Sep 14, 2021 - Economy

Exclusive: GovExec completes 9th acquisition as revenues double

GovExec revenue
Data: GovExec; Chart: Will Chase/Axios

GovExec, the media and insights company targeted to government leaders and contractors, is acquiring Market Connections, a government research and insights company, executives tell Axios.

Why it matters: It's the company's ninth acquisition since spinning off from Atlantic Media in March 2020.

  • Deals have become a key part of GovExec's growth strategy, as it looks to build the dominant media company that serves public sector workers.

Details: Market Connections will be added to a new research arm within GovExec that will include the Government Business Council (GBC) and its Leading Brands in Government franchise.

  • The research center will be led by Market Connections President Aaron Heffron, whose title will become executive vice president, Market Connections. GovExec will acquire the roughly 10 employees at Market Connections.

The big picture: The deal is GovExec's most recent investment in data and insights services. The company's business model revolves around providing three types of services: data and research, tools to mine that information and insights to analyze it.

  • In December, it bought The Atlas for Cities, an online community for local government officials and staff to browse city case studies and data. In August it acquired GovTribe, a market intelligence company for government contractors. Later that month it bought Public Sector 360 Group, an insights and lead generation company that services the government technology community.
  • Other acquisitions made in the past year have helped the company expand its audience or database products. It acquired "City & State New York" and "City & State Pennsylvania" earlier this year to expand its reach to public officials in those markets. In June it bought Military Periscope, an online database of global defense information.
  • Over the summer it bought Government Contracting Institute and Government Marketing University, training programs that target the federal sector.

Be smart: Prior to GovExec, there hasn't been one media company that has tried to bundle all of the content and services that serve public sector officials in one place.

  • Many of these brands, like Market Connections, have been around for decades, but haven't modernized. "Our evolution has been to bring all of our brands into a digital business model," said Tim Hartman, CEO of GovExec.

By the numbers: The pandemic brought newfound attention to government services, which is very clearly reflected in GovExec's growth.

  • The company is on track to bring in $50 million in revenue this year, up from about $20 million in 2020, and continues to be profitable.
  • When it spun off from Atlantic Media in March 2020, it had 80 employees. Today, it has more than 200.
  • Hartman says that the company's organic growth rate has been about the same as its inorganic growth rate, with about 50% of new employees coming from existing GovExec businesses, and another 50% coming from acquisitions.

"We were the right platform at the right time," said Connie Sayers, the president of GovExec. The growing importance of the public sector "drew a lot of organic growth."

  • A lot of its organic growth came from pivoting its roughly 200 annual events to virtual. The team built its own virtual events platform, called Virtuoso, which it used to lure marketing dollars from big in-person trade shows that were cancelled.
GovExec revenue composition
Data: GovExec; Chart: Will Chase/Axios

The company's business model has also shifted with its digital transition.

  • "When we went independent, we were primarily a lead generation business," said Hartman. "Lead generation and marketing services were about 70% of our total revenue and events were the other 30%."
  • "Our ambition over the next two-four years is to have 50% of our revenue come from paid content (software, data services, content, etc). A lot of our acquisitions are trying to build out those capabilities."
  • In addition to owning several data and marketing services businesses, GovExec also owns a few journalism outlets that cater to the public sector, such as NextGov, a publication about technology and the future of government, Defense One, which covers national security, and Route Fifty, which covers state and local government.
  • The goal of those publications, Hartman says, is "we want to be the most highly-read and have the most influential brands in those markets." To that end, he notes, "groundbreaking journalism is really the center of the business model."

What's next: Hartman says there's potential growth opportunities for GovExec in the education space within government services. "There's potential acquisitions in that area that we are interested in."

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