The pending emergence of at least one new publicly-traded government contractor, and maybe more, means the conversation about this market will increasingly be in the open and executives will have less control over that narrative.
I hope that Baird's Jean Stack turns out to be right in her prediction to my boss that more public listings of companies in the government market are on the way.
Stack's big call to Nick Wakeman can be heard in the newest episode of our WT 360 podcast that goes over the market's merger-and-acquisition landscape. The discussion on public listings mostly takes place in the episode's second half.
One listing is certain, as we found out in the blockbuster transaction announcement Amentum and Jacobs made on the Monday night of Thanksgiving Week.
Their partnership in creating a new publicly-traded government services company remains a market-wide conversation starter that includes many variants of these questions:
- Who and what will this new publicly-traded "NewCo" company turn out to be?
- What will the new name be? (NewCo is a temporary placeholder)
- Where will NewCo want to go in the market?
- Why are Amentum and Jacobs doing this?
- How will NewCo go about the strategy and vision?
Amentum, Jacobs and NewCo's executives are addressing these broad questions and detailed follow-ups from the company's investors.
Investors are already curious about NewCo and also interested in understanding the broader government market it operates in and evaluating the sector’s performance.
Public companies often serve as the compass and barometer for understanding an industry beyond its financial reports. That's why our articles on quarterly earnings reports place the financials figures at the end, as we focus more on the overall direction and narrative behind the numbers.
Obviously, so much business activity happens in the world of private capital, so many private companies also contribute significantly to industry discussions. However, unlike publicly-traded firms, privately-backed companies are not legally required to be as transparent.
Being a public company does have two byproducts that come with the territory: facing tough questions from investors that are not necessarily familiar with the government market's inner workings, plus having much less control over the narrative surrounding the business and industry.
A major sign of a more mature industry is when all key players embrace the increased attention being public gets, even from those outside the tent. Sometimes, that increased attention and lack of control can lead to disagreements and debate over a company and an industry.
Everyone involved in NewCo certainly has all of that in mind as they craft their story for Wall Street.
That also raises the question for government contractors not publicly-traded: Why should I care about what NewCo is doing?
What NewCo will be up to also matters for the kind of partnering that makes the government contracting ecosystem go 'round. NewCo will be a "competimate" in the market, just like Jacobs and Amentum have been.
NewCo will also need to explain the market’s overall story to investors, helping them better understand the company’s narrative and its future direction.
Having one more publicly-traded company in the government market is a validation of this industry being one to watch just like all of the others in the economy. Embracing this attention, rather than avoiding it, can help businesses of all sizes create their own path to visibility in the world.
Where the conversation about this industry at-large is can also be looked at in contrast to what happened at OpenAI -- the artificial intelligence startup that changed the world with its creation of ChatGPT.
Amentum and Jacobs made their announcement on day number three of the power struggle at OpenAI that saw co-founder and CEO Sam Altman get fired and then re-hired.
A more mature industry is marked by both a stable universe of public companies and what I just described: professional debate and diverse opinions being shared out in the open. The more that an industry can handle public creative tension, the healthier it is.
That discussion and debate over such a critical sector of the economy that GovCon is, well, is critical for it to keep moving forward.
Everyone in the ecosystem, ourselves included, is responsible for facilitating critical debate on its issues. Perspectives from those seen as outside the tent should be a part of the conversation as they were with the OpenAI situation.
Easier said than done of course. A cursory look at GovCon LinkedIn shows harsh blowback at perceived slights or unpopular opinions.
The way forward is through elevating the level of open discussion. Help us do that and hold us to it.