Blog Author

David Jasmund

E: djasmund@pcecompanies.com

Follow me: LinkedIn

Industry Trends

Boeing’s China Recovery Hampered Due to Airline Crash

On March 22, Boeing’s shares closed 3.6% lower, and attempts to regain market share within the biggest aircraft market were hindered after the deadly crash of a China Eastern Airlines 737-800. China is currently the largest market for the 737-800 model, with 1,200 aircraft in service. Since the crash, China Eastern Airlines halted all 737-800 flights until the cause is determined.1

Defense Firms Prepare for Potential Tax to R&D Expenses

The 2017 Tax Cuts and Jobs Act requires companies to capitalize and amortize research and development expenses beginning fiscal years after December 31, 2021. The new tax law will cause billions of dollars in additional taxes from U.S. defense companies. Defense company executives say the tax law discourages investment in innovation and are optimistic that Congress will repeal or defer the law in 2022.2

Defense Industry Gets Tougher on M&A Antitrust Activities

Lockheed Martin’s $4.4 billion deal to acquire missile supplier Aerojet Rocketdyne was blocked by the Biden Administration in an attempt to prevent further consolidation within the industry. M&A activity has picked up dramatically within the defense industry in the past 30 years. Facing historical consolidation within this industry, the Department of Defense looks to focus on M&A activity and pursue antitrust investigations to preserve competitiveness and innovation amongst contractors.3

Pentagon Seeks to Expand Small Business Participation

Participants in the Department of Defense’s Small Business Programs stand to benefit from a new Pentagon strategy to maximize participation from small defense contractors. This development comes as the U.S. defense industry has shrunk by over 40% in the last decade. The Pentagon seeks to attract new entrants and innovators participation in the program.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • PAE Incorporated
  • Amentum Government Services Holdings LLC
  • $2,070.15

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • West Star Aviation, LLC
  • The Sterling Group, L.P.
  • n/a
  • Firefly Aerospace Inc.
  • AE Industrial Partners, LP
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • SMC Aerospace Ltd
  • G.S. Precision, Inc.
  • n/a
  • Paravion Technology, Inc.
  • Dart Aerospace Limited
  • n/a
  • Pioneer Industries, Inc.
  • Flight Support Group, Inc.
  • n/a
  • Swift Aviation Services, Inc.
  • Jackson Jet Center, LLC
  • n/a

 

Source S&P Capital IQ as of 4/6/2022 and PCE Proprietary Data

Subscribe to PCE's Quarterly Industry Reports

PCE Aerospace, Defense & Government Contracting Deals

Contacts

David Jasmund

Orlando Office

407-621-2111 |

Read More

Michael Poole

Orlando Office

407-621-2112 |

Read More

Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. Freed, Jamie, Eric M. Johnson. “Analysis: China Eastern crash could set back Boeing’s China recovery, return of MAX.” Reuters, Thomas Reuters Corporation, March 22. 2022.
  2. Weisgerber, Marcus. “Defense Firms Brace for Billions of Dollars in New Taxes, And Hope for Congressional Relief.” Defense One, Government Media Executive Group LLC, February 25 2022.
  3. Erwin, Sandra. “Pentagon to rein in defense and aerospace industry mergers.” SpaceNews, Pocket Ventures LLC, February 15 2022.
  4. Gould, Jeff. “New Pentagon strategy to bring in small businesses coming soon.” Defense News, Sightline Media Group, March 7. 2022.
RELATED RESOURCE
RELATED RESOURCE

Resource Title goes here

Read now
contact usan image