“2021 proved to be the busiest merger & acquisition market that the defense and government technology services sector has ever experienced. Well-capitalized buyers, an abundance of financing, well-positioned targets, heightened valuation multiples, and a threat of increased capital gains taxes have motivated buyers to buy and sellers to sell, creating the perfect conditions for robust M&A activity…”
“The current administration remains focused on expanding funding for civilian agencies, and domestic discretionary spending more specifically, primarily in areas of NextGen IT to advance specific mission objectives. The agencies expected to be the biggest beneficiaries are Health and Human Services, Veteran’s Affairs, Department of Education, and those focused on climate change initiatives.
As a result, interest in such areas, and in particular Health IT, is booming and traditional buyers, as well as some more commercially focused buyers, were eager to bolster civilian exposure via M&A in 2021. Key examples include SAIC’s acquisition of Halfaker, Veritas-backed Guidehouse’s purchase of Dovel Technologies, Capgemini’s acquisition of VariQ, and Maximus’ acquisition of Attain’s federal business…”
“While it may be a challenge to break another record with respect to total transaction volume in 2022, the M&A market appears to be off to a strong start to the year. Public acquirers continue to signal strong appetite for M&A and the private equity landscape is as healthy as ever, ensuring continued buyer demand and supply of attractive targets.
As long as budgets remain strong, midsized companies should continue to perform well, creating a supply of motivated founder-run sellers. Buyers are currently using M&A to expand exposure across both the Civilian and DoD/IC markets. In addition, buyers seek M&A to: add scale; expand in-demand capabilities (e.g., NextGen IT, Space, etc.), differentiated solutions, and intellectual property; and gain prime positions on sought-after Best-In-Class contract vehicles…” Read the full article here.
Source: M&A activity exploded in 2021. Here’s why – By Kate Troendle, February 9, 2022. Washington Technology.
