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GovCon Exclusive: Bob Kipps’ 3-Tier M&A Market Report

Bob Kipps

GovConExec magazine provides a unique glimpse from the GovCon executive’s perspective on the government market.

In the just-released Spring issue of the magazine, the execs tackle the increasingly mission critical field of big data,  which promises significant value to all Americans when harnessed.

From drones to healthcare, digesting and analyzing enormous amounts of data can make the difference between success and failure of crucial national programs.

Bob Kipps, managing director at KippsDeSanto & Co. and a contributing writer for GovConExec’s spring issue,  also provides an update on the mergers and acquisitions market, where disruptive technologies act as especially central market forces in the current environment.

M&A has become a distinctly three-tier market, Kipps writes, with major contractors, private equity firms and public sector officials all playing an important role in determining the deal landscape.

On the policy side, it’s more than slack budgets affecting firm decisions. As government acquisition professionals assume greater clout in the procurement process, reliance on “low price, technically acceptable” awards is increasing, with the use of “best value” criteria falling as a result.

In response to “tightening budgets, skittish customers and troublesome procurement activity, ” contractors are often either cutting overhead and reducing other costs, or taking on great risk and investing heavily to specialize in next-generation technologies that will be well funded.

Firms that follow the second path find themselves in the top GovCon M&A tier and are drawing huge interest from large public contractors looking for access to contract vehicles and health IT, C4ISR and other plays.

“These firms are still experiencing a seller’s market, with 80 percent or more of investors and large, public strategic buyers pursuing them, ” Kipps writes.

Kipps identifies Dynamic Research Corporation’s acquisition of HPTi, TASC’s pick up of TexelTek, Sotera’s September SPT purchase and now Boeing susidiary Argon as deals representative of top tier activity.

For more executive insight into the future M&A landscape, what drives activity in the other tiers and what valuations different companies are seeing in the market, check out GovConExec.

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