Financier Worldwide

FW moderates a discussion M&A in the government contract sector between Holly Roth, a partner at Kelley Drye & Warren LLP, Marc Marlin, managing director at KippsDeSanto & Co, and David Ayres, founder and president at TATE, Incorporated.

FW: How would you describe M&A activity in the government contract sector over the last 12-18 months? What factors, in your opinion, are driving deals?

Roth: M&A activity in 2015 was vibrant and varied. It included large government contractor mergers, divestitures, splits and strategic acquisitions. Small and mid-size government contractors actively participated as well – frequently with the goal of growing and diversifying their businesses to compete for larger, and potentially bundled, government contracts. Many government contractors, large, mid-size and small, are focusing on strengthening existing capabilities, expanding relationships with agencies that are current customers or broadening their reach into new, synergistic opportunities. Concern over the Federal Reserve increasing the interest rate, the 2016 presidential election, the continued tightening on federal funds available to contractors, the consolidation of existing contracts to save costs, the drawdown of troops, and avoidance of the negative impact certain government regulations such as the conflict of interest regulations may have on future government contract opportunities, are factors that contributed to the types of M&A activity that took place in 2015.

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