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    Aerospace, Defense & Government Contracting Q1 2023

    Q1-2023-Aerospace-Defense-Government 

    Industry Trends

    Financial Pressure on Aerospace Suppliers Creates Opportunities for Private Equity

    Demand from aircraft manufacturer giants soared after the global air travel slump during the pandemic. As a result, aerospace suppliers attempting to keep up with the demand face tighter lending standards from regional banks following the collapse of Silicon Valley Bank and First Republic Bank. Armed with record levels of cash, private equity firms have stepped in to fill the gap, providing liquidity to suppliers struggling to meet production demand for more planes and parts.1

    Satellite Operators Continue to Merge

    SES and Intelsat are the two latest examples of companies attempting to merge and grow market share to remain competitive in the industry. The merger between SES and Intelsat would be valued at more than $10 billion, including debt. The combined company would be better positioned to compete with Starlink, the fast-growing satellite-internet service operated by Elon Musk’s SpaceX.2

    The Pentagon Seeks Help from Startups to Keep Pace with China’s Military

    The Pentagon is attempting to encourage private capital into the defense sector amid concern that consolidation in the industry has stifled innovation and made companies in the space too reliant on government funding. The initiative aims to produce new weapon defense technologies from more efficient and agile suppliers. This past year, an estimated $6 billion of private capital flowed into the U.S. defense and aerospace sector.3

    Department of Defense to Increase Small Businesses in the Defense Industry

    The U.S. Department of Defense has announced increased efforts to attract small businesses to join the defense industrial industry, providing opportunities for them to contribute to national security and creating a more diverse and innovative landscape. The measures include simplifying procurement processes and increasing outreach efforts to small businesses.4

    Largest Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Aviation & Missile Solutions, LLC
    • Undisclosed Investors
    • $18.00
    • Global Technology And Management Resources, Inc.
    • Castellum, Inc. 
    • $6.55
    • ZIN Technologies, Inc.
    • Voyager Space Holdings, Inc.
    • n/a
    • Herley Industries, Inc.
    • Cobham Advanced Electronic Solutions Inc.
    • n/a
    • Constant Aviation, LLC
    • Flexjet, LLC.
    • n/a
    • Launcher Inc.
    • Vast
    • n/a
    • Western Jet Aviation, Inc.
    • StandardAero, Inc.
    • n/a
    • Compendium Federal Technology, LLC
    • Boathouse Capital
    • n/a
    • IF Armor International, LLC
    • The Armored Group, LLC
    • n/a
    • Dzyne Technologies Incorporated
    • Highlander Partners, L.P.
    • n/a

    Other Financial Buyer Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Frontgrade Technologies
    • Veritas Capital Fund Management, L.L.C
    • n/a

    Other Strategic Buyer Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Blackhawk Modifications, Inc.
    • AVEX, Inc.
    • n/a

     

    Source S&P Capital IQ as of 4/10/2023 and PCE Proprietary Data

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    PCE Aerospace, Defense & Government Contracting Deals

    Contacts
    David Jasmund

    David Jasmund

    Orlando Office

    407-621-2111

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    Michael Poole

    Michael Poole

    Orlando Office

    407-621-2112

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    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. Lampert, A.; Ganapavaram, A. & Keidan, M. “Financial turbulence widens door to private equity in fast-growing aerospace sector.” Reuters, 24 March, 2023.
    2. Jacob, D. “Satellite Operators SES, Intelsat Discuss Merger as Industry Looks to Consolidate.” Wall Street Journal, 29 March, 2023.
    3. Weinberger, Sharon.; Wall, R & Cameron, D. “Pentagon Woos Silicon Valley to Join Ranks of Arms Makers.” Wall Street Journal, 26 March 2023.
    4. Lopex, T. “DOD Increases Efforts to Bring Small Businesses into Defense Industrial Base.” U.S. Department of Defense, 24 March, 2023.

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