2016 saw a decline in sector Merger & Acquisition (M&A) activity, which although is still at healthy levels, showed a reversal after the escalation in component manufacturing transactions over the last couple of years. Going forward we expect this decline will be partially offset by increased activity in defense, defense IT and cyber.
The number of Aerospace & Defense M&A transactions declined by 16% in 2016, twice the 8% reduction in North American deal activity across all industries. The number of transactions returned to levels seen in 2011 - 2013 before the escalation of the last couple of years, and in line with the 2007 high point from the prior M&A cycle.
As expected, much of the decline was in Component Manufacturing where activity reached unprecedented levels. In 2015 Component Manufacturing transactions had increased substantially on the back of record order books and consolidation activity by both private equity groups and strategic buyers. In 2016 the trend reversed, with a 30% decline in the number of Component Manufacturing transactions as fewer targets remained and net new commercial aircraft orders declined.
In our 2017 report provides a wealth of Aerospace & Defense M&A transaction data and also discusses:
- The outlook for M&A activity
- Convergence in M&A by sub-sector
- Contrasting activity of strategic and financial buyers
- Company founder exits and ownership transitions
- Differing valuation trends in public and private markets
- Commercial aerospace outlook and potential vulnerabilities
- Defense budget optimism and realities
- Developments in unmanned ground systems
- Aftermath of government IT sector realignment
- Cybersecurity escalation
To download a complimentary copy of the report, click here.