Mergers, acquisitions important to contractors, report states

Mergers and acquisitions, an increasingly important part of federal contracting strategies, continued at a robust pace in 2005, according to a report Input released yesterday.

Input tracked 118 such transactions and discovered that:

  • More than half of them -- 63 deals, or 53 percent -- involved buyers making multiple acquisitions. General Dynamics, L-3 Communications and Lockheed Martin each had five or more acquisitions, putting them at the top of the list. Other companies making multiple acquisitions included CACI International, DRS Technologies, ChoicePoint, EDO, MTC Technologies, Northrop Grumman, QinetiQ, Science Applications International Corp., SRA International and Veritas Capital.

  • About two-thirds of the 2005 mergers and acquisitions involved the security and defense markets. Military communications, sensors and signal processing technologies were areas of particular focus.

  • Several vendors who bought firms early in 2005 became sellers later in the year.

  • More buyers and sellers are smaller companies. In the 85 transactions Input analyzed for which seller revenue figures were available, two-thirds of the sellers had annual revenues of less than $40 million. Of 20 buyers that logged multiple acquisitions in 2005, six reported revenue of less than $300 million.

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