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How M&A Strategy Can Help Mid-tier Government Contractors Scale

Mid-tier contractors face unique challenges competing for federal dollars.  Sized out of small-business preference programs, they must battle large vendors’ hefty BD teams and extensive past performance qualifications. Growing contracts organically is time consuming, requires large amounts of cash upfront, and necessitates niche expertise relating to each contract. As we’ve all seen, the preference for incumbent awards always makes new bids a challenge.  With that in mind- a smart buy-side merger & acquisition strategy can help mid-tier government contractors rapidly growth their businesses and readily compete with large government contractors. Here are seven ways an M&A strategy can help you grow your government contracting operations and business.

Don’t Underestimate Access to IDIQ’s

M&A targets with IDIQ (indefinite delivery/indefinite quantity) contracts present an excellent opportunity to immediately gain a long-term, lucrative government contract at a potentially reasonably cost point. IDIQ contracts represent substantial amount of revenue for mid-tier businesses given the potential for large orders, or frequent orders, over an extended period of time. Gaining access to the applicant pool for IDIQ contracts on your own can be lengthy and a limited opportunity. Acquiring a company with pre-existing access and open IDIQ contracts is the simplest way to add these lucrative contacts to your business’ portfolio.

Rapid Addition of Capabilities

The Federal Acquisitions Streamlining Act requires that contracts exceeding $100,000 have the previous performance of contractors appraised. As of 2009, the Federal Acquisition Regulations System requires all Federal Agencies to post contractors performance evaluations on PPIRS (Past performance information retrieval system). Officials recommend that past performance count for at least 25% of the total evaluation or equal to all other non-cost evaluation factors combined.

This means that government contracts are more likely to be awarded to companies with previous experience, over companies who demonstrate the capabilities relating to the contract. Your business can quickly add capabilities, experience, and expertise to its name by acquiring a business with previous contracts.

Improved Ability to Scale Business.

Acquiring or merging with a new business will provide you will additional resources and manpower. More hands on deck will result in the ability to scale your business with more proposals and faster turnaround times. Your business will gain their knowledge of contract opportunities and strategies for successfully winning contracts, which are valuable on their own but can also be incorporated into your business to improve your processes across the entire organization.

New Resources and Partners

A smart M&A strategy for growth of government contracting business should target companies with a pre-existing network of valuable resources and partners.  Many contractors look to their subs and / or teaming partners as acquisition candidates.  Taking that strategy a step further, acquisition candidates also often come with their own pipeline of subs and teaming partners that extend reach for the acquirer.  Partners such as these can greatly enhance your business’ ability to compete with larger companies and improve turnaround or contract completion time. As with acquired in-house talent, a network of superior partners and resources can be incorporated across your overall business to improve efficiency and revenue.

Diversification of Government Contracts

The healthiest (and most valuable) GovCons have diverse government contracts across many federal agencies (as well as access to state and local government vehicles in many instances). Acquiring a business with contracts with additional agencies will enable you to immediately diversify your investments and revenue sources. Diversification of government contracts insulates your business against dramatic revenue fluctuations caused by cutbacks in any one agency. The SBA recently noted that among small business government contractors, 19% of revenue came from federal government contracts and 14% came from state and local contracts, on average.

New Contacts & Customers

Acquiring another a government contracting business provides immediate access to new, friendly government contacts. In addition to POCs, your business will also gain access to government sites and offices. Being on-site is advantageous for networking with even more decision makers and increasingly the likelihood of learning about new projects, developments or contracts.

NAGGL Lenders Conference – Thanks for Stopping By!

We had a great time at the NAGGL conference in Colorado Springs this week!  Great to meet some new folks (and see some old faces of course).

A bunch of folks have asked for our most recent Lenders Business Valuation Desk Reference – you can grab a copy here.

Both Holly and Katie were in attendance and from what we hear it was a great conference all around. Looking forward to keeping in touch – see you on the next deal!

– The Quantive Team

Quantive Enters Colorado Market

Quantive Enters Colorado Market

April 6, 2017 (McClean, VA and Colorado Springs, CO) Quantive Business Valuations, a McLean, Virginia based business valuation firm, is pleased to welcome Holly Flores to their team of finance professionals. Based in Colorado Springs, CO, Flores joins Quantive as a Value Advisor.

Flores has an extensive and varied background that gives her unique insight into the operations of companies and the needs of business owners. She has worked for organizations of all sizes, and across several sectors, including service in the U.S. military.

Before joining Quantive, Flores worked for a middle market mergers and acquisitions boutique located in Colorado. She has also worked in private wealth management and institutional sales for UBS, as well as in wealth management at Northwestern Mutual. Additionally, she has worked as the Operations Director for an oilfield services company, managing service and support to over 1200 oilfield workers in a remote Alaskan oilfield.

Flores graduated from the U.S. Military Academy at West Point and went on to serve as a Logistics Officer in the U.S. Army, leading multi-functional logistics organizations in support of forward deployed division operations.

According to Dan Doran, Founder of Quantive Valuations, “We are pleased to welcome Holly to the Quantive team. Her background in M&A and wealth management are immensely valuable to the growth of our practice. We’re also excited to expand our reach into the western U.S. market through Holly’s existing footprint in Colorado.”

About Quantive

Quantive Business Valuations is a professional business valuation practice specializing in small to medium sized closely held and family owned businesses. The addition of Flores to Quantive’s team marks an expansion into Colorado for the company, which currently has offices in New Jersey and Virginia. Learn more at quantivevaluations.com.

Dan Doran OpEd – Washington Business Journal

Quantive’s Dan Doran was recently published in the Washington Business Journal (Paywall).  Dan argues that the IRS’s so-called 2704 proposal will be hugely detrimental to family business ownership.

These regs will make it increasingly difficult to keep businesses and farms in the family – essentially the opposite of the American Dream.

“The IRS has proposed a set of regulations with the intent of limiting certain abuses in tax planning that are often used by the wealthy. They will have a devastating impact on family businesses.”

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Quantive Welcomes New Ops Chief

We’re super happy to have Rob Ratcliffe joining Team Quantive.   Rob joins us after retiring as a career Special Forces officer in the U.S. Army.  His time in the military included various commands (to include a Special Forces A-Team), as well as several years as a strategic planner.   His role at Quantive is simple: help us “Get Things Done.”  His background fits well with our philosophy of “Walk Softly and Execute Relentlessly.”

Suffice it to say he’s over qualified for his role here, and we’re humbled to have him aboard.

Learn more about Rob here.

Dan Doran Awarded Exit Planning Certification

Quantive is pleased to announce that Mr. Doran has earned the CEPA Exit Planning designation.  While Mr. Doran has been working in the field for over a decade, he feels that a commitment to ongoing education in the field is fundamental to success.

Original Press release follows.

 

Elite Business Advisors Earn Prestigious CEPA Designation

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