Deal Details

Octo Is Acquired by IBM

Technology & Services

Octo, a portfolio company of Arlington, sale to IBM

Summary

Octo (the “Company”), a portfolio company of Arlington Capital Partners (“Arlington”), is to be acquired by IBM (NYSE: IBM). The Transaction is subject to various regulatory approvals and customary closing conditions and is expected to close in the fourth quarter of this year.

Baird served as financial advisor to Octo and Arlington on this transaction.

About

Octo is a technology firm dedicated to solving the Federal Government’s most complex challenges, enabling agencies to jump the technology curve. Octo creates lasting change through best practices that help agencies implement and integrate at-scale next-generation technology and innovation. With a mission and service first mentality, Octo provides Agile, DevSecOps, Artificial Intelligence, Cybersecurity, Blockchain, Cloud, Open Source, and Data Science solutions, collaborating to solve customers’ pressing problems. Octo delivers proven technology vital to civilian, healthcare, defense, national security, and intelligence agencies that directly impact our nation. Octo is based in Reston, Virginia.

IBM’s acquisition of Octo establishes one of the largest digital transformation partners to the federal government. Upon the close of the acquisition, Octo’s approximately 1,500 employees will join IBM Consulting's U.S. public and federal market organization. Octo will complement IBM’s existing strengths in IT modernization and digital transformation, enhancing its ability to support federal agencies with a flexible, modern approach to digital transformation and growing IBM Consulting’s public and federal market organization to 4,200 highly skilled employees.

This Transaction represents the following themes in Government Technology & Services M&A: (1) market priority for companies of scale with distinguished capabilities in high-growth markets such as Agile DevSecOps, Low-Code / No-Code software development, and Artificial Intelligence / Machine Learning; (2) proprietary tools and methodologies driving market differentiation and increasing customer retention; (3) increasing interest in the Federal market from diversified commercial companies.

IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. IBM helps clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. More than 4,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service. IBM is based in Armonk, New York.

Arlington is a private equity firm with approximately $7 billion of assets under management via six investment funds. Arlington is focused on middle market investment opportunities in growth industries including government services and technology, aerospace & defense, healthcare, and business services and software. Arlington’s professionals and network have a unique combination of operating and private equity experience that enable Arlington to be a value-added investor. Arlington invests in companies in partnership with high quality management teams that are motivated to establish and/or advance their Company’s position as leading competitors in their field. Arlington is based in Washington, DC.

Technology & Services

Octo, a portfolio company of Arlington, sale to IBM