Meet Jean Stack, Managing Director of Aerospace, Defense, and Government Group at Houlihan Lokey. Stack told WashingtonExec what she thinks will occur in the federal contracting space over the next several years, keeping budget constraints as well as buyer sentiments in mind.
Jean Stack’s thoughts on government contracting in 2012 and beyond:
– The lack of clarity in federal spending will continue until 2013 at the earliest. However, there will be opportunities for contractors willing to embark on bold strategies to maintain a competitive edge – whether those strategies center around pricing, solutions orientation or IP differentiation. Contractors will need to find a differentiated approach to move the government away from awarding contracts based upon the low cost, technically acceptable bid. In addition, in a tougher budgetary environment, we’ll see increasing government adoption of commercial technology.
– In 2012 we’ll see the re-emergence of the mid-tier contractors that don’t face the same exposure to defense budget cuts and can be more agile, nimble and cost competitive than their larger competitors.
– M&A in 2012 will prove to be more of an art than a science. With more cautious buyer sentiment, companies will need to be able to articulate their unique value proposition and distinguished characteristics. While high growth companies will continue to get deals done at premium prices, moderately growing companies will need to be more thoughtful and diligent in market positioning. Ultimately contract vehicles, defensible and proven IP, and priority customers, with thoughtful preparation and positioning, will drive premium valuation.