Mergers & Acquisitions

Our attorneys will be participating in a panel discussion on unique M&A issues in government contracts. The panel will address key M&A issues, including due diligence, differences in transactions with public and private companies, and solutions to common government contracts issues.

Sylvia Yi will moderate and Todd Overman will be a panelist for this event that will be held at Wiley Rein in Washington, D.C.

EVENT DETAILS:

Continue Reading Event: Due Diligence and Unique M&A Issues in Government Contracts

Recently, Bass, Berry & Sims co-hosted (along with investment banking firm Bluestone Capital Partners and accounting firm BDO) a CEO panel discussion on “Building Shareholder Value in the Mid-Tier.”  Panelists included Chris Coleman, CEO of LookingGlass Cyber Solutions. Paul Leslie, CEO of Dovel Technologies. and Julian Setian, CEO of SOS International. Tim Garnett of The Avascent Group delivered a keynote presentation. The focus of the event was to discuss strategies for middle-market government contractors to build value for shareholders.

Continue Reading Growth Strategies for the Middle Tier

On June 23, 2016, the General Services Administration (GSA) released a final rule that will result in the most significant change to the GSA Federal Supply Schedules (FSS) program in the last two decades. 81 FR 41103 (New Rule). The New Rule introduces a transactional data reporting element to the FSS program, effectively replacing the current requirements relating to Commercial Sales Practices (CSP) disclosures and the Price Reduction Clause (PRC).

Under current FSS regulations, contractors are required to submit CSP disclosures with their initial offer for a FSS contract, which includes a broad disclosure of discounts the contractor offers to commercial customers for similar products and services. The CSP disclosures are used to identify a “tracking customer,” which consists of a customer or category of customers that will be tracked to identify pricing discounts to GSA customers. The PRC requires the contractor to monitor its ongoing commercial sales to ensure that the government receives the same price reductions given to the “tracking customer.” Through the New Rule, GSA is replacing the CSP disclosures and PRC requirements with a different method of award monitoring: transactional data reporting.

Continue Reading Major Changes to GSA’s Federal Supply Schedules Program

Recent mergers and acquisitions activity among government contractors has been frothy, especially in the government services sector. What has been driving all the activity? Elevated stock prices and readily available credit has certainly accounted for some of it, at least until the recent decline of capital markets at the end of 2015 and thus far in 2016. However, even with the capital markets decline, there are macro trends specific to government services that at least partially counteract the decline of the broader market and cause many in the sector to remain relatively bullish on continued M&A activity.

The most important of these macro trends are contract vehicle consolidation and a shift toward low price-technically acceptable (LPTA) awards. During President Obama’s term, in the name of budgetary concerns, the administration has worked with agencies to reduce the number of federal contracts by consolidating contracts into fewer and larger vehicles. Mid-sized government services players need to grow larger to be able to continue to compete for these larger vehicles. They often seek growth by acquiring other contractors with sought-after, differentiated capabilities and deep customer relationships. Buyers are choosy when it comes to acquisitions, and contract consolidation has made it more difficult to accurately analyze whether a target’s contracts will be eliminated altogether or consolidated into a larger vehicle. This makes valuations a challenge, which helps explain why we see a fair number of earn-outs based on renewals of specific contracts. However, companies with coveted prime positions on full and open contract awards with a good backlog can find themselves highly desired targets.

Continue Reading Will M&A in Government Services Continue to Outperform?

Bass, Berry & Sims attorney Todd Overman authored “Ten Unique Issues to Consider When Buying or Selling a Government Contractor,” outlining 10 helpful tips unique to acquisitions involving government contractors. The areas discussed include:

  1. Structuring the transaction – stock vs. asset purchase?
  2. How to deal with a corporate conversion
  3. Novation tips for the unwary
  4. Will the seller lose its small business set-aside or 8(a) contracts?
  5. Assessing organizational conflict of interest risk
  6. Accounting and business system compliance
  7. What happens to classified contracts?
  8. GSA schedule contract compliance
  9. Optimizing seller’s intellectual property
  10. Managing change of control communications

The full article, “Ten Unique Issues to Consider When Buying or Selling a Government Contractor,” was published by Bloomberg BNA’s Federal Contracts Report on November 17, 2015 and is available online (subscription required).

In a couple of days, I’ll be headed north to Montreal, Canada, to join leading aerospace and defense investment bankers and advisors at the 2015 Fall Meeting hosted by the International Law Section of the American Bar Association. I’ll be speaking at “Headaches and Hot Spots: A Review of the Changing World of M&A in the Global Aerospace and Defense Industry.” Over the past year, there have been major industry consolidations, mergers and transformation initiatives in North America, Europe and Asia, trends which will be highlighted during this session. In addition, it will focus on the role counsel plays in shepherding M&A during tough times.

The 2015 Fall Meeting will be held on October 20-24, 2015 in Montreal, Canada at Fairmont the Queen Elizabeth.

I’m heading to Oak Ridge, Tennessee again next week to present “Preparing Your Government Contractor for Sale: How to Maximize Value and the Importance of Internal Controls” with Ted Hotz of Pugh CPAs.

Join us on Tuesday, October 13 from 11:30-1:30 at the Oak Ridge Chamber of Commerce (1400 Oak Ridge Turnpike).

Why should you come? In the last twelve months, transactions in the defense and government services sector have increased in volume by almost 30%, with deals ranging from billion dollar combinations to numerous tuck-in acquisitions. Despite the recent years of federal budget belt-tightening and continued budgetary uncertainty, there is no indication that this trend has reached its peak. Businesses with unique technologies, service capabilities, good internal controls and strong customer relationships are potential targets.

To register, visit the Oak Ridge Chamber of Commerce website.

Next month I’ll be headed back to Tennessee for a few days and making a couple of stops! I’m excited to be teaming up with UT PTAC for its Advanced Training Executive Series. The training will be centered around the topics of teaming agreements and joint ventures, and feature a dynamic group of panelists. The first stop will be in Oak Ridge on August 12 at the Oak Ridge Chamber of Commerce and then onto Nashville on August 19 at the Tennessee Bankers Association. If you are in the area, it would be great if you could join me!

To register for the Advanced Training Executive Series:
Oak Ridge Event Registration | Nashville Event Registration

I am participating on a panel discussion in the upcoming American Bar Association webinar, “Key Issues in Government Contractor Mergers and Acquisitions.” The webinar will be Thursday, February 12 from 1:00 – 2:30 p.m. EST.

Listeners will learn best practices for conducting business transactions when government contractors are involved. The panel will address the following questions:

  • What is the current state of the government contractor M&A marketplace?
  • What risks and opportunities are presented by contractors with small business set-aside contracts?
  • What are the unique diligence issues often seen in deals involving government contractors?
  • How should parties deal with foreign investment and/or foreign operation and control of U.S. based government contractors?
  • What are the best practices for transactions involving classified contracts?
  • How should parties avoid common traps associated with novation and other change of control requirements?

In the November 2014 issue of Contract Management magazine, I wrote an article titled “Preparation is Key to a Successful Novation” that outlines how companies can successfully transfer a federal government contract through a process called novation. In the article, I describe the common problems that can arise in the novation process and how best to resolve them. To read the full article, click here.