WASHINGTON ― LMI, a consulting firm to the U.S. government, has agreed to sell its for-profit subsidiary to a group of three investment firms in an effort to better compete for contracts and invest in new technologies.
In an interview with Defense News, Doug Wagoner, LMI’s chief executive, said the mid-tier contractor wasn’t able to reap the advantages of being a small business or a very large company.
“For a year or two, LMI realized for us to continue our growth trajectory that we would need additional investment for [both] bigger acquisitions [and] investment in technology,” Wagoner said.
These investments, he said, would help LMI become a larger player in logistics management and in analytics, especially in sectors where the company had a smaller presence, such as intelligence and space.
Wagoner said another key motivation for selling was a change in how the government buy services.
He likened it to the movie “Field of Dreams” with the famous line spoken by Kevin Costner’s character: “If you build it, they will come.” The U.S. government wants to go to vendors that already have solutions to its most pressing problems; to have solutions, companies need to be able to spend on research and development.
“They don’t want to buy just individuals or people,” Wagoner said. “You need to come to the market with a solution. That takes investment.”
The investment firms ― Declaration Partners, Capitol Meridian Partners and 22C Capital ― are familiar partners for the company, Wagoner said. A number of LMI board members have worked with them before.
In a joint statement, the leaders of the three firms expressed confidence in LMI’s ability to continue as a leading government contractor. Terms of the deal were not disclosed.
All of the roughly 2,100 LMI employees will remain, except five executives who will help lead a new start-up non-profit ― the NobleReach Foundation ― which will focus on non-profit national security work. Wagoner will stay with LMI.
All proceeds from the sale of the for-profit subsidiary will go to the NobleReach Foundation.