Despite the challenges and uncertainty that come with an economic downturn, the government contractors continue to generate new business and strategic purchases that position companies for future growth.
“The government has always been a critically important market with a budget now in the trillions, and today, for companies looking to survive and thrive in this new and dynamic normal, the federal market may be more attractive than ever,” Aaron Binstock, a partner at Cooley LLP and a new member of the ACG National Capital Board of Directors—told us.
We sat down with Mr. Binstock to talk about deal flow and explore what makes the government contracting industry, and specifically the middle market, attractive, even in an economic downturn.
In addition, Mr. Binstock also shares why he feels the need to deepen his involvement with ACG by becoming a member of the Board and recalls how ACG’s NextGen program had been valuable when he was a rising star.
Here is what he had to say:
Corporate Growth…Capital Style (CGCS): First, tell us a little about yourself and what kinds of companies and industries your M&A practice concern.
Aaron Binstock: I’m a deal-maker and strategic advisor to companies within two of the most innovative and rapidly evolving industries: technology and media, with a particular emphasis in cybersecurity, artificial intelligence, IoT, SaaS, healthcare, communications and government contractors.
My practice focuses on mergers and acquisitions and other complex corporate transactions, representing strategic and financial buyers and sellers in public and private acquisitions as well as venture capital and growth equity financings.
Over the years, I’ve worked on dozens of transactions ranging from under $1M to over $7B, and I particularly enjoy advising general counsels, executive teams and boards of directors in navigating complex challenges at critical stages throughout a company’s growth and seeing them through to successful exit and beyond.
CGCS: Why is the government a desirable customer prospect, both for established government contractors looking to expand their core capabilities and for companies that have recently entered the field?
Aaron Binstock: The government has always been a critically important market with a budget now in the trillions, and today, for companies looking to survive and thrive in this new and dynamic normal, the federal market may be more attractive than ever.
The government spends hundreds of billions of dollars on a wide range of technology products and services each year, and a lot of this spending—like defense spending—is pretty insulated from economic downturn. It can also be countercyclical; for example, when the government pumps billions of dollars into the market as part of economic stimulus. I work with a lot of GovCon companies and cross-over companies with dual-use capabilities, and having practiced through two economic downturns, I can say that mid-market deals in the GovCon space don’t dry up entirely like other sectors.
“…having practiced through two economic downturns, I can say that mid-market deals in the GovCon space don’t dry up entirely like other sectors.”
CGCS: What types of technologies have seen increased government demand in recent years? Do you foresee that demand continuing to grow and why?
Aaron Binstock: Cybersecurity, artificial intelligence, 5G, quantum computing, and IoT solutions as well as space and satellite technologies are in hot demand. I believe we will continue to see unprecedented disruption within the government from these technologies across national security and critical infrastructure. We’re just at the cusp of what’s possible; think of the internet in its infancy.
CGCS: At the beginning of the year, there was a tremendous amount of consolidation in the government contracting space. Do you think this level of M&A activity will continue given the present uncertainty? How should corporate growth professionals take advantage of this outlook?
Aaron Binstock: Yes, there were some huge deals over the last year and I think we are going to continue to see consolidation. Downturns can be advantageous for healthy, well-financed companies to find good values in the market. It will be tough for the mega deals to move forward until the economy stabilizes a bit, but there is still a ton of mid-market activity both in terms of large contractors buying smaller companies and PE platform rollups. A lot of corporate development professionals are also betting on a quick recovery and are trying to resist letting the last few months hinder their broader M&A strategy.
“Downturns can be advantageous for healthy, well-financed companies to find good values in the market. “
CGCS: You were recently named a Board Director for the National Capital Chapter of ACG. Why were you interested in that position?
Aaron Binstock: I’ve been involved with ACG in a number of ways over the years and find that the organization cultivates a strong community of companies and professionals who are interested in M&A.
When asked if I would serve on the Board, I saw it as an opportunity to invest in this community and drive new opportunities that further strengthen our ecosystem and position businesses in the region for continued growth and success.
CGCS: You have been particularly involved in ACG’s NextGen series. Why are these informative sessions important and who should consider attending?
Aaron Binstock: The NextGen program is fantastic! Carl Grant invited me to participate when I was an associate and it was a valuable platform to learn from other professionals and form relationships with peers early on in my career. Members who have rising stars on their teams should strongly consider inviting them to participate. I’m still actively involved with the NextGen series and am speaking on an M&A-focused panel in June.
To learn more about Aaron Binstock and his work, click HERE.