The public company acquirer remains a unicorn in the M&A action

The clear majority of merger-and-acquisition activity in the government market involves private equity groups, either via their acquisition of a company or follow-on purchases to further scale out the business.

Between 62% and 72% of transactions in the market over the past three years have involved private equity, Greg Woodford and Greg Nossaman of the investment bank G Squared Capital Partners told me in an upcoming WT 360 episode.

Our math for 2024 also puts the ratio of PE involvement at between two-thirds and three-fourths of the transactions closed. This covers either platform investment number one, add-on acquisitions or a sale to a larger buyer.

Read Nick’s analysis of the full list here for more on the private equity buyer/backer in GovCon.

But if we are being honest, the public company acquirer or merger partner still garners the most attention of market observers and outsiders. People with a passing curiosity about GovCon also use the public companies as a barometer for what the industry is up to.

In some instances, the public company acquirer will hold a conference call with investors to spell out the backdrop and rationale for their decision. Those calls are instructive for understanding how the market and companies in it function.

With all of that said: the public company category of buyer remains the minority. Uncorn is also an apt word, as are picky and conservative. Publicly-traded companies in all industries also like to call themselves “selective” buyers.

Roughly 10% of the acquisitions in 2024 were led by a publicly-traded GovCon or a mostly-commercial company with a significant federal footing.

What they, and all of us too, can call “New Amentum” opened for business in September after by far the largest and most complex transaction of them all in 2024. To go behind the scenes, listen to this episode of our WT 360 podcast from November featuring Amentum’s chief operating officer Steve Arnette.

General Dynamics IT’s buy of the special operations tech provider Iron EagleX is notable given it was the former’s first since its blockbuster acquisition of CSRA in 2018. Lockheed Martin has been a longtime venture investor in the space systems maker Terran Orbital and decided to acquire all of it.

CACI International held to its heritage as a serial acquirer and integrator with three purchases: Applied Insight, Azure Summit Technology and Quadrint. An upcoming episode of WT 360 podcast will feature Nick’s interview with CACI’s chief financial officer Jeff MacLauchlan, so keep your eyes and ears out for that one.

Other public company highlights for us included:

• Accenture Federal Services’ buy of Cognosante to essentially recreate the health business
• CGI Federal’s addition of Aeyon to further extend into digital transformation programs
• Booz Allen Hamilton’s purchase of PAR Government Systems to grow defense technology and prototyping work
• KBR’s buy of LinQuest to continue building out a franchise space business
• Parsons’ acquisition of BlackSignal Technologies to bring in more cyber and electronic warfare offerings
• Tetra Tech’s addition of LS Technologies that focused on the Federal Aviation Administration customer

These are not closed yet, but AeroVironment’s pending acquisition BlueHalo and Redwire’s agreement to buy Edge Autonomy are worth watching as they will give us two larger defense tech players to watch.

Everyone in this section being a public company means we can see almost all of the details because, for the most part, they have to give them. We get a snapshot of how the M&A ecosystem and larger market works.