Springs-based Core Capital Group is at the core of the technology

Colorado Springs Business Journal, Mar 18, 2005 by Marylou Doehrman

An upswing in the number of mergers and acquisitions is creating a flourishing market for sellers, buyers and finance middlemen, and a Colorado Springs investment banking company is at the core of the technology recovery.

The tech resurgence is centered on technologies that serve the Department of Defense and security applications, said Mark Sandson, partner and managing director of Springs-based Core Capital Group.

Sandson works at Core Capital's San Diego office, where the business base is strong because of its diversification, from defense contractors to communication companies to tourism, he said. And partnerships between academia and industry have created a thousand relatively young technology based companies in San Diego, Sandson said.

Core Capital also is fairly young, formed five years ago by a group of high-tech professionals and finance experts. The Springs' headquarters is where Capital's three other managing directors - Terry Piddington, Loren Lancaster and John Graff - and associate Andrea Kale are located.

Piddington is the president of Core Capital, which he defined as a company that represents middle-market technology companies interested in selling, buying or arranging financing.

Primarily we represent sellers of businesses, Piddington said. We are talking about clients with sales between $10 million and $250 million a year. We work only business to business with primarily privately held companies, mainly in the technology sector.

Most of Core Capital's business is secured through referrals, from previous clients or others active in the business world, he said. Core Capital also is a member of the International Network of Mergers and Acquisitions, an international group of about 60 firms that work together to find the right company for the right merger and acquisition.

Piddington said Core Capital is in the right place at the right time as one of the few firms focused on the technology sector. The relationship allows us to operate in a seamless fashion with firms like ourselves around the world, he said.

A refreshed global climate has been a catalyst for investment successes.

The upswing in M & A transactions will continue, which is indicative of the sector as a whole. Although investors are still smarting a bit from the 1990s & it's time to grow again, Piddington said.

Core Capital is growing, too, with expectations of improved business through 2005, Piddington said. The group just sealed a deal for Virtual Alert Inc., a Sacramento, Calif., company that sells a software product to the Homeland Security market, which includes federal, state and local governments.

The software provides state governments the ability to quickly gather information associated with public health epidemics or bio- terrorism, Piddington said. The problem can then be dealt with directly and reported in a timely and efficient manner. Virtual Alert is the only company that we are aware of that is offering this software, and it is already installed in 18 states.

Global Secure Holdings Ltd., a Washington, D.C.-based company, purchased Virtual Alert for $20 million. Core Capital participated in negotiating the transaction. Global Secure Holdings acquires companies specializing in Homeland Security applications.

We were invited by another company into the engagement of this sale because of our expertise, Sandson said. We were able to identify a few candidate buyers and received a few competitive offers. We helped the buyers adjust their offers to conform to the seller's requirements, and helped each party understand how their businesses complement one another. It's very important that we have a deep operational understanding of the clients and the businesses we represent.

Core Capital has represented other Springs-based businesses during the past several years. Piddington said he and his partners acted as advisors in the sale of Northern NEF to Dallas-based multi- billion-dollar company CompuCom Systems Inc., and negotiated the sale of National Systems and Research Co. to Memphis, Tenn.-based SCB Computer Technology Inc.

The market strength lies in companies that deliver technology to the service sectors, Sandson said.

Companies that are predictable and have long-term contracts as a part of their revenues and profitability are much more valuable to investors, he said. Technology is sort of a crapshoot - some succeed and some don't. Health care technology & biotech is booming. Technology assisted services almost always succeed.