Madison Dearborn Partners Announces Sale of LinQuest to KBR

Rhea-AI Summary

Madison Dearborn Partners (MDP) has announced the sale of LinQuest, a leader in National Security space systems and technology solutions, to KBR (NYSE: KBR) in an all-cash transaction. The deal is expected to close by Q4 2024, subject to regulatory approval. LinQuest, acquired by MDP in 2018, has grown significantly under their partnership, nearly tripling headcount and quadrupling EBITDA.

LinQuest specializes in digital engineering & integration, advanced analytics, and electronic warfare solutions for the U.S. federal government's Space, Air Dominance, and Connected Battlespace missions. The company has secured over $850 million in contract awards in the past year and is well-positioned for future growth in the rapidly evolving National Security space sector.

Positive

• KBR's acquisition of LinQuest in an all-cash transaction, potentially strengthening KBR's position in the defense and intelligence sectors
• LinQuest's significant growth under MDP ownership, with headcount nearly tripling and EBITDA quadrupling
• Over $850 million in contract awards for LinQuest in the past year, indicating strong market demand
• LinQuest's strategic alignment with high-priority missions across U.S. Space Force, Department of Defense, and Intelligence community

Negative

• None.

Insights

Financial Analyst

The acquisition of LinQuest by KBR signifies a major strategic move in the defense and intelligence sector. KBR is acquiring LinQuest in an all-cash transaction, which is significant because it implies a strong liquidity position and financial capability on KBR’s part. It’s pertinent to note that LinQuest has shown remarkable growth, nearly tripling its headcount and quadrupling EBITDA under MDP's ownership. These metrics indicate robust operational performance and could be an attractive value proposition for KBR.

From an investor’s perspective, the acquisition bodes well for KBR’s expansion strategy. By integrating LinQuest’s expertise in space-based military technologies and digital advancement, KBR can diversify its service offerings further and strengthen its position in the highly competitive defense sector. However, investors should also consider the regulatory approvals still pending, which could introduce some uncertainties in the short term.

This move aligns with the current trend of modernization and digital integration within the U.S. federal government’s defense systems. By acquiring LinQuest, KBR stands to gain not just from its contracts and technical prowess but also from its established relationships within the Department of Defense and intelligence community.

Market Research Analyst

LinQuest’s acquisition by KBR is a noteworthy development considering the evolving landscape of national security and defense. LinQuest's extensive history in the field, coupled with a 50-year legacy in enabling space as a U.S. National Security domain, provides KBR with deeper penetration into specialized markets. The impressive $850 million in contract awards over the past year is a clear indicator of LinQuest’s strong market positioning and potential for future growth.

For retail investors, understanding the market dynamics is critical. The acquisition allows KBR to leverage LinQuest’s digital engineering, advanced analytics and electronic warfare capabilities. This could result in synergies that enhance KBR’s competitive edge. However, the transaction is dependent on regulatory approval, which means investors should monitor any developments closely.

Additionally, the emphasis on digital mission integration and space capabilities aligns with the broader market trend towards modern, interoperable defense solutions. Investors should note this alignment as KBR could significantly benefit from increased defense spending and modernization initiatives.

Tech Expert

The acquisition of LinQuest by KBR is a significant step in the integration of advanced technologies in defense and intelligence operations. LinQuest’s capabilities in digital engineering, advanced analytics and electronic warfare are pivotal in ensuring the U.S. maintains its strategic advantage. For KBR, this acquisition means an enriched tech portfolio that can drive further innovation and enhance their service offerings.

Technologically, LinQuest's focus on enabling interconnected battlespace operations and space-based military technologies speaks volumes about its role in the future of defense. This acquisition could be transformative for KBR, opening up new avenues in space and cyber defense technologies. Investors should recognize the importance of these technologies in maintaining national security and their potential for future growth.

In the long term, this acquisition could lead KBR to become a dominant player in next-generation defense technologies. However, the immediate focus should be on how well KBR integrates LinQuest’s assets and leverages its technological advancements to create value.

CHICAGO & HERNDON, Va.--(BUSINESS WIRE)-- Madison Dearborn Partners (“MDP”) today announced that it has signed a definitive agreement to sell LinQuest (“the Company”), a leader in National Security space systems and technology solutions for the defense and intelligence communities, to KBR (NYSE: KBR). KBR, a leading provider of science, technology and engineering solutions to governments and companies around the world, will acquire LinQuest in an all-cash transaction that is expected to be completed by the fourth quarter of 2024, pending regulatory approval and other customary closing conditions.

“The MDP team recognized LinQuest’s differentiation and significant potential ahead of the transformative trends in our core missions that are reshaping the U.S. defense and intelligence communities, and I would like to thank Matt, Brandon and the entire MDP team for their vision, partnership, expertise and support over the past six years,” said Greg Young, LinQuest President and CEO. “With MDP’s assistance, LinQuest has grown exponentially, nearly tripling our headcount and quadrupling our EBITDA while expanding our solutions offerings to better meet the complex and evolving needs of our customers. I could not be more proud of our incredible team and partnership with MDP. We are excited about joining KBR and believe our future home’s expansive network and government technology expertise will further accelerate our strong momentum across our core markets and enable our defense and intelligence community customers to achieve their missions and safeguard our country.”

