Blog Author

David Jasmund

E: djasmund@pcecompanies.com

Follow me: LinkedIn

Industry Trends

Annual Defense Funding Bill Increases Defense Spending by $24 Billion

On Sept. 23, the House passed its fiscal 2022 National Defense Authorization Act, giving the Pentagon a budget of $768 billion. Lawmakers voted on four hundred and seventy-six amendments, including everything from attempts to scale back the budget to limiting U.S. involvement in conflicts throughout the Middle East. The House adopted a provision that would end logistical support to Saudi Arabian airplanes involved in Yemen strikes and stop the United States from providing intelligence to Saudi forces that enable the strikes. All attempts to create an amendment to reduce spending were defeated.1

U.S. Military Successfully Fight-Tests New Hypersonic Weapon Technology

The Defense Advanced Research Projects Agency (DARPA) and the U.S. Air Force successfully flight-tested new hypersonic weapon technology named the Hypersonic Air-breathing Weapon Concept (HAWC). The HAWC is one of several hypersonic weapon efforts within the Department of Defense and is part of the U.S.'s ongoing efforts to develop hypersonic cruise missiles. Hypersonic cruise missiles will be used to provide next-generation capability to the U.S. military since they are faster than cruise missiles and can maneuver along unpredictable flight paths.2

Boeing Forecasts $9 Trillion In Aerospace Market Opportunities Over the Next Decade

Boeing’s annual forecast for the commercial, defense and space aerospace market reflects confidence in the industry’s long-term growth and recovery following the pandemic. Boeing states that the commercial airplanes and services industry is showing signs of recovery, while the global defense, space, and government services markets have remained stable throughout the pandemic. Boeing’s projection of $9 trillion is up from last year’s $8.5T and the pre-pandemic estimate of $8.7T in 2019. Demand for domestic air travel leads the recovery of the global market, with an estimated return to pre-pandemic levels by 2023 or 2024. The defense and space outlook remains consistent with last year’s outlook at $2.6 trillion for the next decade.3

Aerospace Giant Airbus Develops Air Taxis To Revolutionize Transportation

Airbus recently unveiled their first prototype for an electric vertical takeoff and landing vehicle (eVTOL), tentatively scheduled for commercial liftoff as early as 2025. The fledgling market has a compelling potential since it could reduce travel times in congested cities. Still, there will likely be no positive return on investment for these businesses until at least 2030. Urban transportation could be revolutionized in the next few years, with many companies creating their own eVTOLs, including Volocopter, Lilium, and a partnership between Porsche and Boeing.4

The U.S. to Share Nuclear Submarine Technology with Australia in New Defense Partnership

President Biden is taking more steps to strengthen alliances against China's expanding military and economic ambitions. The Biden administration created a new defense partnership with Australia that will arm Australia with nuclear submarine technology from the United States. The agreement also includes the United Kingdom and involves closer cooperation on cybersecurity and artificial intelligence. The agreement, known as AUKUS, does not give Australia access to nuclear technology but will enable its submarines to travel further and more quietly. Tensions have been growing with China and certain countries in the E.U. There is potential for increased government spending on defense and aerospace in the near future to combat the conflict.5

Growth In Private Businesses Supports The Commercialization of Space Travel

In the middle of September, the first all-civilian crew launched to orbit the Earth in the first privately funded, non-government trip into orbit. This trip is a major contributor to the commercialization of space travel, and it was spearheaded by SpaceX who already has more trips planned for privately funded space exploration. Other prominent players in private spaceflight include Blue Origin, founded by Jeff Bezos, and Virgin, founded by Richard Branson. SpaceX aims to reduce space travel costs within the next few years to colonize Mars by 2050, while Blue Origin aims to colonize the Moon.6 7

The Commercial Airline Industry Recovers From the Effects of the Pandemic

The U.S. recently eased transatlantic travel restrictions, and consequently, airline bookings skyrocketed, indicating the continued recovery of commercial air travel as the pandemic wanes. Bookings on Virgin Atlantic on September 20th were up more than 600% compared to a week earlier, with Orlando bookings up 1100%, Miami up 900%, and Las Vegas up 800%. Foreigners can fly with vaccination proof and a negative COVID-19 test beginning this November, which will likely increase transatlantic travel. People are excited to travel, as British Airways noted an increase of around 2,000% in internet searches for flights to the U.S. for Thanksgiving and 900% in searches for flights and package holidays to key U.S. destinations for the days leading up to Christmas.8

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Apollo Fusion, Inc.
  • Astra Space, Inc.
  • $135.00
  • GlobalParts Group, Inc.
  • VSE Corporation
  • $38.00

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Forrest Machining, Inc.
  • DVSM, LLC
  • n/a
  • Air Comm Corporation
  • Arcline Investment Management LP
  • n/a
  • Capco, Inc.
  • Chumash Capital Investments, LLC
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Kemco Tool And Machine Company, Inc.
  • L-3 Communications Crestview Aerospace Corporation
  • n/a
  • SkyWarrior Flight Training INC.
  • CAE USA, Inc.
  • n/a
  • BEI Precision Systems & Space Company, Inc.
  • Quantic
  • n/a
  • Global Jet Services, Incorporated
  • CAE Inc.
  • n/a
  • Sehlke Consulting, LLC
  • Artlin Consulting, LLC
  • n/a
  • Systima Technologies, Inc.
  • Karman Missile & Space Systems
  • n/a
  • Aircraft Hardware West, Inc.
  • Clarendon Specialty Fasteners Limited
  • n/a
  • Trace Aviation, Inc.
  • Precision Aviation Group, Inc.
  • n/a
  • Swarm Technologies, Inc.
  • Space Exploration Technologies Corp.
  • n/a
  • redUAS, LLC
  • AVIAN INC
  • n/a
  • Wilco, Inc.
  • Aero-Mach Labs, Inc.
  • n/a

 

Source S&P Capital IQ as of 10/6/2021 and PCE Proprietary Data

Subscribe to PCE's Quarterly Industry Reports

PCE 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. Clevenger, Andrew and Satter, Mark. "House passes major defense policy bill." Roll Call, CQ Roll Call, 23 Sept. 2021.
  2. Pickrell, Ryan. "The U.S. military successfully flight-tested new hypersonic weapon technology.” Business Insider, Microsoft, Sept. 28, 2021.
  3. Ford, Georgina. “Boeing forecasts $9 trillion aerospace market opportunities in commercial, defense and services over next decade.” avationbusinessme.com, ITP Media Group, 17 Sept. 2021.
  4. Hetzner, Christiaan. "Air taxis are coming sooner than you think, aerospace giant Airbus says." FORTUNE, Fortune Media I.P. Limited, 22 Sept. 2021.
  5. Megerian, Chris. “U.S. will share nuclear submarine technology with Australia in new defense partnership.” Los Angeles Times, Microsoft, 15 Sept. 2021.
  6. Harwood, William. “SpaceX launches all-civilian crew on Inspiration4 mission.” CBS News, CBS Interactive Inc, 16 Sept. 2021.
  7. Hyun-bin, Kim. “Private companies spearhead global space race.” The Korea Times, koreatimes.co.kr., 30 Aug. 2021.
  8. Genovese, Daniella. “Airline flight bookings jump after U.S. eases transatlantic travel restrictions.” Fox Business, Microsoft, 21 Sept. 2021.
RELATED RESOURCE
RELATED RESOURCE

Resource Title goes here

Read now
contact usan image