SPRING 2013 Aerospace & Defense Update: Mergers, Acquisitions and the Operating Environment Contents 1 Executive summary 4 Mergers and acquisitions update 4 Activity overview 8 Component manufacturing 14 MRO component repair, distribution and support services 17 Defense technology Aerospace & Defense Update: Mergers, Acquisitions and the Operating Environment 21 Defense electronics Grant Thornton Corporate Finance 25 SBIR-funded businesses Mergers and Acquisitions Aerospace and Defense Group 28 The operating environment Contact information 28 Aerospace market outlook Ian Cookson Managing Director, Investment Banking 34 Defense budget outlook Grant Thornton Corporate Finance LLC 226 Causeway St. 41 European update Boston, MA 02114, USA 45 Federal regulations T +1.617.848.4982 E
[email protected] 50 Highlights of the 18th Annual Government Vice Adm. Lou Crenshaw, U.S. Navy (Ret.) Contractor Industry Survey Principal National Practice Leader, Aerospace and Defense 56 Grant Thornton Aerospace and Grant Thornton LLP Defense contacts 333 John Carlyle, Suite 500 Alexandria, VA 22314 57 About Grant Thornton T +1.703.837.4430 E
[email protected] Executive summary M&A update: Within MRO, transaction volume increased 5% in 2012, on Deal activity slows due to caution in defense acquisitions. the back of a 27% increase the previous year, with aggregate Component manufacturing reaches record highs on the deal value doubling. The subsector saw a number of large back of strong commercial aviation growth. aircraft leasing company deals as airlines increasingly look to Aerospace and defense (A&D) merger and acquisition lessors to fund the procurement of fuel-efficient aircraft. activity within North America declined by 4% in 2012 and Within A&D electronics, M&A activity decreased by 11% was marked by a divergence in subsector transaction activity.