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IBM Eyes Federal IT Support Expansion Through Octo Purchase; Baird Advises on Sell Side

IBM (NYSE: IBM) has agreed to buy government technology services provider Octo from Arlington Capital Partners in a move to complement Big Blue’s IT and digital transformation offerings for the federal sector.

Baird served as financial adviser to Arlington and Octo on the transaction. Financial terms of the deal were not disclosed and all the parties expect to close the transaction by the end of this year, pending regulatory approvals and other customary closing conditions.

IBM said Wednesday the U.S. public and federal market organization under its consulting arm will absorb approximately 1,500 Octo employees upon completion of the acquisition, which will bring that segment’s workforce to 4,200.

Founded in 2006, Octo provides DevSecOps, artificial intelligence, cybersecurity, Agile, cloud, blockchain, data science and open source technologies and related services to clients in the defense, intelligence, civilian, health care sectors. The company’s 14,000-square-foot oLabs facility offers computing capability to facilitate rapid prototyping of emerging technology platforms for federal agencies.

John Granger

“Governments require agility and resiliency to meet the evolving needs of citizens directly and in real time,” said John Granger, a senior vice president of IBM Consulting.

Granger added that integrating Octo into IBM will allow the combined organization to help federal clients modernize operations faster.

Mehul Sanghani

Octo CEO Mehul Sanghani said the combination will work to deliver digital transformation services to federal customers with “greater reach and scale” as agencies aim to address public health, national security, defense and intelligence mission challenges.

The deal is the eighth acquisition move by IBM this year and comes two and a half years after Arlington Capital acquired a majority interest in Octo.

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