Aronson Capital Partners has published a short report on the state of Government focused private equity. While broad market buyout volume declined 35% during 2009, the pace of deals is increasing in the Government Services sector. In fact, “Over the past twelve months, private equity groups have invested in 27 companies with a significant federal services presence, compared to just eleven over the prior period.”
Highlights include a continued focus on deployment of a platform model for sector-targeted investment strategies, namely in the areas of cyber-security and intelligence (i.e. NISC, Harding Security Associates). In the past year, PE investors have created 13 new Government Services platforms. However, of these only 3 came from traditional Defense/Government investors like Veritas and GTCR. New entrants include firms like Relativity Capital (MHF Services), Harrison Street Capital (MCR LLC), and Global Equity Capital (Halifax Corp.), among others.
Finally, the report ends with a tidy summary of exactly why we think the Defense & Government Services market is such an attractive area of private equity investment: