2
2013 Year in Review
35
29
31
28
40
28
32
29
Q4
2013
Q3
2013
Q2
2013
Q1
2013
Q4
2012
Q3
2012
Q2
2012
Q1
2012
53
42
48
29
47
46
45
30
45
43
52
32
59
51
74
38
2010
2011
2012
2013
Q1 Q2 Q3 Q4
2013 ADG M&A Overview
Source: InfoBase; Capital IQ as of 12/31/13
Quarterly Aerospace Transaction Activity
TMG tracked 38 announced defense and government services sector
transactions and 35 announced aerospace sector transactions during Q4.
Total 2013 transaction activity in the defense and government services
sector was down considerably from prior years. Most notable was the lack
of buy-side activity from large primes. The five companies in The McLean
Group’s large prime index completed only five transactions during 2013,
down more than 60% from the last three years’ annual average.
Additionally, transactions were smaller in size and targeted specific
growth areas. There were just two reported government services deals by
strategics in excess of $100 million announced in 2013: CACI’s $820
million acquisition of Six3 Systems and Engility’s acquisition of Dynamics
Research Corporation for $120 million. Meanwhile, activity from financial
buyers remained strong. Examples include DC Capital’s take private of
Michael Baker Corporation for $397 million and Aurora Capital Group’s
$270 million take private of National Technical Systems.
In contrast, acquisition activity in the aerospace sector was much more
robust. Many strategic aerospace buyers remained active and helped to
drive average EV/EBITDA and EV/Revenue multiples of 10.3x and 1.6x,
respectively. Also, 19 transactions had reported deal values in excess of
$100 million, four of which were in excess of $1 billion. Strategic buyers
moved to strengthen their market positions due to growing commercial
aircraft sales and a 151% forecasted increase in global revenue
passenger kilometers (RPK) over the next 20 years. Large OEM suppliers
were particularly active, seeking to capitalize on estimates that the global
commercial aircraft fleet will more than double by 2032 to meet rising
demand. Precision Castparts, TransDigm and Curtiss-Wright made a total
of 13 acquisitions valued at well over $1 billion. The robust industry
outlook has attracted the attention of many private equity groups which
accounted for more than 25% of the 123 transactions in 2013.
Defense and Government Services Transaction Activity
