The company's war chest from 2021 through 2025 includes $3.5 billion to $4.5 billion in total capital deployment that "prioritizes strategic acquisitions," Booz Allen CEO Horacio Rozanski told Wall Street analysts during an earnings call on January 28, 2022, according to a SeekingAlpha transcript.
Booz Allen's Current Cybersecurity Performance
Even before new acquisitions arrive, Booz Allen's existing cyber business has momentum. Among the noteworthy wins: The Department of Defense will partner with Booz Allen Hamilton later this year on a $6.8 million project to prototype a new security model based on zero trust principles, SC Media reported.
Meanwhile, Booz Allen's global commercial revenue grew 26.7% in Q3 of fiscal 2022 compared to the corresponding period last year. And that performance "was driven by growing demand in our U.S. commercial cyber business -- and contributions from Tracepoint where we are seeing strong cross-selling momentum and early synergies," Rozanski said.
Booz Allen acquired Trace Point -- a digital forensics and incident response company -- in September 2021. And on the cloud consulting front, Booz Allen acquired Salesforce government cloud partner Liberty IT Solutions in May 2021.
Both of those acquired assets are performing well, Rozanski indicated. "Liberty and Trace Point continue to deliver the strategic and financial value we expected," he noted. "Integration is going well, and we are extremely pleased with the upside these acquisitions create and in addition, we continue to build our acquisition pipeline."
Booz Allen Contemplates Next Cybersecurity Acquisitions
Among the big questions: Is Booz Allen comfortable making additional cybersecurity acquisitions? The background: Some publicly held cyber companies have lofty valuations, and privately held companies often demand extremely high multiples. Still, Wall Street has been in correction mode during the first month of 2022, and Rozanski didn't sound overly concerned about potential M&A multiples.
When asked about M&A valuations during the earnings call, Rozanski stated:
"We are seeing continued growth in our M&A opportunities in the functional areas that we're emphasizing: Cybersecurity, data analytics, system software development and engineering. Those are small to midsize opportunities. With our strong balance sheet and capacity, we're not seeing valuations in these particular areas spike. But keep in mind: We're also doing a better job in terms of cultivating the opportunities based on the relationships we have. Also, based on knowing the industry as well as we do, I think that has -- in some ways -- insulated us from what we see more broadly with some of the elevated valuations should go into an auction. But up to this point, we haven't seen a spike in valuation."
Booz Allen: North America's Largest Cybersecurity Workforce?
Overall, Rozanski said he "really likes" Booz Allen's market positioning across the company's portfolio. He believes the company has "the largest cyber workforce in North America, the strongest AI footprint in the Department of Defense, and some of the work we're doing about 5G these days is both breakthrough and growing."