F ocus” is the new mantra for aerospace and defense corporations, as shifting federal defense spending priorities, technological advancements, and activist investors prompt them to reevaluate portfolios and sell units no longer deemed core to their businesses. Investment groups eager to acquire A&D assets are standing by, despite the complexity involved in corporate carve-outs in this highly regulated sector. High-profile deal announcements underscore divestitures’ role in recentering corporate priorities. When Boeing announced it would sell parts of its Digital Aviation Solutions business to private equity firm Thoma Bravo last year for over $10 billion, its CEO cited plans to “focus on core businesses.” In December, Stanley Black & Decker’s CEO said reducing debt and “focusing on growing our big- gest brands and businesses” informed the company’s decision to sell its Consolidated Aerospace Manufacturing business to Howmet Aerospace for $1.8 billion. For defense contractors in particular, divestitures have become a crit- ical tool to free up cash to reinvest in cutting-edge defense tech inno- vators—often at the behest of investors hungry for returns. “They can take businesses that are good, steady earners but that aren’t meaningfully driving growth and divest those, so they can reinvest in these new technologies,” says Rudy Minar, partner and co-head of technology at Mirus Capital Advisors. In the past, corporations may have tried to innovate on their own, but the speed at which startups are developing drones, cybersecurity solutions, and advanced weapons systems has pushed them toward M&A. “What they’re seeing in the market right now is that you don’t have time to build it,” says Michael Fiore, industrial products deals leader at PwC. Corporations’ race for relevance has generated a pool of assets look- ing for a new home, which is creating opportunities for buyers on the other side of the deal—provided they can execute the carve-out effectively and scale the business after the transaction closes. The Carve-Out Opportunity for PE Private equity sponsors have been active in the A&D market, evi- denced by elevated deal counts and new fundraising announcements. PitchBook’s Q1 2026 A&D report estimated 143 private equity deals in aerospace and defense in the quarter, up 22% from the prior quarter and 123% from Q1 2025. Recent fundraising activity further illustrates investor appetite for A&D assets. In July, Capitol Meridian Partners raised $1.9 billion for its second fund, exceeding its target by 50%. The private equity firm focuses on national security, defense, and commercial aviation. For PE sponsors, divested A&D assets can be an appealing place to direct capital. “The backlog visibility and the durable, high-quality
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up 123% YoY 143 in Q1 2026 PE deal count in A&D reached
Source: PitchBook
cash flow is a strong interest factor,” says Laura Adams, partner and government contracting lead at CrossCountry Consulting. “A lot of these companies that they’re buying through carve- outs have longer-term contract and vehicle dura- tions, and that makes it appealing based on their hold time. It just gives a lot more visibility and structure.” Among the deals announced over the past year was L3Harris’ sale of its space propulsion, elec- tronics, and power systems businesses to AE Industrial Partners at a total enterprise value of $845 million, announced in August. In March, TriMas, a packaging and specialty products manufacturer, sold its aerospace unit, TriMas Aerospace, to private equity firms Tinicum and Blackstone. The divested unit, which makes fasteners and components for the commercial aerospace and defense industries and generates They can take businesses that are good, steady earners but that aren’t meaningfully driving growth and divest those, so they can reinvest in these new technologies.
RUDY MINAR | Partner and Co-Head of Technology, Mirus Capital Advisors
ACG MAGAZINE 15
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