The Colorado Springs Gazette final

O’neil Group growing

Springs-based O’neil Group building defense-based group of companies

BY WAYNE HEILMAN Special to The Gazette

Springs-based private-equity company has acquired interests in eight other small businesses with the goal of creating a defense-based group.

Less than a year after selling his family’s Colorado Springs-based defense conglomerate, Kevin O’neil is trying to build another one.

The O’neil Group, a private-equity company, sold Braxton Science & Technology Group to Virginia-based engineering and construction giant Parsons for $300 million in December, 12 years after buying a majority interest in the small California-based company and moving it to Colorado Springs. O’neil Group added about 300 employees and grew the company’s revenue by about 25 times, generating a nine-fold return for the family-owned investment firm.

Kevin O’neil started building his next defense-focused group of companies about the same time O’neil Group agreed to sell Braxton to Parsons, beginning with Onedev. Headed by his brother, Ken O’neil, and longtime Braxton executive Rob Patterson, Colorado Springs-based Onedev employs 10 people and specializes in providing data analysis, software development, cybersecurity and artificial intelligence services for U.S. defense agencies.

During the past eight months, Kevin O’neil said O’neil Group has acquired majority and minority interests in eight other small defense companies, including Colorado Springs-based Bluestaq and Innovative Scientific Solutions & Analytics (ISSAC) and California-based Systems Engineering and Management (SEMCO). Kevin O’neil declined to identify the other five companies but said most are based in Colorado Springs and the nine companies combined employ 400 to 500 people.

“There has been an exodus of entrepreneurism in Colorado because a lot of small defense companies have exited by selling to big companies to take some of the risk (to the owners) off the table,” Kevin O’neil said.

“We want to offer them a way to take some of the risk off the table but allow the entrepreneurs to stay in control of their companies. ”

Kevin O’neil wants to build a consortium during the next three to five years of several dozen small defense companies, mostly based in Colorado

Springs, that can work together to win large contracts and eventually employ thousands of people. While O’neil Group has no plans to move any of the out-of-town companies in which it acquires an interest to Colorado Springs, Kevin O’neil hopes to funnel much of the growth here.

“We are going to build a small-business consortium, that if done correctly, will be the most influential in the nation. We want to use the labs in Catalyst Campus (a defense-focused business park on downtown Colorado Springs’ east edge) to expose their intellectual property to potential customers,” Kevin O’neil said. “Our plan is to have owners of these small companies working together to help each grow and mature their products.”

O’neil Group leaves existing management in place when it buys an interest in a company and makes available additional business development, engineering, government affairs, marketing and other executives to supplement the company’s work force. Those additional resources are designed to help members of The O’neil Group’s consortium seek new opportunities they couldn’t pursue on their own, said Seth Harvey, CEO of Bluestaq, a data and information technology company; O’neil Group acquired a major stake in Bluestaq in January.

“The goal of this is to find small companies that are the best in what they do,” Harvey said.

“You can take two, three or four companies that are the best in what they do and provide a solution to the government that is the best of breed in all aspects,” he said.

“There are a lot of companies that are good at one thing, but no company can be the best in all aspects. This allows us to deliver the very best solution in each niche area.”

The nine companies O’neil Group has invested in “are already benefiting from what we bring to the table, giving them resources they may not have internally to help scale the business and do things they may not have been able to do on their own,” said Andy Merritt, O’neil Group’s chief strategy officer.

Members of the consortium are expected to soon land two major small-business innovation research grants from federal agencies valued at several millions of dollars, a good example of the consortium’s benefits, he said.

O’neil Group started its acquisition spree in January, making a “significant investment” in Bluestaq that will help the company double its workforce to about 120 and position it for national growth beyond the defense and intelligence sectors. Bluestaq agreed this year to hire 585 people for jobs paying an average annual salary of nearly $190,000 in Colorado during the next eight years in exchange for $5.6 million in state tax credits.

The next known deal, a majority stake in ISSAC, was completed in May to help the Colorado Springs company grow and compete for larger contracts. ISSAC employs about 30 people locally and in Huntsville, Ala., to work on contracts and subcontracts with the Army, Navy, Missile Defense Agency, U.S. intelligence agencies and in the health care industry. ISSAC also specializes in systems engineering, software development, modeling and simulation and artificial intelligence.

O’neil Group last month bought a majority interest in SEMCO, which employs 25 people in Carlsbad, Calif., to design and manufacture equipment that gathers and transmits data gathered at military and civilian flight test ranges for advanced aircraft, missiles, rockets and weapon systems. Kevin O’neil said in a news release that O’neil Group wants to expand SEMCO’S reach to help test ranges collect and use “all data generated across these ranges.”

SEMCO President Bill Tincup, who will remain with the company, said in the release that he is “excited to take advantage of the research and development opportunities afforded us at O’neil Group’s Catalyst Campus facility in Colorado Springs, especially as we continue our current efforts in support of ‘Range of the Future’ concepts and requirements.” Range of the Future is a U.S. Space Force program to modernize its test ranges.

Kevin O’neil said the consortium hopes to use Catalyst Campus to help in the modernization program by understanding what “pain points” Space Force is now experiencing at the ranges and coming up with ways to eliminate those issues. Ultimately, O’neil Group hopes to develop a way to connect all U.S. government ranges together to allow the Department of Defense to experiment with how wars might be fought in the future.

“We will keep buying companies for the foreseeable future, probably dozens of companies. We have plenty of financial firepower left” to complete many more transactions for world-class companies in industry sectors, Kevin O’neil said.

“This is a whole different model that what we have seen in Colorado Springs before. Our goal is to keep the money and employees here instead of being consumed by companies that are located elsewhere.”

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2022-08-14T07:00:00.0000000Z

2022-08-14T07:00:00.0000000Z

https://daily.gazette.com/article/282501482413772

The Gazette, Colorado Springs