A National Security space leader and pioneer, LinQuest has a 50-year legacy of enabling space as a U.S. National Security domain, enhancing interconnected battlespace operations and space-based military technologies, and accelerating the digital advancement and integration of cutting-edge space capabilities. Seeking to meet the most challenging demands across the U.S. federal government’s Space, Air Dominance, and Connected Battlespace missions, LinQuest drives innovation into the U.S. National Security community through its digital engineering & integration, advanced analytics, and electronic warfare solutions and capabilities. Funds affiliated with MDP acquired LinQuest in 2018 and the MDP team implemented its National Security space investment strategy to help LinQuest become a market leader in advanced analytics, engineering, technology development, and operational solutions in space and other mission critical domains.

Matt Norton, Managing Director and Head of MDP’s Technology & Government team, added: “I’m tremendously proud of all we accomplished in close partnership with Greg and the entire LinQuest team. We were incredibly excited about LinQuest’s potential back in 2018 when we originally partnered with Founder/CEO Leon Biederman, Greg Young and the rest of the LinQuest team. Today, LinQuest has grown into a scaled mission critical technology provider, and the combination of LinQuest’s market leadership and MDP’s National Security space investment strategy and broad network of advisors helped meaningfully move the needle on mission-critical technologies across the Defense and Intelligence communities. This investment is a testament to the immense potential we see in partnering with founders, not just to support and accelerate the growth of their businesses, but also to play a role in addressing the crucial need for modernization across the U.S. National Security system.”

Mr. Norton continued: “I would also like to thank Doug Loverro, former Deputy Assistant Secretary of Defense for Space Policy and Associate Administrator for Human Exploration and Operations for NASA. Doug is our trusted partner across all of our National Security space related investments and has served as Chair of LinQuest’s strategy committee and has been a Board member since we invested in 2018.”

As the U.S. federal government continues to prioritize the modernization of critical mission systems, LinQuest is pioneering digital mission integration for next-generation systems and capabilities, providing technical expertise and innovation that enhance the nation’s strategic advantage for great power competition. With more than $850 million in contract awards over the past year, LinQuest has significant growth momentum and multiple avenues for additional growth in the future, including a robust new business pipeline.

Brandon Levitan, a Director on MDP’s Technology & Government team, added, “LinQuest is strategically aligned with the largest, fastest-growing mission priorities across the U.S. Space Force, Department of Defense, Intelligence community, and civil and international space customers, and we know LinQuest will continue to thrive and serve its customers well as part of KBR. It was incredibly rewarding to partner with Greg and the entire LinQuest team over the last six years, and we know that they will continue driving innovation across the DoD and IC for years to come.”

Baird is serving as financial advisor to MDP and LinQuest and Kirkland & Ellis LLP and Crowell & Moring LLP are providing legal counsel.

About LinQuest Corporation

LinQuest is a National Security space leader that enables defense and intelligence missions through advanced digital transformation solutions and the development, integration, and operation of mission-critical systems. With a legacy that spans 47 years, LinQuest’s 1,500-plus team members work side-by-side with their customers to solve their most complex technical challenges, drive innovation, and deliver fielded solutions for National Security missions. More information can be found on the company's website at www.linquest.com

About Madison Dearborn Partners

Madison Dearborn Partners, LLC (“MDP”) is a leading private equity investment firm based in Chicago. Since MDP’s formation in 1992, the firm has raised aggregate capital of more than $31 billion and has completed over 160 platform investments. MDP invests across various dedicated industry verticals, including basic industries, financial services, health care, and technology & government. For more information, please visit www.mdcp.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20240715475787/en/

Media:

For MDP and LinQuest:

Deirdre Walsh / Deven Anand

H/Advisors Abernathy

abmacmdcp@h-advisors.global

212.371.5999

Source: Madison Dearborn Partners, LLC

FAQ

What is the expected completion date for KBR's acquisition of LinQuest?

The acquisition is expected to be completed by the fourth quarter of 2024, pending regulatory approval and other customary closing conditions.

How has LinQuest's performance changed since Madison Dearborn Partners acquired it in 2018?

Since MDP's acquisition in 2018, LinQuest has nearly tripled its headcount and quadrupled its EBITDA, while expanding its solutions offerings to meet evolving customer needs.

What is the value of LinQuest's recent contract awards?

LinQuest has secured over $850 million in contract awards over the past year, demonstrating significant growth momentum.

What are LinQuest's main areas of expertise?

LinQuest specializes in digital engineering & integration, advanced analytics, and electronic warfare solutions for the U.S. federal government's Space, Air Dominance, and Connected Battlespace missions.