17 Factors That Determine Value for the Buyer
In the Acquisition of a Government Services Firm

BCSI uses these 17 factors to identify strengths and weaknesses in your company as the basis for an action plan that will substantially increase its value in the market. In addition, we use these factors to evaluate and compare target acquisition candidates.

Growth. Sustained growth is highly valued by acquirers, especially publicly-traded firms. A 5-year Compound Annual Growth in Revenue (CAGR) over 15% is considered favorable.

Profitability. Profitability is a major factor in value. Values typically range from 4X to 10X EBITDA.

Balance Sheet. Adequate working capital, short cash cycles, few if any contingent liabilities, and a simple equity structure are valued. Current Ratio of 1.5 is considered average in the industry.

Contract Backlog. Multi-year contracts are valued highly. Funded backlog more valuable than unfunded. IDIQ contracts are of limited value. Multi-year contract backlog >5X annual revenue is considered good.

New Business Pipeline. Long client relationships, cross-selling opportunities, and a history of winning recompetes are valued highly. Pipeline management processes that accurately project future bookings are valued highly.

Prime Contracts. Prime contracts valued more than subcontracts. >70% revenue from primes is desirable.

Services Offerings. High-end services are valued higher than management, admin, or low-tech services

Business Focus. Substantial clients and credentials in a few areas is preferable to having scattered clients.

Client Mix. Multi-year contracts with clients with firm budgets and future requirements are valued highly.

Contract Vehicles. Prime contract platforms that can be used for multiple purposes are valued highly.

Client Retention Record. A history of winning consecutive contracts with the same clients is an indicator of customer loyalty and adds value.

Meeting Budget. Ability to predict and meet annual budget/indirect rates improves profitability and value.

Overall Size. Other factors being the same, higher annual revenue receives a higher EBITDA multiplier.

Management Team. Depth and quality in the management team, and a well- understood vision of the company=s strategic direction and succession plan are valued highly.

Intellectual Property. Technologies, patents, unique processes, software, etc. and their proven ability to generate revenue in addition to direct labor adds significant value to the company.

Security Clearances. High percentage of staff with security clearances is sought after in acquisitions. Top Secret/SBI clearances valued more highly than Secret clearances.

Contingencies. Eliminating (or reducing) contingent liabilities from the Balance Sheet is essential in reducing the risk of an acquisition. Contingent liabilities reduce value.

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