Veritas Capital to acquire MetroStar Systems
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By
Ross Wilkers
MetroStar was originally founded in 1999 to help agencies get a handle on Y2K and has since evolved into more of an enterprise IT services provider.
Veritas Capital has agreed to acquire a provider of digital transformation and modernization services that will become part of the private equity firm’s fund for backing midsized government contractors.
MetroStar Systems was originally founded in 1999 by CEO Ali Reza Manouchehri and President Robert Santos to help federal agencies get ready for any potential issues from Y2K.
MetroStar has since evolved into an enterprise IT services company focused on defense and intelligence agencies, while also incorporating artificial intelligence into its overall offering. In a September 2023 interview with iHeartMedia, Manouchehri described MetroStar as a 400-employee company with roughly $100 million in annual revenue.
Terms of the agreement announced Wednesday were not disclosed, while all parties involved expect to close the transaction before the end of this year. Blue Delta Capital Partners, the GovCon-focused venture firm, has been a backer of MetroStar since early 2024.
“Together with Veritas, we’re building the new model for how services, solutions, and software must be delivered for America to win the AI race,” Manouchehri said in a release. “This partnership will allow us to scale faster, invest deeper in innovation, and empower our federal partners to accelerate their missions with greater speed, trust, and intelligence.”
Veritas is undertaking this transaction through its Vantage Fund, a $1.8 billion vehicle the firm stood up in 2021 to focus on the government market’s middle tier.
In one example, Arcfield has been backed by the Vantage Fund since 2021 and made two acquisitions since. The second portfolio company is Epiq Solutions, a communications tech company that became part of the Vantage Fund in 2022 and has also made two acquisitions with that backing since.
“Backed by the Vantage platform, where MetroStar will serve as one of the fund’s platform companies, we look forward to investing in talent, innovation, and capabilities to position MetroStar for sustained long-term success,” added Veritas managing partner Hugh Evans.
KippsDeSanto & Co. worked as the financial adviser to MetroStar, whose legal counsel was Holland & Knight. Latham & Watkins LLP is legal counsel to Veritas.