The hangover to last year’s deal frenzy continues.
As mentioned last month, deal announcements during the first part of 2013 are likely to be well below the past levels given the compression of deals into 2012–for tax and market reasons—and the ongoing budget uncertainties which are hampering many business owners’ ability to accurately portray their business’ potential.
During March, there were only five (5) government services, intelligence and defense transactions announced vs eleven (11) in March 2012. Similarly, only 21 industry deals were announced through the first quarter of 2013 vs 38 during the first quarter of 2012.
Not only were overall deal counts down, but there really were not many large or noteworthy deals announced.
That being said, deal activity is beginning to heat up both for entrepreneur-owned business–for the reasons I mentioned last month—and for components of existing businesses whose parent organizations are exploring divestitures of units deemed to be underperforming, non-core and/or creating OCIs.
Both corporate/strategic buyers and private equity firms are showing interest in deals but remain extremely selective in what they are pursuing and otherwise cautious about sellers’ future financial performance given future budget constraints.
While we expect to see some pickup of transaction activity in the second quarter, it is likely going to be a bit longer before we see activity return to the levels experienced over the last ten years.
Bob Kipps has more than 20 years of experience providing transaction advisory and financial consulting services to defense and technology firms. Prior to founding KippsDeSanto, he served as a managing director in Houlihan Lokey’s Washington office and helped lead the firm’s Aerospace∙Defense∙Government industry investment banking group.
Named the 2007 Dealmaker of the Year – Investment Banker by the Association for Corporate Growth’s National Capital Chapter, Kipps has also held executive posts with Peterson Consulting and Tucker Alan, advising aerospace and defense, engineering, construction and IT companies.
Kipps graduated from the University of Virginia with distinction as a bachelor of science in commerce. He is registered with FINRA as a General Securities Registered Representative and Principal (Series 7, 63, 24, and 79).