The pace at which government contractors are engaging in mergers & acquisitions has increased notably in recent years, as a stream of recent stories in the Washington Post and New York Times have reported.
The acquisition of a government contractor frequently provides the buyer an opportunity to increase its market share and/or strengthen its capabilities in an existing industry. The acquisition may also allow the buyer to develop and market a new government contracting capability that was previously lacking from its portfolio.
In the past few months alone, several multi-billion-dollar acquisitions within the government contracts sector have been announced. For example, in September 2017, Northrup Grumman announced it would acquire Orbital ATK, a rocket and defense contractor. Orbital will bring new capabilities to Northrup’s portfolio, including a missile defense business line and the ability to launch rockets that carry satellites into space. The deal, worth $7.8 billion, will also allow Northrup to bolster its existing satellite capabilities.
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