Jennifer Schaus hosts a series of government contracting events & webinars. Full list & recordings w audio available at http://JenniferSchaus5.eventbrite.com This webinar focuses on M&A in Government Contracting from current valuations to time frames. Bob Dinkel and Rob Tillson of Pierce Capital Partners present. Full audio & slides at: http://www.youtube.com/watch?v=YA6FTq1q2D4

1. Mergers & Acquisitions
In Government Contracting

2. Mergers & Acquisitions
In Government Contracting
• Agenda
– Introductions
– Presentation
– Q & A

3. Mergers & Acquisitions
In Government Contracting
–Introductions:
• Fed Bid Speed
• Fierce Government
• Bob Dinkel / Rob Tillson – Pierce Capital Partners
• Jennifer Schaus – Jennifer Schaus & Assoc.

4. Mergers & Acquisitions
In Government Contracting
• Fed Bid Speed
* Software program to manage B2G Opps
* Single click integration with FBO.gov
* Share notes & project manage RFP’s

5. Mergers & Acquisitions
In Government Contracting
• Fierce Government
* Free Govt IT Newsletter
* IT in Govt Agencies / Defense / Cloud / Cyber
* White Papers / Events / Analysis
* In-depth & Quality = Differentiator

6. Mergers & Acquisitions
In Government Contracting
Pierce Capital Partners
Founded 1988
Team of experienced Gov Con Experts:
Fed Results, SAIC, CACI, GE, etc.
Services Include:
M&A, Private Equity & Debt Placement
JV, Buy Outs
Advisory Services
www.PierceCapitalPartners.com

7. Mergers & Acquisitions
In Government Contracting
• Jennifer Schaus & Associates
• B2G Services and Events
GSA Schedules
Federal Sales / Marketing
Full Series of GOV CON WEBINARS:
http://JenniferSchaus5.eventbrite.com

8. Mergers & Acquisitions
In Government Contracting

9. Mergers & Acquisitions
In Government Contracting
What is the Current Market?

10. Mergers & Acquisitions
In Government Contracting
What Is The Current Market?
Valuations have declined – 3-5x EBITA
Acquisitions must be accretive to EPS
Must provide:
* new client or new contract vehicle
* competitive technology
* high % of Prime work

11. Mergers & Acquisitions
In Government Contracting
What Is The Current Market?
Wells Fargo
HIGHLIGHTS OF THE WEEK--Government Services. As we had been expecting, growth
continues to decelerate and margin has become more difficult to maintain for those supporting the U.S.
federal government as funding remains tight, clients reluctant to make decisions and deploy funds, and
pricing pressure intensifying. With the fall elections, expected start of GFY2013 under continuing resolution,
and the uncertainty of whether the “sequestration” will be reversed, forward commentary was even more
muted. CACI (CACI) reported disappointing FQ3 revenue, trimmed June quarter revenue guide, and
suggested slower organic growth likely in FY13 (June). ManTech (MANT) missed revenue and EPS
expectations and lowered its outlook again, although our view is that the new forecast is still too optimistic
given the upcoming grow-over of supporting the war-fighter. Civilian agency-focused ICF's (ICFI) Q1 was a
touch light, but 2012 guidance was held. Small-cap NCI (NCIT) reported in-line Q1, but highlighted
upcoming challenges as it works to refocus/rebuild its new business machine.

12. Mergers & Acquisitions
In Government Contracting
What are the Valuation Metrics?
(related to government contractors – IT sector)

13. Mergers & Acquisitions
In Government Contracting
Valuation Metrics
Customers in Agency w growing budgets &/or high barrier to entry;
Strong management team;
Revenue size & growth;
High operating margins;
Valuable IP;
High-end skills & high hourly rates;
Full & open contracts – vs – set-asides;
“Hot” technology.

14. Mergers & Acquisitions
In Government Contracting
Valuations Lower in 2012-3
Security Clearance/Intel = 9 - 10x TTM EBITA
Large > $500M = 5 - 7x TTM EBITA
Mid $250-$500M = 4 - 6x TTM EBITA
Small < $250M = 3 - 5x TTM EBITA
NOTE: Health IT, Cyber, Info Assurance, Geospatial, Energy will raise valuation

15. Mergers & Acquisitions
In Government Contracting
What Is the Process?

16. Mergers & Acquisitions
In Government Contracting
The Process – PART 1
Prepare a “Book” & Offer Materials
Contract Waterfall
Financial Forecast
Key Personnel Profile
Research & Contact probable / acceptable purchasers
Send NDA & “Book”

17. Mergers & Acquisitions
In Government Contracting
The Process – PART 2
Pierce determines responders ability to pay
Management meetings
Negotiate & Select LOI
Negotiate Purchase Agreement

18. Mergers & Acquisitions
In Government Contracting
Preparing For The Sale

19. Mergers & Acquisitions
In Government Contracting
Preparing For The Sale
Financial Audit – 3 yrs;
Legal Structure - Stock, Employee, ESOP;
Internal Control – Tax Filings, etc;
Minimize Set-Aside revenues;
Restate “add backs”;
Develop 3 year sales & EBITA projections.

20. Mergers & Acquisitions
In Government Contracting
The Closing
Integration of company structure / culture
Escrow release
Retain key personnel
Advise on earn-out provision

21. Mergers & Acquisitions
In Government Contracting
Time Frames
Preparation: 30 - 45 Days
Marketing: 30 - 45 Days
Closing: 45 Days

22. Mergers & Acquisitions
In Government Contracting
Conclusions

23. Mergers & Acquisitions
In Government Contracting
Conclusions & Strategies:
Get your house in shape early
Identify your value
Partners
Competitors
Keep your eye on the business
Overall company considerations

24. Thank You !!!!!
Please submit questions here …....
The webinar is recorded &
will be available for download.
Thank you for your time!

25. Mergers & Acquisitions
In Government Contracting
Jennifer Schaus & Associates
JSchaus@JenniferSchaus.com
www.JenniferSchaus.com
+ 1 – 2 0 2 – 3 6 5 – 0 5 9 8
Bob Dinkel
5 7 1 – 9 3 4 – 6 1 3 1
bdinkel@piercecapitalpartners.com
Rob Tillson
7 0 3 – 6 5 2 – 4 5 1 2
rtillson@piercecapitalpartners.com