Four M&A trends to watch in 2009

The federal market hasn’t been immune to economic downturn, but it is getting through the turmoil in better shape than other sectors of the economy, according to an analysis by Aronson Capital Partners.

Among its findings are four merger and acquisition trends to watch in 2009:

• Persistent strong buyer interest. Many of the publicly traded companies in the government market have strong balance sheets and cash reserves. This will let them be active buyers with relying on third-party financing. Commercial buyers also are showing interest in the governmet market as are private equity firms, Aronson said in its report.
• Well-positioned firms will continue to command attractive valuations. Companies that have expertise in cybersecurity, health care information technology, intelligence services, IT infrastructure, and military logistics and modernization will draw higher than average valuations.
• Portfolio shaping will become a necessity. Aronson is predicting that well-managed contractors will look to refine their lines of business by selling off pieces that are not in their core market areas.
• Tax policy will continue to favor sellers. Changes to the tax code are temporarily on hold, so the timing of an M&A transaction continues to be critical, Aronson said.