Selling a Defense Business

Most defense services contractors are priced off cash flow, plus the risk profile of the contract book. Value usually improves when revenue is tied to funded task orders, recompete timing is spread out, clearances are stable, and capture can run without the founder. To sanity-check a range, use the free valuation calculator, then pressure-test the inputs against your funded backlog and recompete calendar.

No. Brokers often charge 5–10% of the sale price for packaging and outreach you can run yourself with the right tools. Rejigg is built for broker-free sales: buyers are pre-vetted, NDAs are signed digitally, diligence runs through a secure data room, and you can compare offers side-by-side without a middleman. Start with the prep guide.

Defense deals can run longer than typical services deals because the timeline gets driven by novation, customer consent, and security and governance updates. You can still move fast if your contract schedule, funded backlog, and compliance materials are organized. Expect extra time when novation is likely or when clearance posture needs review. Rejigg speeds up the controllable parts by organizing documents in a data room and keeping buyer Q&As in one place through due diligence and closing.

Start with a sanitized package that explains contract reality: a contract and task order schedule, backlog split into funded and unfunded buckets, and a 24–36-month calendar of option and recompete decision dates. Add a high-level clearance overview and an org view that shows who owns delivery and capture. On Rejigg, you can stage this safely using buyer vetting, digital NDAs, and permissioned folders in the built-in data room. See the preparation guide.

Sometimes. An SBA loan can be harder in GovCon when revenue is concentrated in one customer, contracts are short-dated, margins depend on aggressive indirect rates, or compliance obligations raise lender concern. Buyers still model SBA when the contractor has stable service revenue, clean books, and transferable management. Use the SBA loan calculator to test payments, then line the model up with funded backlog and recompete timing so the financing matches reality.

Contract ceiling is the maximum the government is allowed to buy under a vehicle. Awarded value is what has been awarded in the contract documents, and it can include options and unfunded pieces. Funded value is what is obligated today and can be performed and invoiced right now. Buyers weight funded value most, then look at your history of options being exercised and funding arriving on time.

Buyers want to know whether your programs can ride out a funding pause without losing cleared staff or missing deliverables. They will ask what happened during the last continuing resolution you lived through, how incremental funding hits your contracts, and how fast invoices get accepted and paid. A specific story beats a forecast. If you have a staffing and subcontractor playbook for delays, buyers usually get more comfortable.

Add-backs are owner or one-time expenses a buyer may treat as non-recurring, so they do not reduce the cash flow expected after the sale. In defense services, buyers push hard on add-backs tied to compliance, recruiting, and proposal work because those costs often come back every year. The clean way to handle it is to itemize each add-back, attach backup like invoices, and explain what changes so it truly will not repeat.

Working capital is the cash tied up in running the business, mainly receivables, payables, and accrued payroll. In GovCon, payment timing can hinge on invoice acceptance, and payroll for cleared labor does not wait. Buyers often set a target working capital level at close so the company can operate without an immediate cash squeeze. Clean receivables aging and a clear invoicing cadence usually make this negotiation easier.

Earnouts tie part of the price to future results. In GovCon, they often get tied to recompete wins, option exercises, or revenue retention, which can be workable if the definitions are tight. It helps when the seller still has real influence over the outcome and when the buyer cannot change staffing, pricing, or bid decisions in ways that quietly make targets unreachable. Rejigg’s deal dashboard lets you compare earnout terms side-by-side using deal negotiation guidance.

Seller financing means you take part of the price over time as a note, which is essentially a loan to the buyer. It can expand the buyer pool, but it also ties your risk to their ability to manage staffing churn and recompetes after close. In GovCon, buyers ask for it more often when lenders are nervous about customer concentration or short periods of performance. If you do it, focus on clear repayment terms and protections.

A non-compete is a promise that you will not start or join a competing business for a certain period and within a defined scope. In GovCon, scope needs to be specific because “competition” can mean an agency, a contract vehicle, a prime relationship, or a service line like cleared engineering support. Buyers usually want enough protection to keep you from taking the same relationships and team right after close. Keep it tied to what they are buying.

The biggest risk is sharing contract details, staffing lists, or compliance materials too broadly before you know who the buyer is and how they handle controlled information. Use an NDA, stage what you share, and keep a record of who received what. Rejigg reduces leakage by pre-vetting buyers, using digital NDAs, and letting you control document permissions in the built-in data room. For sequencing, start at finding buyers.

Taxes depend on your entity type and the deal structure, including whether the buyer buys assets or equity. In GovCon, structure can also be constrained by contract transfer and clearance realities, so tax planning needs to match what is actually workable. A practical approach is to model after-tax proceeds early, then sanity-check the structure against your contract portfolio. Keep diligence organized so your tax and legal advisors can move faster with negotiation steps.

In defense services, key employees are often the product because performance depends on cleared staff and trusted program leaders. Buyers usually ask for a retention plan for customer-facing roles, hard-to-fill cleared roles, and positions required by the contract. Expect diligence on comp, bonuses, and whether critical labor sits with employees or subcontractors. A clear transition plan reduces churn risk and helps protect recompetes. Rejigg supports the handoff with transition guidance and organized buyer requests.

Compare who is holding the risk and when you get paid. Look at cash at close, any earnout tied to recompetes or options, requested seller financing, and assumptions about funded backlog and indirect rates. Also, evaluate whether the buyer has a credible plan for clearance continuity and keeping cleared staff. Rejigg’s offer comparison dashboard shows terms side-by-side so you can pressure-test value, contingencies, and timelines. Use negotiation guidance to dig in.

Start earlier than you think because the value lift comes from clarity, not pitch decks. Get your contract schedule, funded backlog breakdown, and 24–36-month recompete calendar tight. Then document who owns security, capture, and delivery beyond the founder so buyers can see continuity. Rejigg’s prepare-to-sell guide walks you through the sequence and keeps everything organized.

Yes. Most sellers start with a sanitized summary, then share deeper documents after buyer vetting and an NDA. You can describe contract type, period of performance, prime versus sub position, funded backlog buckets, and upcoming option and recompete dates without sending full contract files on day one. Rejigg supports staged diligence with pre-vetted buyers, digital NDAs, and permission controls in the secure data room as conversations progress.