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2014 Year in Review
2014 Defense and Government Services M&A Trends
Buyer Composition and Heightened Activity by Private Equity PortCos
One of the most impactful trends on Defense and Government Services M&A is
the shifting buyer composition. From 2010 to 2013, activity among public buyers
declined each year while private equity and privately held strategics filled the
void. In 2014 public company activity returned to 2011 levels, representing 48%
of completed transactions, and private strategics kept pace with the prior year.
Financial sponsor activity receded dramatically in 2014, although there certainly
were many notable transactions by private equity firms and their portfolio
companies in 2014. CM Equity backed Preferred System Solutions acquired
three companies in 2014. In just one day in December, Vistronix, backed by
Enlightenment Capital, acquired three companies and throughout the second half
of 2014 Novetta Solutions and Arlington Capital completed four acquisitions.
Source: InfoBase; Capital IQ as of 12/31/13
Defense and Gov. Services Buyer Composition
49%
41%
29%
48%
11% 23%
29%
29%
40%
36%
42%
22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011
2012
2013
2014
Public Private Financial
Target Classification
Highly Valued M&A Market Segments See Increased Activity
In 2014 buyer appetite returned across a wide range of federal market segments.
IT Services and Engineering Services each garnered the most acquisitions in
2014, and Cybersecurity and Healthcare deals represented a larger portion of
closed transactions.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013
2014
O&M
Software Development
VAR / Distributor
Application Software
Data Analytics
Training & Simulation
Healthcare
Communications
IC
Electronic Hardware
Cyber Security
ISR
Professional Services
Defense Products
Engineering Services
IT Services
acquired
acquired
acquired