Wolf Den Associates has published its always informative Practitioner Perspectives for December 2018. Focused on the growing M&A market in federal contracting. Highlights include:

• The federal M&A market has reached a fever pitch over the past 12 months, with valua- tions at record highs and deal volume up
• Valuations are propped up by the highest fed- eral spending in a decade and receding LPTA emphasis that relieve some pricing pressures
• Federal contractors command a premium because they are non-correlated to wage inflation, bad debt, and other late-cycle risks

Cerberus has announced it will acquire a 70% stake in the defense unit of Navistar International (NYSE - NAV). Navistar announces quarterly earnings on Dec 18, and it will be interesting what details of the deal are offered by its Chairman and CEO Troy Clarke.

​Navistar hasn't regularly broken out its military sales in its earnings statements, preferring to report total sales for its Trucks and Parts divisions by truck class. For the first 9 months ending 31 July 2018, total Truck sales were up 23% due (partly) to an "increase in military sales." This increase probably has more to do with an industry-record total orders in the quarter of 52,000 Class 8 heavy trucks, up 34% compared to last year. But its medium truck class saw an increase in orders of 18% as well.

Surely Clarke will have to outline the impact this sale has on its ongoing operations, and we should also get more details on valuation and terms than Cerberus has announced. It will also be interesting to see if this marks a trend in corporations spinning off their "non-core" defense units due to strength in that market.