Valiant (Acquisition of Cubic)

Company Background:

GC Companies is an independent sponsor interested in building a leading mission-critical services supplier to the United States. Candlewood previously worked with GCC on the initial platform acquisition of Valiant and its subsequent acquisition of ABM Government Services. Valiant provides global expeditionary services to the Defense Logistics Agency and information gathering for INSCOM (Intelligence and Security Command), an internal intelligence unit for the Department of Defense along with other systems, training and readiness services to multiple agencies within the defense complex.

Services Provided:

Acquisition Services

Capital Structuring

Situation

Within 6 months of the close of its purchase of ABMGS, GCC and Valiant were presented with the opportunity to acquire the Government and Defense Services division of Cubic Corp. The purchase represented a transformational opportunity to accelerate the growth of the Valiant platform by more than doubling revenue and significantly expanding the reach and scope of its service offerings.

Transaction Overview

While continuing to provide advisory services to Valiant following the ABMGS acquisition closing, Candlewood was engaged to advise on the potential Cubic transaction and to secure debt financing. Valiant competed against several large strategic and financial buyers in the bidding process before being selected for exclusivity by the seller. Throughout this process, Candlewood conducted extensive diligence and developed a complex merger model to evaluate purchase price and capitalization considerations.

Candlewood advised on purchase price and working capital negotiations throughout the bidding process, while also leading the marketing of the opportunity to senior lenders, and ultimately arranging to finance the transaction with a combination of equity and a new term loan from a blue-chip fixed income lender. The new business’s revolving loan capacity was also significantly upsized as part of the transaction.

Valiant completed the purchase of Cubic four months after being selected for exclusivity – the acquisition diversified the company’s end-markets, services and geographies, and positioned Valiant as a major “mid-tier” contractor while reducing customer concentration. Most importantly, the acquisition financing broadened the newly merged Valiant’s liquidity profile and debt capacity.

Post-closing, Candlewood continues to serve as a third-party financial advisor to GCC and Valiant in evaluating ongoing strategic and market-based opportunities.

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