Financial Sponsors – Continued Interest in Government Services
Over the last five years, the Government Services industry has seen continuous interest from financial sponsors. Private equity firms have acquired publicly-traded services providers (e.g., Providence/SRA; Ares/GTEC), divestitures of large systems integrators (e.g., Veritas/The SI; General Atlantic & KKR/TASC), and both middle and small market contractors (e.g., Arlington/White Oak Technologies; LLR/Paragon). In 2012, private equity firms and their platforms accounted for one-third of the acquisition activity within Government Services. Financial sponsors are expected to continue to play a significant role in the Government Services M&A market as contractors (public and private) seek new opportunities to grow in an environment of sequesters, budget cuts, and funding uncertainty.
The Draw of Government Contracting
Financial sponsors like predictable cash flows and large addressable markets. Compared to the commercial sector, federal contractors have Continue reading »
Grant Thornton’s Survey on the Government Contracting Industry – Were Your Predictions Right?
Results of the widely known and anticipated 18th Annual Grant Thornton Government Contractor Survey were recently released, offering both surprising and presumably expected insights. Julian Rosenberg, government contract advisory leader at Grant Thornton reported some noteworthy takeaways from the survey in the areas of cost accounting, company relationships with the DCAA, revenue, profit, win rates as well as indirect cost rates. Highlights from the survey also supplied interesting information on M&A activity.
Fringe Benefits are Increasing
In a time of fierce competition within the government contracting industry, accounting practices related to indirect costs and direct labor can be critical factors. According to the survey, Continue reading »
Industry Trends: Discretionary Spending Down, Profit Margins Up – Read more!
Deltek releases GovConClarity Industry Trends this week, confirming our observation of trends over the past year. Highlights from the survey are:
- Overall pool of available dollars for discretionary spending is down 4%.
- There are a few growth sectors – Energy/Conservation, Budget Streamline Processes for the Government; Healthcare; and, of course, Cyber.
- In general, it appears that, although growth has slowed and the amount of negative growth has doubled for contractors, profit margins have increased on a year-to-year basis, Continue reading »
Top M&A Deals of 2011 – Aronson Capital Partners Selected as Advisor to Best Foreign Deal
Washington Technology, in its annual round up of the Top Mergers & Acquisitions in the government contracting industry, selected Ultra Electronics, plc.’s acquisition of Special Operations Technology (SOTECH) and Zu Industries as the Best Foreign Deal of 2011. Aronson Capital Partners served as the exclusive M&A advisors to both Sotech and Zu on this notable transaction. Washington Technology stated that, “Acquisitions by foreign buyers slowed in 2011, so this deal is significant”. Continue reading »Event: Preparing Your Middle-Market Company for a Sale – October 12, 2011
Years are spent building a successful business. That success has been driven by long days and late nights working, but none of it has come easy. Is now the right time to think about selling? What can be done today to prepare for the right time? Is this the dawn of an era of opportunity for middle-market businesses? These are the questions that face every business owner and that will be addressed by leading middle-market M&A professionals, including Aronson Capital Partners’ own Larry Davis. With insights from people who spend their professional lives advising business owners about how to prepare for and execute smoothly a sale of their most precious asset, this is an event not to miss! Continue reading »
Aronson Capital Partners Advises TexelTek, Inc. on its sale to TASC, Inc.
Aronson Capital Partners (“ACP”) is pleased to announce the acquisition of our client, TexelTek, Inc. (“TexelTek”) by TASC, Inc. (“TASC”), a portfolio company of affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and General Atlantic LLC (“GA”). ACP served as the exclusive financial advisor to TexelTek in this transaction.
TexelTek, headquartered in Annapolis Junction, MD., is a leader in the development of highly scalable cloud computing intelligence applications and platforms through agile software solutions. Leveraging its deep subject matter expertise in key enabling technologies and architectures proven in the commercial industry, TexelTek enables its clients to quickly fuse and analyze massive volumes of intelligence data collected through a variety of ISR platforms. Consistent with its customers’ mission, TexelTek also develops and deploys cyber security technologies within secure distributed cloud architectures.
Aronson Capital Partners Year End Newsletter
Aronson Capital Partners invites you to read our 2010 Year End Newsletter, featuring the following articles:
- 2010 Government Services M&A Recap
- 2011 Government Services M&A Outlook
- 2010 Public Company Performance
- 2010 IPO Markets Thaw
Survival Tactic #9 Know What’s Hot in the M&A Market
2011 Government Services M&A Outlook
The government services sector is set to face prolonged challenges in 2011 driven by federal budgetary pressures and increased competition. Procurements will be delayed, awards will be protested, and the contradicting commentary regarding insourcing and federal pay freezes will persist. However, many of these factors that will confront the government services industry as a whole will likely fuel M&A activity. Strategic buyers, faced with lower organic growth rates, continue to analyze their portfolios and acquire firms that fill capability gaps and position them in the areas of federal spending priority to create additional financial growth in profitable areas. Therefore, we expect 2011 government services deal volumes to be consistent with 2010. Below is a list of areas that will see the lion’s share of M&A activity in 2011:
Deltek’s Clarity 2010 Industry Report sheds light on the year in review.
For 2010, Government Contractors faced lower profit margins, lower overhead rates, and longer Days Sales Outstanding across the board based upon Deltek’s Clarity 2010 Govcon Industry Report . 2010 was a tougher economic year for the government contracting industry than the previous and government contractors showed a lack of growth in revenue with some respondents indicating negative growth for 2010. Continue reading »
Acquisition of Zytel Corporation Expands GTEC Cyber Capabilities
Aronson Capital Partners (ACP) is pleased to announce the deal to acquire of Zytel Corporation by Global Defense Technology & Systems, Inc. ACP served as Zytel’s financial advisor in this transaction.
Global Defense Technology & Systems, Inc (NASDAQ: GTEC) announced the acquisition of Zytel Corporation for $26.8 million in cash. The announcement was made September 13, 2010 and Zytel is expected to provide GTEC with $20 million in revenue for 2010, and is expected to see rapid growth in 2011. Zytel delivers Cyber Security & mission systems in support of critical intelligence, counterterrorism, and cyber warfare missions.
GTEC currently provides services for Continue reading »
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- A Marriage of Inconvenience: GSA Schedule Contracts & The Contractor Code of Business Ethics & Conduct Clause
- Emerging Small Businesses: To Grow Your Business, You Must Plan For Growth
- Government Contracting: Look Before You Leap!
- GSA Schedules – Strategies for Success
- New Employee vs. Independent Contractor Considerations
- Pay on Display – Understanding the Executive Compensation and Subcontractor Data Reporting Requirements & Ramifications
- The GSA Schedule: Your Ticket to the Federal Market (May 2010)
- The New FAR Codes of Conduct and Compliance Program Provisions
- The Seven Deadly Sins (of contract compliance)