It was supposed to be a great year for M&A in the government contracting sector. New SBA rules were expected to drive GovCon sellers to market as they raced to beat the rules’ implementation. But then the Department of Government Efficiency happened, which sought to cut government budgets, something that threatened to negatively affected many GovCon businesses since, as the name implies, government contracts are key to their value.
Helping to identify the trends that are pulling GovCon businesses in two extreme directions, Wright Lewis, a Partner at Dunlap Bennett & Ludwig, stops by to talk about the factors weighing most heavily on M&A in the sector. He also offers a lesson in the key differences between commercial and GovCon M&A, as well as perspective on the sector’s unique risk factors and advice on how to maximize value in what is shaping up to be a tricky market. Here’s an excerpt:
“I think the feeling in the industry was this was going to be a big year for M&A because of the SBA rule going into effect, and the delayed effectiveness of that particular rule on the set-aside multiple award contracts,” Lewis says. “And then obviously, a huge wrench got thrown into that earlier this year. I actually had a deal blow up last year, immediately after the election, because the buyers foresaw that this was going to happen, and so they just pulled out and said, ‘We're not going to spend any more time on this.’”
