Government Contracting M&A Update “Market Intelligence for Business Owners” Q3 2013 Capstone Partners Investment Banking Advisors BOSTON | CHICAGO | LONDON | LOS ANGELES | PHILADELPHIA | SAN DIEGO | SILICON VALLEY Government Contracting Coverage Report MERGERS & ACQUISITIONS UPDATE With the nation’s attention focused on reducing government spending and sequestration, one would expect mergers & acquisitions in the government contracting space to come CAPSTONE PARTNERS LLC to a standstill. But such is not the case, with the number of acquisitions announced 200 South Wacker Drive through June totaling more than 250. 31st Floor Chicago, IL 60606 M&A Activity: Government Contractors www.capstonellc.com 1000 964 900 852 800 786 772 786 732 751 700 568 Ted Polk 600 521 Transactions Managing Director 500 of 398 (312) 674‐4531 400
[email protected] 300 256 Number 200 100 Lisa Tolliver 0 Director 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD (312) 674‐4532 2013
[email protected] YTD 2013 through June 30, 2013 Source: Capital IQ, Capstone Partners LLC research While the year’s activity is currently on‐track to come in under the 2012 figure, that trend is reflective of what we are seeing in mergers and acquisitions in general. M&A activity across the board has been down in early 2013 compared to 2012, primarily the result of the market continuing to absorb the rash of transactions that were closed at the end of 2012 in anticipation of rising capital gains tax rates. But, while the number of closed transactions has slowed this year, M&A activity continues to be supported by strong market fundamentals, namely reasonably high transaction valuations; strategic acquirers with strong balance sheets; abundant private equity capital; an accessible and affordable debt market; and a modestly expanding U.S.