KippsDeSanto is pleased to share its first annual survey of mergers and acquisition (M&A) activity and sentiment in the Aerospace/Defense and Government Services sectors.
In this study, we asked key dealmakers from relevant sectors to share their predictions about M&A deal activity and valuations over the next year. We also asked them to share their insights on strategic drivers of M&A activity and the impact of recent events, including 2017’s tax law changes and the Trump administration.
Respondents are very optimistic about the overall economy and M&A activity in the near- to medium-term. They expect activity levels and valuations to increase in 2018 due in part to the December 2017 tax law changes and greater budget visibility.
For media, please view the Press Release.
Ten Consecutive Years of “Top Deals”
TYSONS CORNER, VA. (April 24, 2018) — KippsDeSanto & Co., the largest investment bank exclusively focused on the aerospace / defense and government services sectors, announced that five of the mergers and acquisitions (M&A) transactions the firm supported in 2017 were recognized in Washington Technology’s annual ranking of “the best deals of 2017” in the government market.
According to KippsDeSanto, the firm represented clients in three of the eight “Top Deals” of 2017 and, overall, five of the 16 “Best Deals of 2017” as determined by Washington Technology. This brings the total to 19 KippsDeSanto transactions recognized by Washington Technology since 2012, and marks the 10th year in a row that deals advised on by the firm have been recognized in the annual rankings.
“There were over 100 transactions in the government market in 2017,” said Co-founder and Managing Director Bob Kipps. “We are extremely proud that so many of our clients were acknowledged as participants in the leading transactions in the industry. It is a true testament to the quality of company that hires KippsDeSanto to advise them on their M&A transaction.”
The recognized KippsDeSanto deals represent a complete set of M&A transaction alternatives, including selling on behalf of private equity clients (DFW Capital Partners and Lake Capital) and privately-held clients (InfoReliance); supporting a merger of private companies (Dominion merging with TeraThink); and selling to a private equity group (H.I.G. Capital) and private equity-backed platform companies (Salient CRGT and ECS Federal).
“These efforts show our entire team’s dedication, creativity and investment in our clients,” Kipps said. “We have built our organization and honed our approach to be a key partner for the best companies in the industry.
“We anticipate 2018 to be another strong year for M&A in the government market and for our firm, as we have already closed or announced seven transactions in the first quarter of 2018,” Kipps added.
About KippsDeSanto & Co.: Founded in 2007, KippsDeSanto & Co. is an investment bank of 25 professionals 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 www.kippsdesanto.com.
KippsDeSanto & Co., a leading aerospace / defense and government technology solutions investment bank, would like to share its thoughts on the “Top 10 M&A Deals of the Quarter” for the period ended March 31, 2018. The following table is our take on the most notable announced M&A transactions — not only based on size, but also on strategic importance and / or impact.
Of the above transactions, the following were especially noteworthy:
The aerospace / defense deal of the quarter is TransDigm Group’s acquisition of Extant Aerospace. The proposed acquisition is worth $525 million, or more than 6x fiscal year 2018E pro-forma revenue. Aircraft aftermarket sales are expected to drive 80% of Extant’s 2018E revenue, with a majority of revenue derived from the military end-market. The company licenses or acquires aftermarket products form aerospace and defense original equipment manufacturers, and then provides maintenance and support for these products throughout the rest of its useful life. Extant support various military aircraft platforms such as the F-16, AH064, F-18, F-15, and C-130. Its commercial platforms include the King Air series, MD 900 / 902, B747, B757, and B777 as well as various business jets. TransDigm expects the acquisition to provide significant opportunities for growth and believes that Extant’s unique business model will be a natural fit within its aftermarket-focused value generation strategy. TransDigm plans to finance the acquisition through a combination of cash on hand and its existing revolving credit facility.
The government technology solutions deal of the quarter is General Dynamics’ (“GD”) announced acquisition of CSRA. The proposed transaction is worth approximately $9.9 billion, or 11.7x LTM EBITDA. Recently, GD increased its original February 12th offer of $40.75 per share to $41.25 after CACI made a counter bid on March 18th for $44 per share in cash and stock. GD ultimately prevailed in the bidding war because its offer was all cash, unlike that of CACI’s, which consisted of cash and stock. CACI’s stock traded down approximately 7% the week after their counter-offer was made public, making its offer less compelling given the stock component. The deal highlights sector buyers’ continued focus on increasing scale and next-generation IT (“NGIT”) capabilities via M&A. Following the acquisition, GD’s federal IT business will generate nearly $10 billion per year in revenue. This will make GD the second largest government contractor, slightly behind $10.6 billion Leidos, which became the largest government IT and services contractor through its merger with the former Lockheed Martin IT business in 2016. General Dynamics and CSRA have received clearance from anti-trust officials, and the deal is expected to close in the first half of this year.
(1) KippsDeSanto & Company is not affiliated with any other company mentioned herein
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KippsDeSanto & Co.
8000 Towers Crescent Drive, Suite 1200
Tysons Corner, VA 22182