Global aerospace and defense deals insights: Q1 2018

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Executive summary

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.

Key trends/highlights

  • Deal value in Q1 2018 was just over $15 billion, 28% above last quarter and 19% higher than Q1 2017.
  • There were 86 deals this quarter, 19% lower than Q1 2017.  However, the average deal size jumped 89% to $485 million, 39% higher than the three-year historical average of $349 million,
  • Seventy-three percent of deal value remains in North America and 99% of global deal value was exchanged domestically (within country borders).

“Where there is change, there is opportunity and liquidity will be key to taking advantage of that opportunity.”

Bob Long, US Aerospace and Defense Deals leader

Contact us

Bob Long
US Aerospace and Defense Deals leader, PwC US
Tel: +1 (703) 918 3025

Randy Starr
US Aerospace and Defense Strategy& leader, PwC US
Tel: +1 (973) 236 5682

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