A new study by Squire Saunders, an international law firm, looks at deal activity in the Defense, Aerospace and Government sector, highlighting private equity involvement and the growth of M&A in Asia-Pacific.
M&A activity in this sector is robust and driven by strategic buyers seeking opportunities to consolidate supply chains, grow market share and expand into new technologies. PE interest, while small compared to strategics, is driven by the idea that is a safe bet for future growth.
The trends of interest to PE investors are that aerospace is slated for higher than average growth, there are opportunities for services expansion, and that changes in US export controls could impact the sector positively. In Q1 2013, M&A increased by double digits year-on year in volume and value terms to 22 deals.
Another encouraging sign of a healthy aerospace, defense and government services sector is the preponderance of large-cap deals, as the above graphic illustrates. There were 10 deals valued at over USD500m in 2012, compared to seven in 2011 and only five in 2008. Squire Sanders also published a report on M&A trends in the Consumer & Retail sectors worldwide. It is a sector that also trending upwards.