Episode 145: S12E3 GovCon M&A Explained: Novation, Set-Asides & Deal Drivers in 2025

GovCon M&A Explained: Novation, Set-Asides & Deal Drivers in 2025

In this episode of The Blackletter Podcast, host Tom Dunlap sits down with Wright Lewis, partner at Dunlap Bennett & Ludwig, to break down the unique challenges of mergers and acquisitions (M&A) in the government contracting (GovCon) space.

Unlike traditional M&A, GovCon deals involve regulations, set-asides, security clearances, and novation requirements that can make or break a transaction. Wright shares expert insights on what contractors, buyers, and sellers need to know before heading to market.

Key topics covered:

• GovCon M&A vs. traditional M&A – why stock purchases dominate and how novation impacts deals.
• Handling facilities clearances and personnel clearances during acquisitions.
• The role of set-aside contracts (8(a), WOSB, SDVOSB, etc.) and how they affect valuations.
• Organizational Conflicts of Interest (OCIs) and how to manage them in due diligence.
• Market uncertainty from DOGE contract terminations and SBA rule changes.
• Which sectors are rising in value (AI, cyber, defense, intelligence) vs. which are under pressure.
• Strategic advice for GovCon sellers:
  1. Market timing around set-aside expiration deadlines.
  2. Diversifying contracts and clients to reduce risk.
  3. Maximizing backlog and margins before going to market.
  4. Making yourself redundant as a seller to increase buyer confidence.

Wright and Tom also touch on earn-outs, revenue concentration risks, and why buyers are inserting new protective clauses into GovCon transactions in today’s uncertain environment.

Resources Mentioned in the Episode:

• Wright Lewis Bio – Dunlap Bennett & Ludwig
• Smart Business Dealmakers Podcast: Wright Lewis Deep Dive on GovCon M&A
• DBL Articles on GovCon & M&A

The Blackletter Podcast

The Blackletter Podcast is a podcast for CEOs, Corporate Counsel, & Entrepreneurs. Each episode explores topics regarding business and law. Join host Tom Dunlap as he speaks with special guests and thought leaders across various professional fields. Their discussions during the interview focus around timely information, insights they’ve gained, and lessons they’ve learned through their experiences.

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