Mergers and acquisitions may be as fundamental to a government contractor’s success as getting on the right contract vehicle.

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Yet, with contractors bracing for the government to reduce its spending, the question now is how will M&A activity be impacted? Will these budget reductions make acquisitions less appealing to buyers?

Will sellers be less willing to sell if they attract offers below their expectations?

Despite budget cuts, the federal government will remains an enormous and dynamic economy on its own. It spends over $500 billion annually on goods and services.

Bloomberg.com ran a recent story on how the size of this market is a primary reason why Carlyle Group and other private equity firms remain dedicated to it.

The recent acquisition of Deltek – a research firm that sells to contractors - might be a proxy for M&A activity in the government space. Its $1.1 billion price tag did garner a respectable 14 times trailing earnings.

For links to these and other stories, please go to WJLA.com/bizgov.

I’m Steve Vito of UpsonVito

Carlyle to Cerberus Lead Private Equity Federal-Contracting Push – Bloomberg.com

Fearing ‘fiscal cliff,’ investors bearish about U.S. contractors – Washington Post

Boeing exec sees defense consolidation — but not at top Washington Business Journal

Deltek Sued by Investor Over $1.1 Billion Thoma Bravo Buyout