Welcome!

@CloudExpo Authors: Elizabeth White, Yeshim Deniz, Liz McMillan, Zakia Bouachraoui, Pat Romanski

Related Topics: Government Cloud, Java IoT, Microservices Expo, Agile Computing, @CloudExpo, @DXWorldExpo

Government Cloud: Article

Eye of the GovCon M&A Storm

Defense and Government Services Deals Are Down So Far in 2013; Will the Tide Turn?

Bob Kipps serves as managing director at investment bank KippsDeSanto & Co., a provider of services to middle-market firms in the government services, aerospace/defense, cyberintelligence and technology industries.

In a new feature for Executive Mosaic, Kipps provides insight into what's driving the GovCon deals market and where participants are aligning for the future.

To start 2013, he addresses impacts of the now-in-effect sequester and other budget pressures and notes five important things to consider for the future.


After gushing throughout 2012, GovCon M&A deal announcements have slowed to a trickle thus far in 2013.  At a recent deal conference in DC last week, lenders and other transaction advisors were commenting about their lack of deal flow.

Sellers clearly tried to accelerate deals that might have otherwise closed in early 2013, before year-end.

After a blistering number of deals at the end of 2012-55 Defense and Government Services deals were announced in the 4th quarter of 2012 alone-there's only been 16 deals closed so far in 2013 through February.

With seemingly an intensification of the budget/sequester, cost and contracting concerns which have dominated the headlines over the past couple years plaguing many industry firms' business visibility and financial performance, this slowdown is not unanticipated.

But has the music stopped for good?  Far from it!

On the buyside, while their diligence is heightened around sequester and budget cut threats, those companies committed to this market for the longer-term continue to have a strong appetite for acquisitions of firms with depth in Health, Collaboration and Cloud Computing, Data Analytics, Cybersecurity, SOF, C4ISR and select areas of Intel that are deemed growth areas or less susceptible to areas facing budget pressure.

In our business, while we have found some buyers choosing to ride out the headline risks on the sidelines, 9 out of 10 buyers say they are "open for [deal] business" and otherwise excited to see our clients coming to market.

On the other side of the deal, while future sellers are likely to pay higher taxes on their deal proceeds, most of the real reasons owners consider a sale-like strong valuations/demand for their business (primarily in the above areas), owner interest in retirement and/or distaste for the current business environment, shareholder differences or ownership rebalancing, and increasingly market/business fear-remain and/or have intensified.

That being said, many potential sellers feeling overly susceptible to budget cuts are rightly staying on the sidelines for now.  The select, firms possessing solid books of business and focus in the areas of strong buyer demand are exploring the market without delay and benefiting, in some cases, from the market's current supply/demand imbalance!

More Stories By Tim Watson

Tim Watson supervises all media production at Executive Mosaic, a digital media company that provides insight, information and analysis on several industries, including government contracting.

He previously produced byline coverage with the economics team at USA Today and evaluated lending proposals for the Overseas Private Investment Corporation.

Tim was born and raised in Washington, DC and holds a bachelor’s degree in Business-Journalism from Washington and Lee University and a certificate in budgeting and finance from Georgetown University's School of Continuing Professional Education.

CloudEXPO Stories
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups. As a result, many firms employ new business models that place enormous importance on software-based innovations. They require not only skilled occupations, such as data analysts and DevOps professionals, with more technical skills, but also middle-level employees with more software and computing acumen. Both large and small firms operate differently.
There's no doubt that blockchain technology is a powerful tool for the enterprise, but bringing it mainstream has not been without challenges. As VP of Technology at 8base, Andrei is working to make developing a blockchain application accessible to anyone. With better tools, entrepreneurs and developers can work together to quickly and effectively launch applications that integrate smart contracts and blockchain technology. This will ultimately accelerate blockchain adoption on a global scale.
It cannot be overseen or regulated by any one administrator, like a government or bank. Currently, there is no government regulation on them which also means there is no government safeguards over them. Although many are looking at Bitcoin to put money into, it would be wise to proceed with caution. Regular central banks are watching it and deciding whether or not to make them illegal (Criminalize them) and therefore make them worthless and eliminate them as competition. ICOs (Initial Coin Offerings) are something most have no idea as to what it means and how you utilize it. Where is the "Stamp of Approval" or "Stamp of Legitimacy" on some of these Bitcoin websites (how do you know you are not dealing with a scammer?)
DXWorldEXPO LLC announced today that the upcoming DXWorldEXPO | DevOpsSUMMIT | CloudEXPO New York will feature 10 companies from Poland to participate at the "Poland Digital Transformation Pavilion" on November 12-13, 2018. Polish Digital Transformation companies which will exhibit at CloudEXPO | DevOpsSUMMIT | DXWorldEXPO include All in Mobile, dhosting, Cryptomage, Perfect Gym, Polcom, Apius Technologies, Aplisens, ELZAB SA, TELDAT, and Rebug.io.
DevOpsSUMMIT at CloudEXPO, to be held June 25-26, 2019 at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Among the proven benefits, DevOps is correlated with 20% faster time-to-market, 22% improvement in quality, and 18% reduction in dev and ops costs, according to research firm Vanson-Bourne. It is changing the way IT works, how businesses interact with customers, and how organizations are buying, building, and delivering software.