How has the lending environment for government contractors changed in the past year?
GH: Lending multiples have been fairly steady over the past 12 months. I think this is the right place for them. Companies have been somewhat whipsawed by credit ebbs and flows over the past several years; the current lending environment seems to capture today’s market risk just right. FGR: For first-to-market government acquirers, how should they assess the importance of the EBITDA multiple? GH: Using EBITDA for the sellers’ trailing twelve months is a good place to start. Sellers will also present their EBITDA on an adjusted basis, taking into account costs that will not continue post-closing. They also will provide projections for future years. Our job, in concert with the borrower, and often independent of them, is to understand the plausibility of such claims, since they affect the lending appetite of the bank in that deal. FGR: How would you characterize the competitive environment for lenders in the government sector? GH: It has become very competitive in the last several years.
