Mercury Systems, Inc. is a technology company that claims to deliver modules and subsystems to the global aerospace and defense industry. Mercury’s products and solutions are deployed in more than three hundred programs with over twenty-five different defense contractors and commercial aviation customers including Lockheed Martin Corporation, the Raytheon Company, Sierra Nevada Corporation, General Atomics Aeronautical Systems, Inc., and others.

Mercury’s business model was based on a mergers and acquisition (“M&A”) roll-up strategy focused on the defense electronics market. Mercury claimed that this strategy helped it to build scale, as well as expand capabilities and technological breadth. Since fiscal year 2014, Mercury completed fifteen acquisitions, expending $1.4 billion in capital.

A recently filed securities fraud class action complaint alleges that, Mercury Systems, through certain officers and directors, acted as a serial acquirer that used acquisitions and improper revenue recognition practices to mask its inability to grow organically. The complaint further alleges that Defendants repeatedly misled investors to believe that their growth was organic by misrepresenting several elements of Mercury’s business, including by hiding that Mercury had switched from “point-in-time” to “long-term contracts” in order to improperly boost reported revenues and that several of Mercury’s projects were in significant distress, including projects related to Mercury’s acquisition of Physical Optics Corporation. Finally, the Complaint alleges Mercury also lied to investors about its strategic growth initiative, 1MPACT, which was designed to improve profit margins but unbeknownst to investors was used to disguise regular expenses as restructuring costs, enabling Mercury to claim that recurring expenses were one-time costs.

Current Mercury shareholders who have held Mercury shares since on or before December 7, 2020, can seek corporate reforms, the return of funds spent defending litigation back to the company, and a court approved incentive award, at no cost to them.

If you would like to learn more about this matter, you are encouraged to contact us at [email protected], or call 267-507-6085.