative

Larry Trammell Chairman, President & CEO, TechFlow, Inc. October 28, 2014

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Topics

• My Background
• TechFlow
• Growth
• Diversification
• Value
• Path forward

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The Aerospace & Defense Forum San Diego Chapter October 28, 2014 2

My background

• Business guy… Government contracting in aerospace, defense and services
• GD
• F-16 program
• Started Services Company
• Tracor
• Aerospace
• Aviation – First hyper focus on growth
• Added government contracts to commercial aviation base
• Project success in your rates
• $8M to $8M in 2 ½ years
• SAIC
• R&D
• Started Technology Services Company – First hyper focus on diversification
• From mammals training to managing the National Cancer Institute
• Zero to $4B over 18 years
• TechFlow
• $7M to $70M over 8 years
• Story began in IT services

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TechFlow - a story of growth

• Began in 1995 and grew to $7M by 2006

1 government contract accounted for 90% of revenues 33 employees in 1 location Failed an attempt to get any significant commercial work Founders realized they could not take the company further themselves

• Upon taking the lead in 2006

Our contract was being put out to competition for the first time Our employees were nervous about losing their jobs

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TechFlow - a story of growth

• Early developments

Won first competitive, unrestricted contract for $35M

Competitors included CSC, GDIT

, Unisys & others

Grew contract to $52M over 5 years Organic growth - Won recompete of that contract for $102M

Obtained security clearance and installed business systems

• Mid term developments

M&A - 4 acquisitions, all for cash Key hires - 3 startup divisions in different business areas

• Long Term

Focus on growth and value

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Growth Drivers

• Organic - Legacy

New business from BD & proposals Expand current work by being the contractor of choice

• Key Hires – Diversification

Find people who are entrepreneurs and can get you into new business areas

• Acquisitions – Diversification

Buy companies that satisfy your strategic growth objectives These can provide pre-packaged diversification

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Enterprise Value in Government Services

• Drivers of value include

Revenue and normalized EBITDA Whether revenue and profit is increasing or decreasing

momentum is highly valued

Contract backlog in dollars and time Proposal backlog in dollars and time Value of services in terms of supply and demand

high level/high value/low supply being most valuable

Special Clearances and other high-demand assets Prime or subcontracts

prime being more valuable since there is more control

Set aside or full and open contract awards

for ability to retain contract once company is purchased by a buyer

• Best size company is a growing company

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Path Forward –Vision

• Contractor of Choice
• Partner of Choice
• Employer of Choice

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