ERT sets new course for itself with Sev1Tech acquisition
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By
Ross Wilkers
Earth Resources Technology is roughly tripling in size and bolstering its footprint at Space Force, an agency often seen as leaning forward into newer and more agile acquisition approaches.
Earth Resources Technology was born in 1993 to focus on providing space-focused geotechnical and environmental services to the federal government, work that remains very much in the company’s DNA.
But in acquiring Sev1Tech with Macquarie Capital’s support, ERT is also setting out a new course for itself in many respects as the company now can say it has a footprint in both the civilian and defense sides of the market.
ERT’s purchase of Sev1Tech announced Tuesday gives the acquirer an increased presence with Space Force, which only was stood up in 2019 and was a target customer in the search for other companies to buy.
“The ground station things that we do are a direct connection, and we get them closer to the satellite,” ERT’s chief executive Mark Lee told us. “They get us closer to pushing the data out, so it's really a really a nice fit there.”
ERT is roughly tripling in size to around 1,600 employees with the addition of Sev1Tech, which is bringing around 1,100 people to the equation. Lee said ERT is looking to use this as an opportunity for creating a new organization because there are “things they do better than us” and the reverse is true as well.
“It is one company buying another, but it's also these teams coming together,” Lee said. “We want to bring an approach to this where the best process wins, best idea wins, and come out of this with something that is not exactly like either company was before, which allows us to build on the strengths that both companies have.”
ERT’s steps to land on Sev1Tech as the right acquisition target for itself is an example of how companies look at the world changing around them and decide to change themselves.
Macquarie Capital’s acquisition of ERT in 2024 both marked a new chapter for the company and an opportunity for its leadership team to figure out where they should go next. Three years prior to that, ERT booked a potential $699.6 million contract with the National Oceanic and Atmospheric Administration to help operate IT and antenna systems on the ground.
Having a franchise program like that can be both a boon and a concern though, according to chief executive Lee.
“We love NOAA as a customer, they're an awesome customer, but they make up a lot of our revenue and as we all went through last year, that was kind of scary having all your eggs in mostly in one basket,” Lee said.
Of course, Lee’s reference to last year speaks to how the entire public sector landscape changed rapidly amid the Trump administration’s push to reshape it.
In deciding what’s next for ERT, Lee and his executive team colleagues decided the company needed to diversify its revenue profile and that meant adding new customers. That naturally meant looking at acquisitions, of which Lee said ERT remained active even while the GovCon industry adjusted to a new pace and cadence.
Sev1Tech’s portfolio with the Space Force includes a potential $188 million contract booked in 2024 to help expand a global network that transports data between the U.S. military and its international partners.
Also known as meshOne, this terrestrial network is designed to link platforms and other systems that are part of the Defense Department’s larger connectivity vision commonly called JADC2.
Lee said ERT has been working with Space Force through some of the company’s weather-related efforts at NOAA, but Sev1Tech’s brand at Space Force was far more established than that of ERT.
ERT’s move to bolster its Space Force presence also means a closer look at an agency that Lee described as “less stuck in their ways about how they buy.”
Since its inception, Space Force has embraced agile acquisition models such as Other Transaction Authority agreements and other commercial-like contracting approaches. These are tools the Trump administration is pushing agencies to increase the use of as part of larger efforts to overhaul and modernize government acquisition.
“Space Force is the vanguard living up to that way of buying, which is exciting for us because we're impatient, we're ready to go, we want to get going,” Lee said. “They’re leaning forward from that perspective, which I think is exciting.”
KippsDeSanto & Co. acted as the exclusive financial adviser to Sev1Tech for this transaction. The sale of Sev1Tech marks an exit for DFW Capital Partners, which acquired the company in 2019.