Global aerospace and defense deals insights: H1 2018

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Executive summary

Strong M&A activity in the global aerospace and defense sector was largely driven by global passenger air traffic growth, increasing competition and US defense spending as concerns for national security intensify.

Commercial aviation is expected to turn in a strong performance in 2018 with 7% growth in RPK (revenue passenger kilometers) and a growing need for fleet expansion in Asia Pacific.

Profitability risks due to strong competition might serve as an incentive for industry consolidation as companies may have to look for strategic growth opportunities and supply chain synergies. Further, the ongoing trade tensions amongst the US, China, and Mexico on rising tariffs is also likely to put pricing pressure on players and impact profitability.

Geopolitical tensions continue to drive defense spending and the wave of consolidation in the government services space does not appear to be waning in any meaningful way.

We believe the factors impacting commercial aerospace and defense, as well as the industry’s liquidity position, bode well for continued strength in deal making.

 

Aerospace and defence deals activity

Key trends/highlights

  • Deal value in H1 2018 was $24.2 billion, representing a 30% increase over H1 2017 and an annual rate 45% higher than the ten-year annual deal value average of $33 billion.
  • Deal volume took a slight dip in H1 2018, but remains 4% higher than the ten-year average.
  • Average deal size in H1 2018 was $315 million, 50% higher than H1 2017 and 87% higher than the ten-year average of $168 million.
  • At the regional level, 84% of deal value remains with North America and 88% of global deal value was traded within borders (domestically).

“We believe the factors impacting commercial aerospace and defense, as well as the industry’s liquidity position, bode well for continued strength in deal making.”

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
Email

Scott Thompson
US Aerospace and Defense Leader, PwC US
Tel: +1 (703) 918 1976
Email

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