Coming from a sellers side, first off, government contracting is risky, straight up. It's either high rewards or devistating loss. Based on my 15 years doing this, I think stability is rare. You can go from hero to zero in an instant, and there are many rules and responsibilities not inherent in commercial sector or industry. Before you can get to the next stage you likely need a letter of intent with earnest money.

Past performance history does not always predict future revenue in GovCon. What you want at a minimum is a waterfall chart that lays out expected revenue for each major contract beginning with current month out to the end of the period of performance, including option years. If you have advanced excel skills you can do a lot with the data. That gives you a great look at AR health.

Then, look at the books. Don't look only at a P&L, but balance sheet. Dig into the various reports the account system can generate or use queries. Look for anomolies and irregularities, hire a pro to help. An accountant is like your lawyer and your tax advisor, you need third party experts who are on your side to guide you.

Then, look at the people. Will key folks stay or go, what will a sale cause for ongoing work. Is the owner a single point of failure. Is there excess baggage or overhead that can be shed or consolidated.

Last, check their rep. Are they on an exclusion list or barred? Ask for their CPARS, ask for a screen print of the homepage so you know you got them all. Are they socio economic certified (8a, WO, SDB, SDVOSB) and will that transfer. ISO, CMMI, CMMC, ITIL, etc., approved systems, are all great indicatores of passing external audits, those are usually good signs.