Trends in aerospace and defense mergers and acquisitions

Aerospace and defense mergers and acquisitions trends

In the aerospace and defense industry, mergers and acquisitions (M&A) have recently changed. Instead of megamergers for the purpose of cost savings and synergies, current aerospace and defense M&A activity focuses on acquisitions that gain new capabilities, access emerging technologies, and offer geographic expansion into markets such as Asia, the Middle East, and beyond. Furthermore, joint ventures and partnerships could replace outright mergers and acquisitions in some instances.

Getting ahead of the merger and acquisition challenges

Aerospace and defense companies must understand the nuances of this change and prepare for the challenges and opportunities that result in executing a merger or an acquisition. For example, acquiring companies or investors must consider how to value a company that has a short financial track record, or has few competitors, or is in a country in which they have not previously operated. Integrating overseas has its own hurdles, potentially resulting in inefficient operations and failure to realize acquisition benefits.

To help companies overcome challenges that may surface during this next wave of aerospace and defense M&A, we analyzed M&A data and interviewed leading industry advisors. This report includes key findings that will help aerospace and defense companies re-evaluate their approach to value creation using M&A. We also discuss the impact of tax reform on valuation, and list challenges that acquirers may face along with potential solutions.