Middle-market A&D companies and private equity firms frequently ask us questions such as: What do we think? How is the middle market A&D performing? How does the middle-market A&D look in the next few years? What these professionals are doing is seeking our expertise as a firm that exclusively sells middle-market A&D companies, and what our thoughts are about the future. These, of course, are very reasonable questions, and we do our best to keep our pulse on the A&D market so that we can share our best thoughts with our client base and potential buying community.
The answer we frequently give, once we have shared our current view at any given time, is that we encourage our clients and potential buyers to look at the available data, which is readily available. At a very operational level, for instance, we recommend looking at the current U.S. Defense budget, friendly nation defense budgets, levels of international strife, etc. On the commercial side, we recommend looking at domestic and international travel through such data as TSA passenger travel numbers, OEM backlogs, business aircraft backlogs, and respective order books.
On a more strategic level, we look at and study emerging technology and its potential to transform companies with artificial intelligence and cybersecurity. We look at the potential impact on companies that may be subject to tariffs, interest rate fluctuations, and the introduction of sustainability programs such as alternative fuel sources and the equipment required. Plus, we look at U.S. consumer spending since it makes up nearly 70% of GDP, and any significant change can have a material impact on the commercial aircraft marketplace.
So, “How is it going?” we can summarize it as follows: study the data, and you will develop a clear answer. As to how we see it now, we believe that the long-term growth in both the defense and commercial markets will continue.
Have a great day,
Bruce Andrews
Partner
