Webinar How to Achieve Growth Profitability Lexy Kessler

Webinar – How to Achieve Growth & Profitability Lexy Kessler, Stephen Pimpo & Mark Johnson | January 24, 2018 www. aronsonllc. com/blogs/fedpoint

Introductions LEXY KESSLER Partner Aronson LLC © 2018 | www. aronsonllc. com/blogs | 2

Introductions STEPHEN PIMPO Principal Greenhouse Consulting © 2018 | www. aronsonllc. com/blogs | 3

Introductions MARK JOHNSON Managing Partner 3 A Broker Services © 2018 | www. aronsonllc.

Why Are We Here Today? Government contractors have had to become leaner and more agile, adapting rapidly and adopting new tactics. They are becoming more efficient in the delivery of services, including utilizing technology whenever possible. However, the uncertainty of the government market is forcing quick adjustments and contractors need to be aware of those possibilities. “Strategize, optimize and realize” should be the new mantra for companies that want to stay ahead of the curve. © 2018 | www. aronsonllc. com/blogs | 5

Trends Affecting These Companies Evolution Spending • Shrinking market • • Significant price pressures coupled with cost increases New normal for government contracting • Potential for increase in DOD spending in 2018 • Industry consolidation and divesture © 2018 | www. aronsonllc. com/blogs | Federal Priorities • Traditional contractors to see pressure from nontraditional competitors – government seeking commercial solutions • Proactive efficiency in technology • Defense and infrastructure 6

2017 Analysis & Outlook Contractor Profit Contractor Risk & Cost Profit, Risk, Cost • LPTA has driven down margins and capabilities • Contractors taking on inordinate profit and performance risk • Compliance mandates have driven costs up • Revenue recognition and lease accounting changes coming • Sluggish transition of Administration Millennials in the Workforce • Wave of Federal worker retirements continues to grow • Generational workforce gap • Public perception low • Millennials less interested in Gov. Con culture and perceive fewer, slower opportunities © 2018 | www. aronsonllc. com/blogs | M&A on the Rise • Profit pressure, compliance demands, spending shifts, and competition to drive M&A acceleration • Popular contracts and agencies key to interest and value • Streamlining focus and approach 7

What Does This Mean For You? © 2018 | www. aronsonllc. com/blogs | 8

The New Govconomy Operations & Systems • Re-engineer back-office & delivery processes • Implement and leverage full capacity of accounting / ERP / CRM systems for quick efficiency gains • Aggressively address emerging / changing cybersecurity requirements • Monitor and prepare for cyber incidents – they will happen to you © 2018 | www. aronsonllc. com/blogs | Contracts Compliance • Be CAS and SCA compliant before the auditors call • Aggressively address cybersecurity acquisition requirements & know how to recoup the costs • Use compliance with new requirements as a competitive advantage 9

The New Govconomy Financial • • Implement accounting rule changes to ensure accurate financial data Explore available tax credits © 2018 | www. aronsonllc. com/blogs | Talent Management • Change personnel / skills to solution / capability needs • Manage executive compensation • Proactively address SCA compliance • Adapt culture and processes for next-gen leaders 10

The New Govconomy Corporate Growth • Strategically plan for contract opportunities • Increase in use of joint ventures • Clearly demonstrating solutions/capabilities • Enforce strict bid/no-bid process • Diversify into adjacent service offerings & agencies (organic growth, M&A or both) • Balance B&P spend vs. cost reductions © 2018 | www. aronsonllc. com/blogs | 11

Contract Management vs. Account Management CONTRACT MANAGEMENT • Responding to client needs within contract scope • • Performing high-quality work Managing compliance to contract terms © 2018 | www. aronsonllc. com/blogs | ACCOUNT MANAGEMENT • Driving increased client service by establishing and expanding relationships • • Identifying new opportunities Introducing new ideas Protecting your territory Building a strong brand across an agency 12

A Simple Formula for Growing Accounts • Penetrate – entering a new account by winning a competition, being hired sole source or by being added to a team • Radiate – leveraging your presence under contract to proactively expand relationships and grow revenue • Insulate – protecting the business and relationships you have build from the inevitable attempts of competitors to take them The overall objective is to develop “Clients for Life” © 2018 | www. aronsonllc. com/blogs | 13

Growing Business Development Folks • Provides huge upside and real value • Current employees have: – Been vetted through the hiring process – Have performed successfully and have a proven track record – Understand the corporate culture and organization – Know the competition and your value proposition – Have a command of the company’s service offerings and products • Client facing and delivery professionals can become your best sales people • All employees can help sell – not in the same way, and some will be better than others © 2018 | www. aronsonllc. com/blogs | 14

Selecting the Right Deal • Core service offerings? Can you “play to your strengths? ” • Do you have relevant past performance and corporate quals? • Size, timeframe, contract type and vehicle? • Do you know the client? Does the client know you? • What are the current issues, budget outlook? • Who are the incumbents and competitors? • Right personnel or appropriate teaming partners? • What are the price points? Can you be competitive? • Have you been able to talk to the client or gain market intelligence? © 2018 | www. aronsonllc. com/blogs | Sometimes you just have to let go! 15

One “Size” Does Not Fit All We look at where a business fits in our Small Business Growth Continuum (i. e. DESTINY) to determine the approach to accelerate their revenue growth: Transform – A firm typically with $22 M+ in revenue that must “transform” to compete upon graduation. Sustain – A firm typically with $12 -22 M in revenue that is looking to “sustain” their growth in the market. Evolve – A firm typically with $5 -12 M in revenue that must “evolve” to compete on a broader level. Dream – A firm typically with $1 -5 M in revenue that has a “dream” to grow their business into something greater. The strategic and tactical approach to growth differs in each phase of the continuum. © 2018 | www. aronsonllc. com/blogs | 16

What is most important for your business? • We see many companies that have graduated and fallen back, and we have adopted the term 30 -20 company for those firms • How do you avoid becoming a 30 -20 company? – Plan strategically on how to continue to maintain and grow revenue from small business set aside contracts • Seek contract vehicles that will extend the life of your access to SDB work • Identify a “flip” partner for re-competes • Consider if there are similar opportunities to strategically form a MPP and JV’s – Never lose focus on quality delivery and client relationships – Understand the competitive landscape on each deal – Team to Win © 2018 | www. aronsonllc. com/blogs | 17

What Does This Mean For You? What does this mean for you © 2018

Contact & Connect with Us Lexy Kessler Stephen Pimpo 301. 231. 62 18 lkessler@aronsonllc. c om linkedin. com/in/lexykessl er 410. 903. 15 48 spimpo@Greenhousefirm. com linkedin. com/in/stephenpi mpo/ Mark Johnson 610. 357. 90 99 mark@3 absllp. com linkedin. com/in/mark-johnsona 304224/ © 2018 | www. aronsonllc. com/blogs | 19