The beginning of 2018 can be marked by easing fiscal policy, tightening monetary policy, and turbulent trade policy. While changes in fiscal and monetary policy do not pose an immediate risk to economic growth, recent trade disputes could disrupt industry supply chains and in turn impact global GDP. Each of these trends has possible implications for M&A activity in the sector.
Where there is change, there is opportunity. And, liquidity will be key to taking advantage of that opportunity. While lower corporate taxes will provide industry players with additional capital to pursue acquisitions, the sector has enjoyed a strong cash position for several periods now. Amplifying the critical role of this liquidity in deal making are increasing interest rates, which will make debt financing more expensive.
On balance, we believe the continued growth in aviation and strengthening trends in defense, combined with a strong financial position, place the sector in a solid position to drive M&A activity amid disruption and uncertainty.
“Where there is change, there is opportunity and liquidity will be key to taking advantage of that opportunity.”