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CFO Sam Strickland: Cash-Strong Booz Allen Reassessing M&A Strategy

CFO Sam Strickland: Cash-Strong Booz Allen Reassessing M&A Strategy - top government contractors - best government contracting event

CFO Sam Strickland: Cash-Strong Booz Allen Reassessing M&A Strategy - top government contractors - best government contracting eventAs many government contractors buckle up to endure a long road of predicted government spending cuts ahead, others are looking to the acquisition market to seize new opportunities and expand capabilities while the price is right.

Booz Allen Hamilton has indicated it may fall in with the latter, even though its last acquisitions were in 2003 and 1999, when it bought the Japanese unit of Capgemini and the Scandinavian firm Carta Corporate Advisors, respecitvely, Marjorie Censer wrote in a Dec. 11 Washington Post piece.

Traditionally, Booz Allen has steered away from acquisitions, while other government contractors have made them central to their strategies. Take for instance CACI International, which has closed more than 50 mergers and acquisitions in the past 20 years.

Company comments indicate that may change. At the Credit Suisse 2011 Aerospace and Defense Conference held in New York City late last month, Sam Strickland, Booz Allen's chief financial officer, signaled that the company’s strong cash holdings and relatively low level of debt are causing it to reconsider its purchasing position.

“While we have never been acquisitive and we don't have a corporate development staff out beating the bushes for acquisitions, it's conceivable we could do an acquisition at some point in time, particularly given the pricing in the industry,“ Strickland said at the conference, according to the Post.

“We do generate a lot of cash.“

John Hagan, head of BB&T Capital Markets/Windsor Group’s defense and government services told the paper that “whenever there's dislocation in a market, there's M&A.” Strickland told Censer that at Booz Allen, “the culture is changing, and I think they are exploring it. Whether they'll actually do something or not, we'll have to see.“

Strickland said that Booz Allen’s historically strong pace of organic growth has enabled the company to be selective in pursuing acquisitions. And  “if they can continue to grow in that manner, that's the least risky form of growth and the most valued form of growth.“

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