Who's got the M&A power?
By
Nick Wakeman
Mergers and acquisitions have slowed compared to action in recent years. Accompanying that trend has come a shift in who has the upper hand in negotiating a deal.
One of my favorite questions to ask merger and acquisition mavens is whether it is a buyer’s or seller’s market.
In the explosion of government services spending following the 2001 terrorist attacks, many companies were spending money in a mad pursuit to get employees, capture contracts and add to their top-line growth. In that environment, there was intense competition to acquire a wide range of companies, and there often were multiple bidders for a single company.
Today, not so much.
When I posed that question this year, the typical response was, “It depends.”
A company looking to sell that has customers or contracts in critical market segments, such as health care, cybersecurity or intelligence, likely will have its pick of suitors. The seller is much more in the driver’s seat.
But if you have lots of small business set-aside work or you are in the reseller business, your ability to control your destiny is limited. You likely won’t get the price you might think you deserve, and you won’t have a lot of buyers knocking on your door. You might have to take what you can get.
Those two groups of sellers have always existed, but the gap between is wider today than it has been in a couple of decades.
Yet deals obviously are still getting done. We have 77 closed transactions listed for 2009 in the government services market. Buyers and sellers continue to find one another.
We invite you to peruse our list and look at our rankings of the top deals. Which would you rather be: the buyer or the seller?