Greg Woodford and Greg Nossaman, founders of G Squared Capital Partners, were recently featured in MergerMarket’s analysis on “Coronavirus M&A pause thawing in US government cloud services” published on July 9, 2020. Woodford and Nossaman weighed in on current M&A activity, noting that middle market sell-side processes are resuming with strong buyer interest and attractive valuations. There is also particular interest in specialized companies with less than $250 million of revenue as buyers seek to position themselves in priority markets.
In the article, G Squared also noted the reemergence of buyers in the last six to eight weeks that are actively looking for deals. As Nossaman said in the article “‘Oddly enough, it seems that we are potentially receiving more interest in certain transactions than pre-COVID.”
There are numerous factors that can be contributing to this reemergence in activity. Nossaman noted one interesting twist that has brought potential sellers to enter the market:
“the pandemic slowed down the procurement of many government contracts, and firms are winning extensions because of it, some even past their initial award period. That’s driving companies to market, too, he said, because revenue from their contract backlog ‘looks good.’”
Another factor that was discussed is the looming presidential election and uncertainty of the Federal budget.
“For now, the federal government is operating under a fully approved budget, not just an interim measure like a continuing resolution, Woodford noted. ‘The federal budgets are really good right now and the federal government is a good spending source,’ Nossaman said. But that visibility may not last. Nossaman noted the major stimulus package following the 2008 financial crisis caused budget problems down the line that eventually decreased discretionary spending. Business owners today are “using the roadmap of 2010 through 2013 as sort of a guide for what they think they should be doing now,” he said.
G Squared also touched upon how the demand in the space is allowing valuations to hold.
“Nossaman of G Squared said deal pricing reflects an industry that has remained resilient during COVID-19. The pandemic has started to prove that the government can achieve optimization and cost savings with cloud technology, Nossaman said.”
To read the full article click here:
https://www.mergermarket.com/intelligence/view/intelcms-mjsv94 or if you would like to discuss these topics in more detail with G Squared, email Libba at firstname.lastname@example.org.