Mergers and acquisition (M&A) deals are fraught with pitfalls and questions, delivering an equal measure of headaches to both buyers and sellers.
Should I sell? Is this the time to buy? Who will buy my company? Is this a good company to spend my money on? Am I getting fair value? Am I overpaying? Fear and anxiety are just part of the process. Add the arcana of government regulations, and the M&A journey gets even harrier.
Why? Because buying or selling government contractor (GovCon) companies is, frankly, quite different from commercial M&A deals. For example, one must grapple with what exactly is being exchanged when a GovCon company with five or 10 years of backlog sells. Transferring federal contracts easily is no small feat, and requires that these deals be done as stock, not asset, deals.
Were a GovCon company to do an asset deal, the government would have to expressly agree to transfer its contract from the previous owner’s stewardship to the new one. That’s quite a “Mother, may I?”
Talk about injecting risk, complexity and time. Such a process—and I have done a few deals like this—can take months or even years. Few buyers have the stomach for those many restless nights.
