ACG National Capital
By Aronson Capital Partners
M&A activity in the government services sector rebounded to have a strong year in 2010 following the 2009 lull. With 98 deals closed or announced, 2010 deal volume was up 46% over 2009, returning to pre-recession levels. The increase was primarily driven by shifting federal spending priorities and threatened expiration of the Bush tax cuts, which were ultimately extended through 2012. The M&A markets also benefited from a recovering economy and improved financing terms, according to Aronson Capital Partners.
While deal volume on the whole is on the rise, the hot areas of interest narrowed significantly throughout 2010. Niche, high-end cyber security and intelligence-focused companies accounted for the majority of 2010 M&A activity and commanded premium valuations compared to their generalist information technology and professional services counterparts.
The hottest segments in 2010 were Cyber Security, Intel/C4ISR and OCI–driven divestitures. In particular, Cyber Security M&A in 2010 was dominated by privately held, nimble mid-sized companies. As the federal government continues to experience cyber attacks from terrorist groups and nation states, this sector remains ripe for consolidation as larger contractors align their capabilities with federal spending priorities.
To read the full Aronson Capital Partners report, that discusses cyber security, Intel/C4ISR and other hot markets, click here.
In addition, you can hear more from a distinguished panel of cyber security experts at the 17th Annual ACG Strategic Growth Conference on current cyber security trends, on March, 17, 2011. There is still time to register TODAY! Additional information and registration is available by clicking HERE.