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ExecutiveBiz: What is your background?
Larry Davis:
I have spent my entire career working in the government contracting industry. One thing in particular that I believe has given me a significant advantage in executing great deals for our clients is my prior experience working as a financial executive on the industry side. This has given me deep insight into the business, the kind that you can only obtain actually running a business. Prior to founding Aronson Capital Partners, I was the Chief Financial Officer for a $100 million federal IT company that was ultimately acquired by DynCorp. After completing that transaction I had the good fortune to spend four years at DynCorp working M&A transactions during which time we built the nucleus of DynCorp’s $1.0 billion professional services business. Along the way I met John Saunders who was running the M&A program at DynCorp who is now my partner here at ACP. I formed ACP in 2000 and John joined me shortly thereafter. We have built a team of eight bankers and have become know as one of the leading bankers to federal contractors.
ExecutiveBiz: What does Aronson Capital Partners do?
Larry Davis:
We provide M&A advisory and corporate finance services to privately held companies. We work closely with owners of these companies to help them position their firms to create long term shareholder value. In most cases we are engaged by our clients to sell or recapitalize their business. We bring decades of transaction experience and relationships along with a disciplined process that insures that our clients maximize value in their transaction. Our industry focus has differentiated us in the market place and has enabled us to achieve outstanding results for our clients.
ExecutiveBiz: What are the hottest trends that you are tracking?
Larry Davis:
We are focusing on companies that support priority areas within the federal budget. In 2007 we see continued growth in outsourcing as the federal workforce continues to shrink. The national security and intelligence agencies continue to adapt to the realities of the war on terror and there is a need for new technology to address those challenges. Companies that can deliver new technology to solve these problems will be in high demand. I think that companies that support health care within the federal sector will see significant opportunities to employ technology to reduce overall costs.
ExecutiveBiz: What are some of the common mistakes made by companies looking to acquire or sell their company?
Larry Davis:
If you ask CEO’s I believe they would say the biggest mistake they make is trying to sell their business without an advisor. It takes a tremendous amount of intense effort to close a transaction. A typical transaction can take from 4 to 6 months. We are often contacted by owners who have gone down the road after being approached by a buyer and end up not completing a deal. They spend many months and dollars, loose focus on their business, and then have nothing to show for it. A good advisor will manage the process to mitigate these risks and insure that events occur in the proper sequence so that a meeting of the minds is hammered out early in the process.
ExecutiveBiz: What's your outlook for 07 for M&A activity in the government contracting space?
Larry Davis:
I see M&A activity continuing at a brisk pace in 2007. As organic growth continues to level off, the pace of consolidation should increase. Valuations for well positioned, privately held companies should remain at high levels. Companies that provide mission critical services to the intelligence community, particularly in the areas of intelligence collection and analysis will be highly coveted as acquisition targets. In addition, we expect strong interest and valuations for companies that provide technology to support the war on terror both on the battlefield and at home.
ExecutiveBiz: How important is culture when looking to buy a company?
Larry Davis:
When you are running a professional services business, culture is everything. Growing a business in this industry is all about recruiting and retaining the best people. It is extremely important to understand and plan how you will integrate an acquired business before making an acquisition.
ExecutiveBiz: What advice would you give founder/CEOs when looking to sell their company?
Larry Davis:
For most CEO’s they are only going to sell their business once, so don’t go at it alone. A good banker will add significant value to a transaction by not only negotiating a good deal, but will allow management to focus on running the business. There is a lot more to a transaction than just price, a good advisor will insure that the terms and conditions are negotiated in a competitive atmosphere to insure a favorable deal. Advance planning is key to a successful outcome, so engage an advisor well in advance of a transaction. Get the benefit of their insights and experience to deal with issues and problems before going to market. This will substantially increase the likelihood of completing a transaction. Lastly, a well executed, discrete, competitive process will provide assurance to an owner that they are receiving fair value for their life’s work.
ExecutiveBiz: What is something most people don't know about you?
Larry Davis:
I am passionate about working to help kids who have not been dealt a fair hand in life. I have been channeling those energies into Hearts & Homes for Youth a non-profit organization whose mission is to serve youth who are neglected, abused, homeless or otherwise at risk. I believe it is incumbent upon the business community to reach out through organizations like Hearts & Homes to insure that our children have an opportunity to become productive members of our community and have the means to enjoy life.
For more information about
Aronson Capital Partners, visit
www.aronsoncapitalpartners.com.
Interview with Larry Davis conducted by JD Kathuria.
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