Timing Kills Deals: Why Government Contractors Can’t Afford to Wait

In the world of M&A, especially in the government contracting sector, the biggest threat to a successful transaction isn’t price, valuation gaps, or competition—it’s time.

We’ve seen it too many times: a strong company, great contract mix, healthy revenue, and clear demand from buyers. But a deal never gets done. Why? Because the seller waited too long. And in this industry, time doesn’t just erode value—it can erase the deal altogether.

Buyers—whether private equity or strategics—are in the business of underwriting risk. They’re willing to bet on performance, on wins and recompetes, and on execution. Diligence is meant to be ‘confirmatory’ so they can bound some of the risk.  Having data readily available, preparing for diligence and quickly responding indicate a well-organized company.  Sellers causing diligence to drag on and struggling to provide data create uncertainty for a buyer and drives them to dig deeper.  This can lead to a deal collapsing.  And the longer a company sits on the market—or stays on the sidelines entirely—the greater the risk of something going wrong.

And in government contracting, something often does.

Sellers often wait for the “perfect moment.” Maybe after the next contract award. Or when margins improve just a little more. Or when the next budget cycle hits. But that moment rarely comes as expected. Market timing is unpredictable, and in a sector tied to federal budgets, procurement cycles, and shifting agency priorities, waiting is almost always a losing strategy.

Smart sellers go to market when the fundamentals are strong:

• Revenues are growing
• EBITDA margins are healthy
• Pipeline visibility is clear with strong probability of wins
• Contract backlog exceeds annual revenue by 2x or more

It’s not about perfection. It’s about momentum.

A few things can happen when you delay—and rarely are they good:

• A key contract gets delayed, protested, or re-scoped.
• A government shutdown or continuing resolution freezes funding.
• Key pipeline opportunities are lost, delayed, or cancelled.
• Procurement reform reshapes how your customers buy.
• Your top BD executive or PM leaves.

Any of these can change a buyer’s perception of value—or take you off their radar altogether.  We had a deal under LOI and closing was within sight.  An attorney convinced our client that the deal might not close and could get a better deal if they waited.  6 months after walking from that deal, DOGE started and 3 months later they lost 50% of their value.  Strike while the iron is hot is real in M&A and not doing so can have enormous downside.

Right now, procurement reform is a hot topic. Agencies are experimenting with new vehicles, streamlining acquisition, and increasingly emphasizing small business participation. These shifts may improve outcomes for the government, but they introduce volatility for contractors.

A company that looks great today may face headwinds tomorrow if a core IDIQ is suddenly restructured or if an expected award is pulled or delayed. And once a buyer sees that risk materialize, it often becomes impossible to recover the deal.

Deals are about momentum. When performance is solid, the backlog is healthy, and the pipeline is credible, that’s when buyers lean in. Sellers who act during these moments get multiple bids, better valuations, and more options for structuring the right deal.

Waiting doesn’t just kill value—it can kill optionality. And when things turn, you may only have one buyer, one structure, and one path out.

There’s never a “perfect” time to sell. But there are good times—and they don’t last forever.

If you’re a founder or executive in the government and defense contracting sector, take a hard look at your business. If you’re growing, profitable, and performing well, don’t wait for another year of proof. The market may not be better. Your contract mix may not improve. Your buyer pool may shrink.

And in this business, as we’ve seen time and again, timing kills deals.

FOCUS Investment Banking’s Government and Defense Group works with owners and founders of government contracting firms to prepare for and execute successful M&A transactions. Contact us today for a confidential conversation about your timing, your business, and your best path forward.