Inside the Report In our 2025 Aerospace & Defense Report last August, we wrote that the A&D indus- try is “experiencing powerful momen- tum.” That momentum has not only con- tinued but accelerated over the last 12 months, with industry sources reporting an escalation of M&A activity and an influx of new participants.
and shed assets—often using the proceeds to acquire high-growth defense tech inno- vators. Investment bankers and consultants spoke to ACG Magazine about the drivers behind recent divestitures, the types of carved-out assets that are most attractive to buyers, and how to execute a carve-out successfully. An accompanying Q&A with Thrive’s executive vice president of pri- vate equity and financial services looks at IT talent considerations and steps to take before, during, and after a carve-out trans- action to avoid critical talent gaps. The third topic spotlighted in the report is the aerospace and defense supply chain, which has struggled to keep up with the growing demand from customers across defense, commercial air travel, and space exploration. Many of these suppliers oper- ate in the middle market, making them prime acquisition targets for private equity sponsors that see potential in building large platforms that can better meet the needs of Tier 1 aerospace manufacturers and defense contractors. On Oct. 14–15, ACG will host its annual Aerospace & Defense Middle Market Leadership Forum in Los Angeles, where these topics will no doubt be part of the conversation among the business leaders, transaction advisors, and private capital investors driving dealmaking in the rapidly evolving A&D sector. //
This year’s A&D Report, sponsored by Thrive, explores the drivers behind that growth, with spotlights on three trends that are shaping aerospace and defense deal activity today. The first is the rise of defense technol- ogy and the proliferation of defense tech startups. Ongoing global conflicts and government appetite for cutting-edge weaponry have helped fuel an ecosystem of startups focused on autonomous vehi- cles, cybersecurity, advanced materials, and other innovative technology. Venture capital investors and corporate strate- gic acquirers have actively backed these companies, but private equity sponsors are treading more cautiously. We analyzed recent defense-tech deals and talked with PE investors about how they’re weighing risks and opportunities in the defense tech sector, and where they see the most prom- ising inroads. A second theme explored in this report is the carve-out opportunities created as large corporations reassess their portfolios
KATIE MALONEY Vice President, Communications & Content ACG kmaloney@acg.org
ACG MAGAZINE
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