Do you have a government contracting business for sale? Issues of Concern
If you have a government contracting business for sale, what are the important issues for you to consider?
Are you a small business owner looking to sell your company that has government contracts? Or maybe you’re interested in buying a government contracting company but need legal oversight to navigate the complex federal regulations?
Our government contracting legal oversight services can provide you with the guidance you need during the sale or acquisition process. We help clients in government contractor mergers and acquisitions and have extensive experience with contract novations and specific federal issues.
With our help, you can ensure a smooth and successful transaction that adheres to all necessary legal requirements. We understand the unique challenges that come with government contracting and can help you navigate any obstacles that may arise.
Don’t let legal issues hold you back from selling or buying a government contracting company. Contact us today to learn more about our services and how we can help you achieve your goals.
Selling a government contracting business requires careful consideration of various factors to ensure a smooth and successful transaction. Unfortunately, in the government contracting space, there is more to consider than just commercial-type transactions.
Whether you are ready to move on to new ventures or simply looking to capitalize on your hard work and years of government contracting, it is crucial to address certain aspects before proceeding with the sale or purchase. By paying attention to these key points, you can navigate the merger or acquisition process more effectively and maximize the value of your business.
1. Evaluating the Value:
Before listing your government contracting company for sale, or acquiring a company with government contracts it is essential to determine its fair market value. This involves assessing various factors such as revenue, profit margins, client base, the types of government contracts the company has, the reputation of the company and its past performance, and intellectual property. Engaging a professional business firm with expertise in government contracting can provide a general assessment that reflects both tangible and intangible assets. Without a deep understanding of the types of contracts, the current time of those contracts and other procurement considerations, it will be misleading and difficult to pinpoint the likelihood of future income.
2. Contract Novation Considerations:
Contract novation is a crucial aspect to evaluate when selling a government contracting business. Novation refers to the legal process of transferring existing contracts to the buyer, ensuring a smooth transition and uninterrupted project execution. Understanding whether a contract novation is necessary depends on several factors, including contract terms, agency requirements, whether the contracting officer believes a novation will be in the government’s best interest ( there is no guarantee that the government will approve a novation), and the buyer’s capability to perform the contracts. Government contracting regulations, unlike commercial sectors, have a specific set of requirements. Our government contract lawyers help companies through the entire process.
3. Government Contract Novation Requirements under the FAR:
Under the Federal Acquisition Regulation (FAR), specific guidelines govern contract novations. Familiarizing yourself with these requirements is essential to facilitate a seamless transfer of contracts during the acquisition or sale of a government contracts company. The FAR outlines criteria such as obtaining consent from the contracting officer, submitting detailed documentation, and ensuring the buyer meets all necessary qualifications.
4. Buyer’s Concerns when Acquiring Government Contract Entities:
If you are considering buying a government contract entity, it is important to address certain concerns. Conducting thorough due diligence is vital to assess the target company’s financial stability, current compliance with government regulations, contract performance history, pending litigation or disputes, and any potential contractual liabilities. Engaging legal and financial professionals with expertise in government contracting can help you navigate this complex process.
5. Merger or Acquisition Considerations for Small Business Contracts:
If you are acquiring a company with small business contracts, additional considerations come into play. The Small Business Administration (SBA) imposes specific rules and regulations for the acquisition of small businesses with government contracts. These regulations aim to protect the interests of small business contractors in the HUBZone Program, in a current mentor-protege relationship, or maintain SBDVOSB status, and prevent the potential loss of socioeconomic benefits. Understanding the SBA’s rules and ensuring compliance is crucial to avoid any pitfalls during the acquisition process.
6. Seek Professional Assistance when Selling a Government Contracting Company:
There are more serious issues to consider beyond the traditional merger or acquisition of a company with government contracts. Selling a government contracting company involves complex negotiations, legal requirements, and due diligence procedures. To ensure a successful sale and mitigate risks, seeking professional assistance is highly recommended. Engaging experienced consultants or professionals with knowledge of government contracting and can help oversee the entire operation, guide you through the process, and increase the likelihood of a favorable outcome.
7. Are you buying or selling a small business that has government contracts? What issues should you be aware of?
When considering the purchase or sale of a small business that has government contracts, it is important to understand how those contracts may be affected in the transaction. As a buyer, you should thoroughly review any existing and pending contracts to determine whether they will remain in force or need to be renegotiated. You must also consider the impact on current staff personnel and any subcontracts in place. The biggest concern for buyers is the stability of current contracts and whether those contracts will continue to generate revenues after the sale. These are all issues that brokers will struggle with.
In conclusion, selling a government contracting business requires careful planning and consideration. Evaluating the value of your business, understanding contract novation requirements, addressing buyer concerns, and complying with relevant regulations are essential steps to take. By seeking professional assistance and following the necessary guidelines, you can navigate the selling process with confidence, maximize the value of your business, and facilitate a seamless transition for both yourself and the buyer.
For professional help going through the acquisition or sale of a government contracting business, give Watson & Associates, LLC government contract lawyers a call at 1.866.601.5518 and speak to Theodore Watson.