Government contracting M&A update

Read more about M&A trends and activity in this sector

Sector highlights

Market Commentary

  • The federal market continues to be a hedge against broader economic market uncertainty and volatility due to its stable customer base, strong funding dynamics and clear revenue visibility characteristics.
  • While the broader S&P 500 dropped more than 20% in the first half of 2022, Government Services companies generated a 4.9% return. Similarly, S&P 500 valuations dropped from nearly 17.0x at the beginning of the year to 12.3x while Government Services IT valuations remained steady at ~12.0x EBITDA.
  • While down from the 2nd half of 2021, 1st half 2022 Government Services M&A deal volume remained strong with 71 deals, more than the first half of last year.
  • 1st half deal mix was a balance of Strategic, Platform and Bolt-On transactions with 5 notable new platforms and 3 platform exits.
  • New fundraising efforts by traditional government-focused private equity players validates their thesis about successfully buying, building and exiting while providing capital to drive future deals.

Government Services M&A Activity

Government Services Deals - by Buyer Type

Government Services Deals - by Seller Type

Government Services PE Platforms – by Vintage Year

We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.


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