M&A Infographic: High Multiples for Government Contractors Who Sell Now
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.
Contributing Advisors
