"Kevin and Greg helped me work through a very complicated series of simultaneous acquisition opportunities. They lined up and negotiated the necessary equity and debt financings, and worked through all the issues to get the best deal closed in tough market conditions. They gave me great advice throughout the process and did whatever it took to help me get it done."
"When I decided to sell my third generation, family business, I had many concerns. I wanted to be represented by an Investment Bank who had a strong reputation in the mergers and acquisition market, knew the market we participated in well enough to target likely interested parties, and who would manage the process of the transaction with various family members with various personal interests.
Kevin Dunn and his team satisfied all of my concerns. Kevin is well known in many industry sectors and has an established reputation and existing relationships with many industry leaders. His team was able to readily access the appropriate people at target acquirers.
As we received offers, Kevin’s team advised the family on the various aspects of acquirers’ proposals including valuation. Their experience in managing the competing expectations of acquirers, family members, and existing company management led to a successful conclusion of a transaction. The transaction concluded three years ago and today the sale continues to be viewed as a success to the sellers, the buyers, and the company management."
Aerospace & Defense
- Defense Electronics
- Defense Systems
- Security and Surveillance
- Cyber Security
- C4ISR
The Aerospace & Defense sector has been somewhat resistant to the softness experienced across other industries, due in large part to the continued operating strength of the businesses fueled by spending on the wars in Iraq and Afghanistan.
Some of the key factors impacting transaction activity in the sector include:
- Government spending has continued at a high level, as the emphasis on military expenditures shifts focus based on the differing needs of Afghanistan versus Iraq.
- Funding for homeland security and intelligence has continued to increase and is unlikely to decline in the immediate future.
- Given the current high levels of defense spending, large acquirers with available cash resources have demonstrated a preference for buying new technology rather than investing the necessary time and resources to develop their own capabilities.
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Activity from international buyers has increased over the past few years, driven by the appetite to benefit from the high level of U.S. defense expenditures.
Transaction volume for the Aerospace & Defense sector peaked in Q1 2008, then declined to lower volumes for the first 3 quarters of 2009. However, there has been an uptick in activity throughout 2010 and 2011. We believe activity in the sector will remain solid over the next several quarters.
In terms of valuations, quarterly average enterprise value / revenue multiples have ranged from 0.7x to 2.8x since the beginning of 2008, with the average revenue multiple in the sector for Q4 2011 being 1.7x. Average enterprise value / EBITDA (earnings before interest, taxes, depreciation and amortization) multiples for this same period ranged from 6.3x to 12.6x, and the average EBITDA multiple in the sector was at the bottom at that range, with only limited data points, at 6.3x during the most recent quarter.
The outlook for transaction activity in the Aerospace & Defense sector continues to steadily improve, although there is some uncertainty around how defense policies and budgets will be impacted by political pressure to reduce spending. However, we believe the development of new technologies, favorable trends toward outsourcing and the challenges of equipping global military forces to face untraditional adversaries will drive demand for investment in this sector. We expect transaction volumes will maintain momentum based on 2011 trends, as interest from international investors and acquirers continues to increase based on a desire to tap the large U.S. market.