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Bob Kipps: GovCon M&A Activity Slows to a Trickle

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 government services, intelligence and defense transactions announced vs eleven 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.

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.

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