Global aerospace and defense deals insights: Year-end 2017

Executive summary

2017 was a record year for deal value in the global aerospace and defense industry, with $72 billion, surpassing the previous record of $67 billion set in 2015. Commercial aviation remains strong, with growth in Revenue Passenger Miles (RPMs) up nearly 8% in 2017 and above 6% in each of the two prior years. However, increasing competition and pressure on profit margins have been catalysts for industry consolidation and have resulted in some of the largest acquisitions in industry history, as suppliers seek synergies.  

Deal activity in defense was also strong this year, mostly due to geopolitical tensions, emphasis on missile defense, and the Trump administration’s increasing defense budgets. Defense contractors have been planning ahead by making investments in technologies such as autonomy, artificial intelligence, robotics, and cybersecurity. We predict these trends will continue through 2018.

Tax reform will provide increased liquidity which, combined with continued strong growth in aviation and a return to growth in defense, should result in another strong year of M&A in 2018.

Key trends/highlights

  • Deal value in 2017 was $72 billion, 7% above the previous record in 2015 and 79% higher than 2016.
  • There were 454 deals in 2017, the same amount as in 2016.  However, the average deal size in 2017 was $411 million, 19% higher than the three-year historical average of $345 million.
  • There were nine deals with announced value greater than $1 billion, accounting for 86% of the total value this year.
  • A $30 billion acquisition was the largest transaction since 2015 and heavily impacted the trends between the third and fourth quarters of 2017 at right.
  • North America had the largest increase in deal activity in 2017, up 29% from 2016, while Europe’s participation as an acquirer dropped by 20%.

"Tax reform will provide increased liquidity which, combined with continued strong growth in aviation and a return to growth in defense, should result in another strong year of M&A in 2018."

Bob Long, US Aerospace and Defense Deals leader

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Bob Long
US Aerospace and Defense Deals leader
Tel: +1 (703) 918 3025
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Scott Thompson
Aerospace and Defense leader, PwC US
Tel: +1 (703) 918 1976
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Randy Starr
US Aerospace and Defense Strategy& leader
Tel: +1 (973) 236 5682
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Dean Gilmore
Global Aerospace and Defense leader
Tel: +44 7970 665555
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