Rick Knop
Rick Knop is senior managing director and head of international banking investment at BB&T Capital Markets, of Reston, Va.
The government contracting industry, like the rest of U.S economy, is trying to ascertain what political change and the financial turmoil will mean for it. Specifically, how are the capital markets and the mergers and acquisitions environment for this industry affected?
Companies with outsourcing and program management capabilities continue to serve as attractive acquisition targets.
The government IT industry is not immune from the larger economy or political changes, but it is more isolated than many industry sectors. What does the mergers and acquisitions environment look like for our sector for the rest of 2008?
A number of recent significant cross-border transactions, regulatory actions, and domestic and international political developments have put globalization of government and defense into the cross hairs of the 2008 presidential election.
From a detailed review of the merger and acquisition and public capital market activity of government technology services companies for the past three years, onemust conclude that this industry has matured. It also is clear that consolidation and M&A activity will continue for the foreseeable future to be a major driver of growth and shareholder value.
A flurry of international deals involving European buyers ofU.S. defense and civilian contractors has been under waysince early 2007. Of 292 transactions by strategic buyersof U.S.-based defense companies in 2007, 50 buyerswere foreign ? 17 percent. So far in 2008, two of 17 deals involveforeign buyers.
Next year, the industry should continue to benefit from many of the positive factors from 2007, including significant liquidity available to strategic and financial buyers for acquisitions and greater competition for deals.
Merger and acquisition activity - both domestic and international - is likely to increase substantially with companies being acquired that perform international services related to nation-building.
The headlines have been dominated by talk of the "credit crunch." Many pundits are predicting that tightening in the debt markets will bring an end to the frenzied merger-and-acquisition environment, but columnist Richard Knop disagrees.
Get a handle on acquisition terms and conditions