Federal Solution Provider NCI To Be Bought By IT-Savvy Private Equity Firm H.I.G. Capital For $283M

NCI has agreed to be purchased by H.I.G. Capital for $283 million to accelerate its use of emerging technologies like artificial intelligence and Agile software development.

The Reston, Va.-based U.S. government solution provider, No. 77 on the 2017 CRN Solution Provider 500, said the Miami-based private equity firm will pay $20 per each outstanding share of NCI stock, or 5.2 percent less than NCI's trading price of $21.10 per share at the end of day Friday. NCI's stock hasn't traded below $20 per share since June 16.

But on Monday morning, NCI's stock was down $1.15, or 5.45 percent, to $19.95 per share. Neither NCI nor H.I.G. were immediately available for additional comment.

[RELATED: NCI Acquires Computech For $56M To Break Into New Federal Markets, Technologies]

"The partnership with H.I.G. Capital will offer NCI an opportunity to accelerate our growth strategy; enhance our delivery of premier solutions to our customers, including the use of artificial intelligence and Agile software development to increase the speed, productivity and capability of their missions; and create new opportunities for our employees," Paul Dillahay, NCI president and CEO, said in a statement.

Over the past quarter-century, H.I.G. has invested in more than 200 companies with a combined $30 billion in annual sales, and said it focuses on small and midsize firms that can benefit from its in-house operating professionals and expertise.

The company holds a stake in five other solution providers: AVI-SPL, No. 51 on the 2017 CRN SP 500; CXtec, No. 237 on the 2017 CRN SP 500; Milestone Technologies, No. 276 on the 2017 CRN SP 500; Teracai, No. 414 on the 2017 CRN SP 500; and Trace3, No. 56 on the 2017 CRN SP 500.

"We believe NCI is well positioned to continue to deliver differentiated technology solutions to its federal government customers, including the men and women of our armed forces, and we look forward to working with the NCI management team through the next stage of the company's growth," Rick Rosen, an executive managing director at H.I.G., said in a statement.

NCI's board of directors has unanimously approved the transaction, which is subject to shareholders tendering a majority of NCI's voting stock and is expected to close by the end of September. NCI has approximately 2,000 employees across more than 100 locations worldwide.

Things have been rocky for NCI over the past year. Brian Clark resigned from the company in October 2016 just one year after being promoted to the CEO role.

Then in January 2017, NCI said that its former controller had embezzled money from the company, prompting it to launch an internal investigation. The company ultimately found that the ex-controller had embezzled $19.4 million between January 2010 and January 2017, and had acted alone without the collusion or awareness of any other NCI employees.

In 2016, NCI's sales fell 3.2 percent to $322.4 million, while net income tumbled 22.1 percent to $9.48 million. But the company's stock price improved 2.2 percent over the 2016 calendar year to $13.95 per share.

Dillahay, NCI's current CEO, came to the company from Arlington, Va.-based CACI, No. 16 on the 2017 CRN SP 500, where he was executive vice president of health and litigation solutions. NCI focused on Agile development and integration, cybersecurity, data analytics, and infrastructure optimization, and services defense, intelligence, health and civilian agencies in the U.S. government.

NCI diversified its customer base to include more civilian agencies and gained IT skills "higher on the food chain" through its December 2014 acquisition of Bethesda, Md.-based Computech for $56 million, Clark told CRN at the time. Computech specialized in Agile software application development, software development, app development and IT systems modernization.

NCI was started in 1989 by Charles Narang, who served as the company's CEO until October 2015. Once the H.I.G. deal closes, NCI will return to being privately held, which the company also was from its founding until October 2005.