Capstone Headwaters Releases 2018 Aerospace & Defense Outlook: Mergers & Acquisitions Update

Aerospace & Defense M&A activity sensitive to potential Asia Pacific Shocks as commercial aerospace growth forecasts are highly dependent on: fleet expansion on the Asia Pacific region which is expected to account for 40% of new deliveries; and continued capital inflows to aircraft leasing (also 40% of purchases) which have been increasingly from Asia Pacific

BOSTON--()--Last year’s Aerospace & Defense merger & acquisition activity highlighted the underlying structural characteristics of an industry dominated by an airframe duopoly, powered by a handful of engine makers, and the reactive efforts of a vast consolidating supply base. Airbus and Boeing sought to expand their dominance by: completing transactions with smaller regional aircraft, bringing work back in house, and extending profitability over the life of an aircraft. Meanwhile, suppliers worked to counter balance OEM pressures by combining and building out complete systems capabilities. Private equity investors have become integral to the consolidation of a previously highly fragmented supply base, enabling founders to retire from companies which in many cases have expanded beyond the financial suitability of individual ownership.

“Structural factors underlying sector M&A of dominant OEMs and a consolidating supply base are likely to continue for years to come. However, the level of activity is likely driven by economic temperature, ambitions of industry participants, and is particularly sensitive to potential Asia Pacific shocks.”

Ian Cookson, Managing Director at Capstone Headwaters, commented, “Structural factors underlying sector M&A of dominant OEMs and a consolidating supply base are likely to continue for years to come. However, the level of activity is likely driven by economic temperature, ambitions of industry participants, and is particularly sensitive to potential Asia Pacific shocks.”

In our 2018 Aerospace & Defense Outlook: Mergers & Acquisitions Update, we discuss major industry themes highlighted by M&A activity. The report also discusses:

  • The outlook for M&A activity
  • Structural industry themes highlighted by M&A
  • Financial buyers’ role as consolidators of the supply base
  • Company founder exits and perspective
  • Valuation trends in public and private markets
  • Commercial Aerospace outlook and dependencies
  • Changing emphasis of the defense budget
  • A resurgence in Government IT
  • Cybersecurity escalation and consolidation
  • Advances in Simulation & Training

To download a complimentary copy of the report, click here.

About Capstone Headwaters

Capstone Headwaters is a leading investment banking firm dedicated to serving the corporate finance needs of middle market business owners, investors and creditors. The firm provides merger & acquisition, private placement, corporate restructuring and financial advisory services across 16 industry verticals to meet the life cycle needs of privately held companies. Headquartered in Boston, Capstone Headwaters has 19 offices in the US, UK and Brazil with a global reach that includes over 300 professionals in 34 countries. For more information, visit www.capstoneheadwaters.com.

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Capstone Headwaters
Jenna Luvin, 617-619-3355
Director of Marketing
jluvin@capstoneheadwaters.com

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