Earth Resources Technology (ERT) has announced a transformative acquisition of Sev1Tech, a move that will significantly expand its operations and establish a stronger foothold within the United States Space Force. This acquisition, supported by Macquarie Capital, triples ERT’s size and positions the company to further diversify its revenue streams and capabilities.
A Strategic Shift for Growth
Founded in 1993, ERT initially focused on geotechnical and environmental services for the federal government. Over time, it became a key player in supporting agencies such as the National Oceanic and Atmospheric Administration (NOAA). However, recent years have underscored the need for the company to broaden its customer base and reduce reliance on major contracts, such as the $699.6 million NOAA deal it secured three years ago to manage IT and antenna systems on the ground.
"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", said Mark Lee, ERT’s chief executive.
Sev1Tech, acquired from DFW Capital Partners, brings with it an established reputation within the defense sector and a significant presence at Space Force. Notably, Sev1Tech holds a potential $188 million contract to expand the Space Force’s meshOne terrestrial network, which facilitates data transport between the U.S. military and its international allies. This network is a key element of the Defense Department’s Joint All-Domain Command and Control (JADC2) vision.
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Combining Strengths for a New Direction
The acquisition of Sev1Tech will add approximately 1,100 employees to ERT’s workforce, bringing the combined total to around 1,600. Lee emphasized the importance of leveraging the strengths of both organizations to create a unified and improved entity.
"It is one company buying another, but it's also these teams coming together", said Lee. "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."
The deal also marks a significant milestone in ERT’s strategy to enhance its defense credentials. While ERT has worked with Space Force in weather-related efforts through NOAA, Lee acknowledged that Sev1Tech’s experience and reputation with the agency are far more established.
Embracing Space Force’s Agile Acquisition Models
ERT’s expanded presence at Space Force aligns with the agency’s reputation for embracing modern, agile acquisition methods such as Other Transaction Authority agreements and commercial-like contracting approaches. These methodologies have been encouraged as part of broader government efforts to modernize acquisition systems.
"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."
By acquiring Sev1Tech, ERT aims not only to increase its participation in these innovative practices but also to deepen its role in supporting Space Force’s cutting-edge initiatives.
Looking Ahead: A Broader Vision
With Macquarie Capital’s acquisition of ERT in 2024 providing the resources and framework for growth, this latest move reflects the company’s commitment to reshaping its market presence. The decision to pursue Sev1Tech as an acquisition target highlights ERT’s proactive strategy in adapting to industry changes and securing a diversified customer base.
KippsDeSanto & Co. acted as the exclusive financial adviser to Sev1Tech for the transaction, which concludes DFW Capital Partners’ ownership of the company since 2019.
As ERT integrates Sev1Tech’s expertise and resources, the company is poised to become a more prominent player across the civilian and defense sectors, with a particular focus on the rapidly evolving opportunities within Space Force. This acquisition not only represents growth but also a shift toward a more balanced and diversified future for ERT.
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