Press Release — Federal Services M&A Transactions Continue To Surge Early in 2005

Burlington, MA and Washington, DC — March 2

The number of mergers announced year to date involving the acquisition of federal services contractors is outpacing those from last year, according to Minuteman Ventures LLC. Through February, 19 such transactions have been announced nationally, compared to 16 during the same period last year.

Minuteman Ventures is an investment bank that specializes in mergers and acquisitions (M&A) in the federal sector.

"While early," said Paul Serotkin, President of Minutemen Ventures, "the preliminary returns argue for a robust M&A environment this year as well in the federal sector."

This continues the dynamic consolidation in the federal services industry for the last several years. In 2004, 74 sector firms were purchased. The pace through February would infer 114 transactions this year.

Serotkin will be on a panel addressing the federal services M&A market at the upcoming "5th Annual Defense & Aerospace Investor & Corporate Development Conference," held March 7 and 8 at the Hyatt Regency Reston in Reston, Va. Strategic Research Institute sponsors the event.

"The factors that led to such M&A strength last year continue," said Serotkin. "Capital is attracted to the federal sector, which has been aggressively funding e-government, intelligence gathering and analysis, network-centric warfare management, modeling and simulation, biodefense and advanced communications systems. Services firms specialize in these well funded areas."

Strategic acquirers and financial buyers will continue to invest in this sector, he added. The aging federal workforce, combined with the movement to have government outsource services not 'inherently governmental,' focuses more attention on a wide range of firms able to provide needed services.

Despite the rush to merge over the last several years, said Serotkin, this remains a mature, highly fragmented market that has undergone a surge in spending in recent years ahead of historic norms.

Minuteman Ventures LLC
Paul Serotkin
phone: 781-750-8065 / 781-750-8065
HQ: Boston • Huntsville • Washington •
        Dayton • Pax River (MD)
SRI Conference
Chris Petersen
Strategic Research Institute