The government contracting industry was plagued by uncertainty due to sequestration and a partial government shutdown, which likely played a big role in the amount of M&A activity that industry faced in 2013. However, growing technology, healthcare and other industries in the area, coupled with a need for defense contactors and other companies to diversify their service offerings played into the level of M&A activity as well.
Caitlin Burke, the Research Director at the Washington Business Journal, recently sat down with Mitchell Martin, principal of The McLean Group LLC and co-head of the McLean firm’s M&A practice, to discuss this very topic. While Mr. Martin’s attention is generally turned to the aerospace, defense, and government services industries, he gave his opinion on what he believes played a major role in dictating M&A activity in 2013, and even offers some hints as to what we can expect to see in 2014.
Here are some of the points that Mr. Martin shared:
– 2013 M&A activity was relatively quiet due to downward pressures like sequestration and the government shutdown. You could divide the year into two halves, with M&A activity picking up significantly by June and July.
– Washington DC M&A activity is so dependent on government activity that it likely doesn’t represent that national M&A scene.
– We’re seeing a much healthier Initial Public Offering (IPO) market than we have in the past, when M&A was the only viable option.
– The sequester and the shutdown may have helped larger companies slash costs at a time when there weren’t many growth options left. They were rightsizing bloated infrastructure.
– 2014 will likely see an increase in consolidation and deal making, as long as valuation continues to trend upward.
The McLean Group LLC is one of the many investment banks that will be taking part in this year’s DealSource, which offers business leaders exclusive, one-on-one meetings with investors. For additional information, and to register to attend, visit: http://www.midatlanticgrowthconference.com/
To read the entire Q&A with Mitchell Martin, click HERE