GovCon M&A Under DOGE: Navigating Uncertainty for Small Business Success

By TED ROSE, ROSE FINANCIAL SOLUTIONS

Change breeds uncertainty. And for small business owners in the government contracting (GovCon) space, the Trump administration’s first 100 days have delivered plenty of both. The introduction of the Department of Government Efficiency (DOGE)—tasked with slashing $2 trillion in federal spending by July 2026—signals a seismic shift in federal priorities. Add in high interest rates, proposed tariffs, and economic volatility, and you've got a chaotic environment where M&A decisions feel riskier than ever.

For small GovCon owners eyeing a sale, this uncertainty can spark hesitation—or worse, a hasty exit at a discount. Yet history offers a counterintuitive lesson. As Warren Buffett, echoing Baron Rothschild’s 19th-century wisdom, advises: “Be fearful when others are greedy, and greedy when others are fearful.” Selling amid DOGE-driven turmoil might mean leaving money on the table, while strategic patience could unlock higher valuations once stability returns.

DOGE’s Short-Term Shock vs. Your Long-Term Goals

DOGE’s aggressive mandate—evidenced by its billions in cuts so far—is reshaping the GovCon M&A landscape. Many larger businesses are in DOGE's crosshairs, with announced reductions targeting the top 10 GSA consulting firms, which could create strategic openings for small businesses. Budget reductions, regulatory reviews (see the February 19, 2025, EO), and workforce cuts (thanks to the February 11 EO’s 1:4 hiring ratio) are squeezing contract pipelines and driving buyer caution. Valuations dip. Competition for deals thins. And buyers increasingly favor conservative deal structures—think earn-outs over cash-heavy offers.

For small businesses, often lacking the balance sheets of larger firms, selling now could mean accepting a fraction of your company’s potential worth.

But short-term turbulence doesn’t dictate long-term value. The GovCon market prizes stability, strong past performance, and adaptability—qualities small businesses can cultivate even under DOGE’s shadow. Instead of rushing for the exit, this is a prime time to sharpen your business, align with shifting priorities (e.g., defense over sustainability initiatives), and position for a premium sale when the dust settles.

Six Steps to Thrive Amid Uncertainty

Small GovCon owners can turn DOGE’s disruption into opportunity with these actionable moves:

1. Scrub Your Financials

High overhead erodes valuation. Trim non-essential General & Administrative (G&A) costs—think redundant subscriptions, idle tools, and underutilized roles. Cleaner financials don't just impress buyers; they build resilience against funding delays.

2. Bolster Your Competitive Edge

Winning even modest contracts signals reliability. Strengthen past performance, and forge partnerships with primes or complementary peers. One strategic win can offset DOGE-related losses and elevate your M&A profile.

3. Align with Market Priorities

DOGE’s focus on efficiency may tilt funding toward defense, IT, and infrastructure. Are your services aligned? Upskill your team in high-demand areas like cybersecurity or systems integration to stay relevant and boost win rates.

4. Know Your Buyer Landscape

Random buyer emails? Often, they’re bargain hunters exploiting uncertainty. Instead, work with M&A advisors who can assess the market and build a competitive sale process. Structured deals protect value—panic sales do not.

5. Plan for 12–24 Months Ahead

Optimize now. Cut waste, win work, and fine-tune operations so you're ready for a premium exit when confidence returns. Buyers pay top dollar for turnkey businesses, not distressed assets... Read more in the ROSE Community.

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Ted Rose

President, CEO, and Founder

In 1994 Ted Rose founded Rose Financial Solutions (ROSE), the Premier U.S. Based Finance and Accounting Outsourcing Firm. In 2010, the Blackbook of Outsourcing named ROSE the #1 FAO firm in the world based on client satisfaction. As the president and CEO of ROSE, he provides executives with financial clarity. Ted has also acted as the CFO for a number of growth companies and assisted with various rounds of financing and M&A transactions.