KippsDeSanto Identifies GovCon Key Market Trend

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KippsDeSanto identifies growth in private equity involvement in GovCon M&A transactions.

KippsDeSanto & Co. is an investment bank focused on delivering exceptional results for leading, growth-oriented aerospace / defense and technology companies.

KippsDeSanto & Co. is an investment bank focused on delivering exceptional results for leading, growth-oriented aerospace / defense and technology companies.

Private equity’s role will likely be significant on both the buy-side and the sell-side as vintage portfolio companies are put up for sale because of the overall healthy industry and economic dynamics at play.

KippsDeSanto & Co., an aerospace / defense and technology bank, has identified significant growth in private equity involvement in government contracting (GovCon) merger and acquisitions (M&A) transactions since 2012.

According to KippsDeSanto, private equity involvement in 2017 GovCon M&A had a 40 percent increase over the 2012 – 2016 average transactions per year. Nearly 65 percent of those transactions greater than $100 million in 2017 involved a private equity group.

“KippsDeSanto & Co. experienced a record year in 2017 on many levels, including our involvement with private equity in GovCon M&A activity,” said Co-founder and Managing Director Kevin P. DeSanto. Eight of the 14 announced transactions on which KippsDeSanto advised in 2017 involved a private equity group. “In addition to our role as advisor to private equity-owned companies such as BEI Precision Systems & Space Company (a portfolio company of The Carlyle Group), we saw five of our clients in 2017 acquired by private equity groups or their portfolio companies.”

In the past three years, 38 M&A transactions involved private equity firms that sold a GovCon portfolio company. This total represents a 138 percent increase in selling activity by private equity groups from the previous three-year period. From 2012 to 2014, 16 such transactions were completed. In 2017, 21 transactions occurred, including Lake Capital selling WBB to H.I.G. Capital and DFW selling Triple-I to Salient CRGT.

KippsDeSanto says that the level of private equity involvement in the GovCon M&A ecosystem is strong. “Private equity’s role will likely be significant on both the buy-side and the sell-side as vintage portfolio companies are put up for sale because of the overall healthy industry and economic dynamics at play,” DeSanto said.

One hundred and fourteen distinct private equity groups were involved in nearly 200 GovCon M&A transactions since 2012. In 2017 alone, 40 distinct private equity groups were involved in at least one GovCon M&A transaction. KippsDeSanto also notes many GovCon private equity investors are in the Washington, D.C., area, but the majority are headquartered outside the Capital Beltway in Boston, New York, Philadelphia, South Florida, Chicago, San Francisco and Los Angeles.

About KippsDeSanto & Co.: KippsDeSanto & Co. is an investment bank focused on delivering exceptional results for leading, growth-oriented aerospace / defense and technology companies. We leverage our creativity and industry experience to provide M&A, private financing and strategic consulting. Capitalizing on real-time industry trends and in-depth technical and strategic analysis, our solutions-driven approach is highly structured and uniquely tailored to each client. KippsDeSanto is recognized for its market insight and broad industry relationships. We help market leaders realize their full strategic value. KippsDeSanto, member FINRA/SIPC, is not affiliated with other companies mentioned herein. For more information, visit http://www.kippsdesanto.com.

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Gregg Voss
KippsDeSanto
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