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Accenture Buys Maxim, Looks to Get Into Defense Electronics

Midway through 2006, executives at business consulting giant Accenture reached the conclusion that they needed to get into the military electronics business in a new way.

Eric Stange, managing director of Accenture’s U.S. defense practice, said that a field of electronics known as C4ISR promised “great opportunities.”

After compiling a list of 700 companies, Accenture executives winnowed down their choices for an acquisition. They decided to target an employee-owned San Diego firm called Maxim Systems Inc. They negotiated.

Maxim’s owners eventually sold, and the deal closed Dec. 12. Specific financial terms were not disclosed.

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The purchase gives Accenture, a $21 billion company better known for management consulting, a presence in San Diego. It also gives Accenture a relationship with Spawar, the Space and Naval Warfare Systems Command, the Navy’s acquisition and research hub for information technology.

In Pentagon lingo, C4ISR means Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance.

Standard & Poor’s, in an aerospace and defense industry survey issued in May, calls intelligence, surveillance and reconnaissance a “strategic priority” for the military. So is a related category called network-centric warfare, also a specialty of Spawar.

Stange says another third-party research firm estimates the C4ISR space will be worth $29 billion by 2010.

Accenture had worked in C4ISR before, but “only on a very small scale,” Stange said.

That changed with the addition of Maxim, which has been in business since 1998, and New Jersey-based Gestalt LLC. As of Dec. 12, the Gestalt acquisition had yet to be finalized.

Maxim, which has received more than $200 million in contract awards, according to its Web site, provides technology services to the government, working closely with Spawar. Most of Maxim’s 135 employees have taken jobs with Accenture.

“We’ve had an extremely high number of acceptances,” Stange said, adding that the figure is in the “upper 90 percent” range.

Stange also says that Maxim’s chief executive, Jim Wangler, will go to work for Accenture and report to him.

Stange has high hopes for his company in the defense space. Having worked mostly in the commercial arena, Stange says Accenture can approach problems differently than one of the big defense contractors.

“They don’t have the familiarity we have with the solution providers,” he said, adding that Accenture recently upgraded supply-chain software for the Defense Logistics Agency, using a commercial product from Walldorf, Germany-based SAP AG. The Virginia-based DLA is the Department of Defense’s largest combat support agency, supplying almost every consumable item America’s military services need, from groceries to jet fuel, according to its Web site.

One of the first things Accenture will do to introduce itself to the community, Stange says, will be to help sponsor the San Diego County Credit Union Poinsettia Bowl, a college football bowl game played annually at Qualcomm Stadium.

“We intend to be a good corporate citizen,” Stange said.

Accenture, which trades as ACN on the New York Stock Exchange, employs 170,000 people in 49 countries. Before 2001, the company went by the name Andersen Consulting. The company has its headquarters in Bermuda. Its subsidiary, Accenture National Security Solutions LLC, oversees U.S. defense work. Stange oversees Accenture’s defense practice from St. Louis.

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