Expertise Beyond the Numbers

Innovation and Insights Driving Government Contracting – SC&H Group Hosts 2nd Annual GovCon Summit

Government contracting leaders and executives from across the region gathered earlier this month to discuss the ever-shifting industry landscape at the 2nd annual GovCon Summit. Hosted by SC&H Group in partnership with Spectrum Careers, the event’s key function was once again to help the Mid-Atlantic’s large number of government contractors focus on the most important topics the industry faces today.

The GovCon Summit’s chief topics this year were panel discussions on mergers and acquisitions (M&As) and capital markets, and an analysis on the state of government contracting in an election year. The powerful discussions and informative sessions at the summit enable industry leaders and executives to stay plugged in to the constantly evolving and shifting landscape of government contracting.

Leading the M&A and Capital Markets panel discussion was Pete Ragone, Audit Director of SC&H Group, who held a lively discussion on the increasing importance of due diligence, organizational transparency, and when to start preparing to sell. Rounding out the panel of experts was Former Co-Founder and CEO of Germane Systems, Kerry O’Brien; Partner at Womble Bond Dickinson, Dean Rutley; Partner at Enlightenment Capital, Jason Rigoli; Chairman and CEO of IIA Technologies Corp, Jeanette Lee; and EVP and General Counsel at MAG Aerospace, Michael Taylor.

On the important topic of due diligence, the panel stressed the need for hiring outside help in the form of M&A consultants and insurance brokers. Due diligence is a critical aspect of the M&A process, and the panel iterated numerous times not to overlook or underestimate its importance, claiming nobody wants to purchase a company and uncover issues and have to go through litigation. It’s better to uncover problems early on than late in the sale process – for both buyer and seller.

Trust and transparency are significant factors during an M&A, particularly when the due diligence process is underway. As a seller, it’s important to work hand in hand with the purchaser. The panelists discussed how not being forthright with information and not providing the buyer with access to key people has a negative impact on the sale. In fact, they even argued it looks like the seller is trying to hide something when this happens. Transparency is in the best interest of everyone involved, on both sides of the deal.

One of the most talked about subjects of the M&A panel was when a business or business owner should begin the process of selling, and the surprising answer was from the onset of starting the business or taking over the executive role. The reasoning behind this was you never know when another business might be interested in buying, and being prepared and ready for a sale is one of the most important things you can do to ensure the sale goes as smoothly and effectively as possible. Begin talking with the necessary parties – tax accountants, consultants, M&A experts, and lawyers – approximately a year in advance of when you hope to ultimately sell. Undertaking steps early in the process can be majorly influential on how well and how quickly the deal goes through.

Leading the panel discussion on the state of government contracting in an election year was Robert Terry, a Senior Writer with the Washington Business Journal. Terry discussed tax reform and political uncertainty with a panel that included the COO of Technica Corporation, Lisa Trombley; Partner of Womble Bond Dickinson, Gary Campbell; Chief Legal Officer at Garda World, Mark Dewitt; and Co-Founder of Blue Delta Capital Partners, Mark Frantz.

On the topic of tax reform, the panel appeared to be in agreement that recent changes to the tax law that took effect at the beginning of the year were starting to show positive results for companies. In the government contracting industry, budgets are beginning to increase, which means more room for more contracts. Further, the panel discussed that for the first time in quite a long time, the industry, and other industries as well, have a pretty strong roadmap laid out to follow when it comes to taxes.

While not everyone is able to agree on what may or may not happen as a result of the upcoming election, one thing everyone could agree on was the level of uncertainty surrounding the midterms. Geopolitical situations normally play a key role in the duration and success of government contracts, and if there’s a shakeup in the House of Representatives, there’s a possibility current projects could be impacted. Partisanship can, and does, stop agendas from being realized, which means if there is to be a shakeup of power following the elections, disagreements on policy could adversely affect current and future contracts.

Preparing your company’s succession plan and navigating times of uncertainty in an election year requires partners to lead the way. SC&H Group strives to provide the insight and expertise the government contracting industry needs to thrive and be successful. We encourage you to reach out if you have any questions and hope to see you at our next GovCon Summit in 2019.