Blog Author

David Jasmund

E: djasmund@pcecompanies.com

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Industry Trends

Defense Spending Boosts Demand for Durable Goods

August saw an unexpected 0.2% rise in durable goods orders, primarily fueled by increased defense spending as the United States aimed to replace military equipment sent to Ukraine. Excluding defense expenditures, durable goods orders declined by 0.7% in the same month, highlighting the impact of defense investments on the aerospace and defense industry.1

Mexican Airlines Set to Soar, Posing Challenges for U.S. Carriers

With Mexico reclaiming its Category 1 safety rating from the U.S. Federal Aviation Administration, Mexican carriers gain access to U.S. cities, intensifying competition in the lucrative U.S.-Mexico international flight market. U.S. airlines, which held a dominant 71% market share in 2022, now face increased competition from their Mexican counterparts, reshaping the aerospace landscape.2

Averted Government Shutdown Ensures Stability for Aerospace and Defense Contractors

Successfully navigating through divisions, the House and Senate avoided a government shutdown, ensuring continuous operations for aerospace and defense contractors. This crucial development safeguards against challenges like payment delays and limited access to government resources, maintaining the stability of contractual activities and employment. While the industry remains vigilant amidst ongoing budget debates, the current resolution provides immediate relief and operational consistency for contractors and their diverse projects.3

U.S. Army Initiates Support for Small Aerospace & Defense Innovators

In response to a notable decline in small business engagement in Army contracting, the U.S. Army is launching a strategy to revitalize innovation initiatives. Instead of direct awards, the Army plans to incorporate incentive language into fiscal year 2024 proposals. This strategy is designed to encourage prime contractors to leverage technology developed by Small Business Innovation Research funding, thereby fostering innovation in the aerospace and defense sector.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Aerojet Rocketdyne Holdings, Inc.
  • L3Harris Technologies, Inc. 
  • $5,127.00
  • Wencor Group, LLC
  • HEICO Corporation 
  • $2,050.00
  • VTG LLC
  • A&M Capital Advisors, LP
  • $10.00
  • EO Vista, LLC
  • General Atomics Electromagnetic Systems Inc.
  • n/a
  • Sinterfire, Inc.
  • CBC Global Ammunition
  • n/a
  • Louis Berger Services, Inc.
  • Versar, Inc.
  • n/a
  • Ecliptic Enterprises Corporation
  • Arquimea Group, S.L.
  • n/a
  • Trident Systems Incorporated
  • LightRidge Solutions
  • n/a
  • Dasi, LLC
  • Marubeni Corporation 
  • n/a
  • VAS Aero Services, LLC
  • Satair USA Inc.
  • n/a

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • -
  • -
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • -
  • -
  • n/a

 

Source S&P Capital IQ as of 10/12/2023 and PCE Proprietary Data

PCE Transactions

Contacts

David Jasmund

Orlando Office

407-621-2111 |

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Michael Rosendahl

New York Office

201-444-6280 Ext 1 |

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Eric Zaleski

Chicago Office

847-239-2466 |

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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. 1. Bartash, J. “U.S. durable-goods orders climb on higher military spending.” MarketWatch, September 27, 2023.
  2. 2. Harrup, A. & Montes, J. “Mexico’s Air-Safety Rating Returns to Category 1.” The Wall Street Journal, September 14, 2023.
  3. 3. Temin, T. “Government shutdown puts contractors in precarious position.” Federal News Network, September 26, 2023.
  4. 4.Judson, J. “US Army to reward big contractors that ingest smaller innovator’s tech.” Defense News, September 7, 2023.
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