Every few weeks, a blockbuster aerospace deal hits the headlines. These big headline deals are exciting to read about, but they’re not a useful benchmark for most privately held middle-market aerospace and defense businesses. Value, buyer behavior, and what the sale process entails can be strikingly different. For an owner of a $50mm – $100mm revenue business, here are some key areas that will differ:
- Buyers: headline deals usually look like a strategic-to-strategic, or mega-fund PE. In the lower middle-market, buyers are mostly niche private equity platforms, sponsor-backed strategics, or independent buyers.
- Valuation Multiples: Large companies frequently command higher multiples for potential scale, synergies, and strategic positioning (10-12x+ EBITDA). Middle-market companies typically trade at 5-8x EBITDA unless there’s something truly unique (proprietary systems, IP / patents, etc.).
- Due Diligence Intensity: Megadeals have armies of accountants, lawyers, and consultants. Your deal might involve a lean buyer team with the seller having to take on more of the prep work (projections, QofE, legal, etc.).
- Structure is Often More Important Than Price: In the middle market, important deal terms like escrow, seller notes, rollover equity, and working capital targets can affect what you take home more than the headline valuation.
Deals with a $50mm revenue company can feel more invasive than a billion-dollar deal. Buyers will ask you to explain historical financials, defend your EBITDA adjustments, and prove customer relationships in a detailed way. They’ll want to meet your second-in-command, and they’ll ask about your lease and your ERP system. While your deal won’t look like a headline deal, it’s important to have an experienced M&A banker guide you through the process and manage your goals. Focus on results, not headlines.
Have a great day,
Max McFarland
Associate
