"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."
"Greg is one of the most effective investment bankers that I have had the opportunity to work with. His professionalism, ability to quickly grasp the complexities of our business, expert advice and follow up insured that our process ran smoothly. Even when we hit road blocks during the process, Greg was there to offer alternative suggestions and to work behind the scenes with all parties to get the deal back on track. Greg was a real partner during the entire process from beginning to end and even though we were operating out of different cities, he was always available day or night to discuss and address the issue at hand."
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, although there is increasing uncertainty of future spending levels due to tightening budgets.
- 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 has increased steadily since early 2009. We believe activity in the sector will remain solid over the next several quarters, but transaction appetite will favor companies focused on maintenance services rather than new programs as government spending is managed more tightly.
In terms of valuations, quarterly average enterprise value / revenue multiples have ranged from 0.7x to 2.8x since the beginning of 2009, with the average revenue multiple in the sector for Q1 2012 being 1.9x. 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 9.8x 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 through 2012, as interest from international investors and acquirers continues to increase based on a desire to tap the large U.S. market.