It’s been quite a year for government contractor mergers and acquisitions. Not at all the kind of year we expected, of course. But one that we’re moving through together (and apart).
Following a deluge of deals in January and February, COVID-19 brought many business activities to a halt – including M&A transactions for government contractors. Since then, there’s been movement leading to a strong Q3.
As our friend Jean Stack, managing director at Baird Global Investment Banking, urges, “Be prepared, so when the window opens and the timing is right, you’re ready to go.” And the windows are starting to open, with trends showing an energetic Q4.
So, here are some key recommendations for government contractors to prepare now for a future M&A.
#1 Start at least one year in advance – and more visibility is better!
Though there are now (and always have been) tons of competing priorities, staying visible in the market is more important than ever.
- Social Media: Keep your company and your personal social media active to show you are engaged. Invite key contacts to connect, including execs at target agencies, industry and financial analysts and M&A advisors. Reach out to new and existing colleagues on LinkedIn to build the number of your connections and the quality of your relationships.
- Virtual Events: After a swath of cancellations, trade show and event organizers are figuring out how to deliver virtual events in a way that benefits sponsors, exhibitors, speakers and attendees. The rich fall schedule offers the perfect time to experiment with virtual event networking and exhibiting, to learn what works for you and your organization. Again, stay visible. Buyers are watching.
- Press Releases: As we noted earlier this year, “Even smaller news and contract wins are reaping tremendous press interest right now!” If you have good news, share it. Make sure you publicize contract wins, executive hires and promotions, program milestones, new offices, new solutions, awards and other hard news. Be strategic about your distribution for each piece of news; don’t just blast it out. The right strategy can provide valuable reporter interviews, giving you time and space to tell your company story and make you more attractive to more buyers. And you can never have too many buyers! More buyers means more leverage.
#2. Keep Communicating with Your Workforce
Your workforce is an essential asset in any M&A transaction, so be sure to communicate with employees about what’s happening with the business and how they can continue to contribute.
- Internal Communications: Zoom meetings, executive emails and video updates can help to keep personnel informed and involved.
- Employee Engagement: Activities such as virtual social lunches, diversity and inclusion webinars, and virtual Take Your Pet to Work days can reinforce your personal connections to employees while showcasing company culture. Culture is also important to buyers.
- Wellness Check-Ins: With the turmoil of COVID-19, political unrest and social inequities in the headlines, many employees are feeling unsettled and anxious. Use wellness check-ins to monitor the health and well-being of employees and to target extra support where needed.
#3 Improve Operational Excellence
Once you’ve decided on an M&A, it becomes even more important to strengthen your operational resilience.
- Leadership Team: With fewer business trips, execs are more accessible this year. It’s a good time to build individual executive leadership skills, strengthen team dynamics and add or replace key senior execs to lead the company through your next stage of growth. Sharp buyers notice when exec teams are being built, especially around a well-known successful M&A exec and/or CFO.
- IT Operations and Cybersecurity: Mass work from home pushed many to shore up their IT operations and protocols, to ensure that employees can effectively – and safely – support clients from home offices. Remember to keep employees aware of the many COVID-19 scams created by cybercriminals to target company, client and employee private information.
- Contract Compliance and Cost Accounting. If you’re delivering services differently than you did at the start of the year, be sure your contract and accounting advisors are guiding how you capture your new costs and contract deliverables. It’s important to get this documentation right now, to avoid a future M&A financial audit that raises concerns.
#4 Monitor and Pursue Business Opportunities
Nobody knows exactly what our “new normal” will look like a year from now. It is likely, though, that it won’t be the same as our “old normal”. Many of the business changes introduced this year will become best practices in the future.
Look for new business opportunities that emerge in the wake of these 2020 disruptions. Introduce new products, services and/or partnerships to be in an even stronger position later.
Historically, the government market has been stable, which is why so many investment banking firms have included GovCons in their portfolio. That stability has become even more important to buyers during this pandemic.
I hope you’ve enjoyed what you’ve read so far. As you can tell, we’ve handled internal and external communications for dozens of transactions. So if you’re looking for communications support from a PR firm that has expertise in both government contracting and M&A communications, please let me know. I’d consider it an honor to support you through this exciting adventure.