Transaction Advisory, M&A & Restructuring

Unusual terms, conditions, and clauses in government contracts present unique risks and opportunities for buyers requiring due diligence by experienced government contracts professionals. Regulations such as FAR and CAS impact financial accounting and earnings estimates (e.g., revenue recognition, management accounting estimates, liabilities) for targets. Federal government customers normally retain unique powers and rights of action that require government contracting knowledge to evaluate acquisitions properly. Adverse findings from federal government audit organizations (e.g., DCAA, GSA OIG, DCMA) and fines, penalties, suspension, debarment, and loss of key employees can significantly impact a target company’s perceived value.

Subcontractor flow-down provisions, intellectual property rights, and contract novation rules unique to government contractors can also complicate the due diligence process. Ethics and conflict of interest rules can have unintended impacts on integration, potentially impacting transaction value.

What We Do

• We perform government contract due diligence and analyze quality of earnings, considering government contracting issues and implications. We advise buyers and sellers regarding contract compliance, cost, pricing, and administrative issues that may impact deals.
• We develop external restructurings, enabling contractors to consolidate and restructure to reduce operating costs. We help our clients comply with the unique government contracting requirements governing the evaluation and approval of costs related to restructuring activities.
• We help organizations undergo successful integrations, thereby improving accuracy, effectiveness, and efficiency, and help redesign processes and systems to realize the improvements and reduce redundancy.