NEW YORK--(BUSINESS WIRE)--A new report by government market intelligence platform HigherGov shows the Aerospace, Defense, and Government market had its second highest number of transactions ever in 2022. The Aerospace, Defense, and Government M&A Review 2022 Report, based on proprietary HigherGov data, found that the sector recorded 433 transactions in 2022 with a disclosed deal value of $46 billion.
“The modest decline in the number of transactions in 2022 is primarily attributable to a normalization of activity following a very active 2021,” said Justin Siken, founder of HigherGov. “We expect that the ADG market will outperform the broader M&A market in 2023 as positive government spending trends and stable recession-resistant cash flows in the sector attract investment.”
Major Trends:
- Sector valuations shook off macroeconomic headwinds to reach an all-time high 13.5x EBITDA in 2022
- Department of Defense concerns about consolidation and higher interest rates sharply reduced the number of transactions greater than $1 billion as transactions of small- and mid-sized contractors grew
- Private equity now accounts for almost half of all transactions, twice the share of a decade ago
- As commercial aerospace continues to recover from COVID-19, pre-pandemic trends in horizontal and vertical consolidation are returning
- Space and government cybersecurity and health transactions all saw retrenchment from 2021, but demand for these capabilities from acquirers remains strong
2023 Outlook:
HigherGov expects ADG M&A activity to remain robust in 2023. Increased global defense spending, demand for space, cyber and other technology capabilities, and predictable cash-flows in the sector will support volumes despite higher interest rates and increased government scrutiny of consolidation.
About HigherGov
HigherGov provides comprehensive government contracting and grant market intelligence for contractors, grant recipients, and their advisors.
