Q1 2020 Aerospace and Defense M&A Update

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GCG’s Q1 2020 Aerospace & Defense Industry Update provides an overview of the latest trends in the sector, including recent equity market performance, valuation multiples and transaction activity.

Key findings include the following:

    • Q1 2020 was hallmarked by the COVID-19 outbreak and significant volatility in the public markets. Across the indices tracked in this update, Defense Components / Systems experienced outperformance (negative 15.9%) compared to the S&P 500 (negative 20.7%) as defense funding and production maintained relative stability. The Defense Tier 1 index was slightly slower at negative 23.0%. The commercial aerospace sector was more severely impacted given the dramatic reduction in travel. Fleet utilization will affect the demand for aftermarket parts and services in the near-term and airlines will continue to assess new aircraft orders and deliveries as the situation continues to evolve. The Aircraft / Engine OEM and A&D Components / Systems indices declined 54.6% and 49.2%, respectively.
    • There were 59 transactions within the A&D industry involving United States based targets or acquirers. 78% of Q1 transactions involved strategic acquirers with the remaining 22% representing platform acquisitions by financial buyers. Acquisitions by strategic buyers who are already backed by private equity firms blur the line between the two categories and represent a meaningful driver to industry activity.
    • Categorically, approximately 57.6% of transactions took place in the Aerospace industry, vs. 12% in the Defense IT/Services, 23.7% in Defense, and 6.7% in Space. Representative transactions are further highlighted in the report.

Click here for the full update.

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