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KEYW Holding Prefers a Stealth Style

Tickers in this article: KEYW

NEW YORK (TheDeal) -- Defense technology and cybersecurity company KEYW Holding Corp. continues to scour the M&A field for acquisition targets though you'd never it if you show up for an auction.

KEYW, of Hanover, Md., has made a name for itself in the defense and cybersecurity world due in part to a unique style of dealmaking, a distinctive corporate culture and operating on the cusp of a cutting edge and highly dynamic sector. While the company has gone on a strong acquisition tear for the past two years, it has done so without participating in a single auction. Rather, it has found targets through an extensive network of contacts and long-term partnerships delicately coaxed into existence through the web spun by its executives.

Shares of KEYW added 0.5% to $16.14 in mid-day trading

Industry watchers expect more acquisitions from the company in the near term, and KEYW is certainly well positioned. Cybersecurity breaches at private companies have become alarmingly more frequent -- or at least more publicized -- of late, and firms are scrambling to protect themselves from hostile intrusions by foreign governments, namely China and Iran. Likewise, the U.S. military is ramping up more sophisticated intelligence technology to combat these threats.

Just don't expect KEYW to stray from its M&A playbook.

"Rule No. 1 is they don't attend auctions. Rule No. 2 is, if you are in a veiled process that's not like an auction but it turns out to be an auction, they will eighty-six you from working with them in the future," said defense banker Paul Weisbrich of D.A. Davidson & Co. "They're pretty hardcore. That's very different. Most corporate development guys are like, 'I don't want to talk to you until you have the book.' "

Weisbrich added: "That being said, they're good people, fair people. From a strategic direction they're M&A sophisticates."

KEYW is firm on its auctions ban, distributing a list of rules of doing M&A with the company to every potential client and their adviser, with this prohibition first and last on its list.