10 Updates
Why Build Expertise When You Can Buy It? Lockheed Martin Looks To The Lower Middle Market For Growth
Photo Credit: Forbes Business

Why Build Expertise When You Can Buy It? Lockheed Martin Looks To The Lower Middle Market For Growth

Apr 17 2014, 10:34am CDT | by

While Facebook’s mega-dollar WhatsApp purchase gets more attention, a lower profile acquisition recently announced by Lockheed Martin should be more interesting to middle market companies...

Filed under: news

 
 
 

14 weeks ago

Why Build Expertise When You Can Buy It? Lockheed Martin Looks To The Lower Middle Market For Growth

Apr 17 2014, 10:34am CDT | by

While Facebook’s mega-dollar WhatsApp purchase gets more attention, a lower profile acquisition recently announced by Lockheed Martin should be more interesting to middle market companies developing short and long term strategic plans.  Last week, Lockheed Martin, one of the world’s largest defense contractors, announced that it expected to complete the purchase of the privately owned cybersecurity firm, Industrial Defender.  This deal should be a guide for middle market companies looking for a long or short term exit play.

The transaction seems to be a natural.  Although Lockheed Martin is better known for its weapons systems (such as the F-35 Lightning II fighter program), the company’s Information Systems & Global Solutions division has 26,000 professionals with $8.4 billion in sales in 2013 and is the nation’s largest defense technology provider .


/>

Industrial Defender is a relatively small, privately held, 12 year old company that, according to its CEO, Brian Ahern, “was founded on the belief that the challenges of global critical infrastructure cybersecurity, specifically related to mission critical industrial control systems, is unique and requires a very specialized approach.”  After spending its early years increasing the awareness of cyber-breaches and evangelizing for the need for security products, Industrial Defender built a reputation on providing cybersecurity solutions for critical commercial infrastructure facilities in the electric, chemical, oil, gas and water utility industries across 25 countries.

Why would Lockheed Martin buy this relatively small company in a transaction with terms that its press release admits are small enough that they are “not material” to Lockheed Martin?  Because it is easier to buy expertise than to build it.

Although Lockheed Martin is firmly entrenched in the defense space, it continues to expand its business into the commercial space, and seems to have decided that it is easier to buy 130 employees experienced in commercial cybersecurity than develop its own.  The company’s culture is clearly oriented toward public sector needs, and while Lockheed Martin has expertise in cybersecurity, its belief that it needed Industrial Defender’s commercial experience is more than likely driving this transaction.  Lockheed Martin expects that the acquisition of Industrial Defender will allow the company to provide a comprehensive set of cybersecurity solutions to both government and commercial customers.

From an economic perspective, this deal will allow Lockheed Martin to fully leverage Industrial Defender’s expertise and capabilities across a much broader sales and marketing platform, which will in turn allow the combined company to grow more quickly.

The Takeaways

This is exactly the sort of transaction that middle market ownership groups should keep in mind when they are evaluating both short and long term strategic plans.  This deal typifies middle market transactions; not the glamor or riches surrounding highly publicized tech deals.

Successful strategic acquisitions of middle market companies are built around sellers with defined and developed market niches.  Industrial Defender typifies this strategic position, having developed a niche expertise and market position that is making it a valuable add-on for a company to whom the economics of the deal are barely a rounding error.

Middle market companies in all sectors can learn from Industrial Defender and their soon to be completed transaction.  Whether an acquirer is the nation’s largest defense contractor or a much smaller player in a much small sector, middle market companies ultimately looking for liquidity should strive to provide value that is easier to buy than to build.

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Se ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern state ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over R ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister D ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Ba ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara D ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Bangladeshi plane catches fire at Nepal airport, passengers safe
Kathmandu, July 28 (IANS) A Bangladeshi aircraft caught fire while landing at Kathmandu's Tribhuvan International Airport (TIA) Monday afternoon, officials said.
 
 
Shift work can worsen asthma, pneumonia
London, July 28 (IANS) A research has found that drugs widely used to treat lung diseases like asthma or pneumonia work better with the body clock.
 
 
Decoded: What triggers sexual arousal in you
New York, July 28 (IANS) Know why just looking at an attractive face stimulates sexual arousal? Well, it takes two to tango!
 
 
Turn your selfie into emoji with this app
New York, July 28 (IANS) Tired of seeing the same yellow-faced smileys? In an age of selfies, how can emojis be far behind?
 
 
 

Latest from the Network

$4 mn for flood-hit northern Slovakia
Bratislava, July 29 (IANS) Slovak government approved Monday a total of 3.06 million euros (over $4 million) in financial assistance for flood-hit Vratna Valley area in Northern Slovakia. A total of 2.42 million...
Read more on Politics Balla
 
Keith Harris lost $12 million fortune
London, July 29 (IANS) Entertainer and musician Keith Harris lost an $11.9 million fortune because severe dyslexia didn't allow him to understand the contracts he was signing. The 66-year-old, best known for his...
Read more on Celebrity Balla
 
Tarantino geared up to direct 'The Hateful Eight'
Los Angeles, July 29 (IANS) Celebrated actor-filmmaker Quentin Tarantino has decided to go ahead with "The Hateful Eight" despite the fact that its early draft of the screenplay was leaked. The "Pulp Fiction" director...
Read more on Celebrity Balla
 
Kutcher-Kunis to wed in July next year?
Los Angeles, July 29 (IANS) Actors Ashton Kutcher and Mila Kunis, who are getting ready to welcome their daughter, have begun to plan for their wedding. "The wedding will be next July. They want to focus on their...
Read more on Celebrity Balla
 
Lady Gaga portraits auctioned
New York, July 29 (IANS) Pop star Lady Gaga's "video portraits" raised over $1 million at an auction at Watermill Center here. Director Robert Wilson put on display "23 Video Portraits of Lady Gaga" series at his...
Read more on Celebrity Balla
 
Kim Kardashian followed by 'crazy driver'
Kim Kardashian claims a ''crazy driver'' followed her around Los Angeles today (07.28.14). The 'Keeping Up with the Kardashians' star hit back at rumors she was pulled over by police officers in Calabasas, California,...
Read more on Celebrity Balla
 
Elizabeth Banks is 'very genetically blessed'
Elizabeth Banks says she is ''very genetically blessed.'' The 'Hunger Games' actress, who has sons Felix, three, and Magnus, 20 months, with husband Max Handleman, insists she only recently realized she is attractive,...
Read more on Celebrity Balla
 
Courteney Cox receives engagement gifts
Johnny McDaid and Courteney Cox received several engagement presents in his native Northern Ireland. The newly-engaged couple were given complimentary souvenirs by excited fans in the city of Derry while exploring the...
Read more on Celebrity Balla
 
Ashton Kutcher and Mila Kunis to wed next July
Ashton Kutcher and Mila Kunis are planning to get married next July. The couple, who got engaged earlier this year and are expecting their first child, have reportedly set a date for their wedding next summer, as they...
Read more on Celebrity Balla