Mission control: Fourth-quarter 2015 aerospace & defense industry mergers and acquisitions analysis

02/19/2016

Download: Mission control: Fourth-quarter 2015 aerospace & defense industry mergers and acquisitions analysis

2015 was a record year in M&A for the A&D sector with a total deal value of $61.7 billion, nearly three times the value in 2014 and more than 50 percent higher than the previous record year in 2007.

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Mission control is PwC's quarterly analysis of merger and acquisition (M&A) activity in the global aerospace & defense industry. It provides an overview of the most recent M&A results and our expectations for future deal activity.

Highlights of what this quarter's analysis revealed:

  • 2015 was a record year in M&A for the A&D sector with a total deal value of $61.7 billion, despite a 20% decline in volume over 2014
  • This resulted in an increase in the average deal size to triple (to $1.4 billion in 2015), compared to 2014
  • Megadeal volume remained flat, on a year-over-year basis. Yet, the average megadeal value also increased significantly (from $2.3 billion in 2014 to $8.5 billion in 2015), led primarily by the largest deal announced this past year
  • Defense contractors continue to look for opportunities for growth and cost reductions, despite the United States and European efforts to discourage further prime contractor consolidation
  • Government services are expected to continue to consolidate by 25 to 50 percent over the next three to five years
  • In addition, stable revenue generation and a noteworthy order backlog for commercial airplanes continues to attract private equity and financial buyers to the sector
  • Commercial OEM’s and large Tier 1’s are demanding more integrated systems and complete sub-systems from the fragmented supply base
  • While, the highly fragmented MRO segment continues to see niche deal activity as the segment further consolidates

Download the analysis to review all the key trends from 4Q15.

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