Own a government contracting business? Right now may be the perfect time to sell.
Mergers and acquisitions (M&A) activity in the government contracting space has reached new heights. That’s according to the Defense & Government Services Market Intel Report (PDF) released by investment banking firm Raymond James last month. The report shows that earnings before interest, tax, depreciation, and amortization (EBITDA) valuation multiples for government services providers are remarkably high. Additionally, valuations demonstrated an upward trajectory over the last few years, growing from 10.8x in 2017 to 13.4x in 2019.
By contrast, valuation over the same time period has fallen for every other defense and government services category surveyed: multi-platform large contractors, defense technology firms, diversified IT providers, and commercial aerospace manufacturers and suppliers. We’ve recreated the chart below.
For the full Defense & Government Services Market Intel Report, click here (PDF).
Offit Kurman has helped numerous government contractors in the Mid-Atlantic region and beyond successfully sell their businesses. In recent months, our team has worked alongside clients to close the following deals:
- VarcoMac Electrical Construction Company in its sale to Therma Holdings LLC, a portfolio company of Gemspring Capital
- KinderMender Walk-In Pediatric Center in its sale to PM Pediatrics Management Group, LLC
- Thomas Point Capital, LLC in its acquisition of M&R Consulting, LLC (DBA Home Instead Senior Care)
- LINKZ, LLC in its purchase of Bowman Educational Services, Inc.
- Insurance agent Jules Hendrix in her purchase of Crow Insurance Agency, Inc
- American Technology Services, LLC in its sale to Worldwide TechServices Holdings, LLC
As with all business transactional matters, government contracting M&A is cyclical. Valuations are high now, but they won’t remain that way for much longer. Business owners thinking of selling should prepare for sales now or ready themselves to weather a market downturn that could last several years.
Offit Kurman’s M&A team can help you prepare and maximize the sale of your business. To get in touch with an M&A attorney, click here. To learn more about current opportunities in M&A and for news about other deals, visit mandapulse.com.
ABOUT MIKE MERCURIO
Michael N. Mercurio is a leading attorney in the field of mergers and acquisitions (M&A). He serves as outside general counsel in buy-side and sell-side M&A, as well as in all business law and real estate law matters. As a strategic partner to firm clients, Mr. Mercurio regularly counsels entrepreneurial individuals and assorted entities on the many challenges, issues, and opportunities companies face throughout the business lifecycle—from start-up to eventual exit.
ABOUT OFFIT KURMAN
Offit Kurman is one of the fastest-growing full-service law firms in the United States. With 14 offices in seven states, and the District of Columbia, and growing by 50% in two years through expansions in New York City and Charlotte, North Carolina, Offit Kurman is well-positioned to meet the legal needs of dynamic businesses and the individuals who own and operate them. For over 30 years, we’ve represented privately held companies and families of wealth throughout their business life cycles.
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