In an interview with Association for Corporate Growth National Capital, Ricky White, Partner at RyanSharkey, says that Government contracting still drives the majority of M&A activity in the Mid-Atlantic region.
On March 28, White will chair ACG’s Mid-Atlantic Growth Conference at the Hyatt Regency Tyson’s Corner.
An article on Axial points to growing value from buy and build strategies. The article quotes Gretchen Perkins from Huron Capital:
"Pursuing a buy-and-build strategy and employing add-on acquisitions is a solid way to achieve above market growth and shareholder value in a 3% GDP environment”
In growing markets with fragmented competitor landscapes, PE investors increasingly employ a buy and build strategy by first acquiring a "platform" company -- typically a larger company with established management team and operations -- and then add smaller acquisitions that tend to trade at lower multiples compared to larger companies.
Bain Capital's 2019 Global Private Equity Report further defines the buy and build strategy not as just doing a couple add-ons, but a deliberate strategy with a steady pace of acquisitions:
"We define buy-and-build as an explicit strategy for building value by using a well-positioned platform company to make at least four sequential add-on acquisitions of smaller companies."
And increasingly, add-on details are part of an overall strategy based on M&A, as evidenced by the following table:
An annual survey of 222 Aerospace and Defense Industry executives & experts by investment banking firm KippsDeSanto & Co shows expectations of continued strong sector growth and M&A activity.
"Our 2019 survey results suggest continued strong mergers and acquisitions activity in the aerospace, defense, and government services sectors," says Managing Director Kevin DeSanto.
Top priority areas for M&A include:
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:
Oddly appropriate that 14 years of defense industry M&A fits on a single slide:
Renaissance Strategic Advisors updates industry M&A infographic
Opportunities for small business contractors of all categories are growing, both in the U.S. and for OCONUS programs. In addition to international opportunities previously mentioned, some agencies with growing budgets, like Special Operations Command, historically prefer small businesses.
SOCOM will spend in excess of $3 billion with contractors in FY18… The Command’s emphasis on small business (historically a third of contracts) has led to the development of a strong lower middle market base of emerging, mission-focused solutions providers.
Aronson Capital Partners Summer 2018 Market Pulse
Despite clear growth opportunities, many retiring or transitioning owners looking to sell their small business contracting companies face limited exit opportunities for a few main reasons:
Of course, these small but highly capable mission-focused solution providers are extremely sensitive to reputation, legacy and potential disruptions to the ongoing business, given the important work they are doing in the public interest.
FRAMCOR is addressing this problem through its investment focus on designated small business professional services contractors. Learn more about our detailed strategy and investment criteria.
Latest FRAMCOR news and ideas on global defense and government contracting, major programs, strategy, talent management, M&A, and more.