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Sigma Federal, LLC is a private equity firm specializing in investments in companies supporting the U.S. government. Sigma also assists its investments in management and operations. Based in the Northern Virginia suburbs of Washington, D.C., Sigma Federal is located in the heart of the government contracting industry, where the greatest numbers of small and middle-market firms carry out business. Sigma Federal operates the Sigma Federal Alpha Fund.

The Fund seeks to generate long-term capital appreciation through acquiring or making other equity investments in federal government contractors. The Fund will enhance their post-acquisition value through improvements in management, contract performance, marketing, sales and through acquisition of additional companies. Many companies of interest will be professional and technical services companies, often in information technology (IT), management consulting, technology services, or operations and maintenance (O&M). Other companies of interest specialize in technology or products, most often in support of national defense, homeland security, and scientific and medical research.

The Fund is backed by a $50 million equity commitment from Edgewater Funds (www.edgewaterfunds.com), a premier private equity fund located in Chicago. Sigma will work closely with the Partners of that firm in making investments and achieving capital appreciation for investors.

Sigma Federal offers its investors and portfolio companies a number of advantages:
  • Experienced Team.
Sigma Federal is led by Dr. Gary R. Nelson and John T. Schell, III, who have decades of experience in the operations, strategies, and transactions of successful government contractors. The Sigma Board of Advisors includes leaders of the federal industry, who will bring industry knowledge and operational expertise to Sigma Federal and its future portfolio companies
  • Federal Contractor Investment Focus.
Sigma Federal believes that federal service and technology contractors repre­sent excellent opportunities during both strong and weak economic envi­ron­ments. Such firms typically compete in well established markets and are usually characterized by relatively predictable cash flows, long-term contracts, and limited capital requirements with low risk of technological obsolescence. In addition, strong franchises often provide su­pe­ri­or margins and defensible competitive positions.
  • Strong Management of Portfolio Companies.
Sigma Federal places a priority on post-acquisition internal management and financial improvements that will build value. This approach and Sigma Federal’s highly experienced management and advisors to execute it are unusual in the federal private equity market.

Small and Middle Market Targets. Sigma Federal targets profitable small and mid-sized companies between $25 and $150 million in annual revenue. These companies may be undercapitalized and can benefit from the application of best practices in operations and financial management. Many of them will be companies with sufficient business and technical infrastructure to qualify as a platform for the acquisition of value-enhancing smaller companies.

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