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Second Quarter 2016
M&A Analysis
Source: Public Filings, InfoBase; Capital IQ as of 6/30/2016
Gov. Services - Notable Trends
Recent Transaction Activity by Quarter
The McLean Group tracked 33 announced Defense and Government Services sector transactions during Q2 2016, down from Q2 2015’s forty-
three transactions, yet surpassing Q1 2016. Public companies remain the most active buyer category in the second quarter, comprising 43% of
all announced transactions in Q2, highlighted by KBR’s announced acquisition of Wyle, Inc. from private equity firm Court Square Partners for
$570 million. Arlington Capital Partners demonstrated significant M&A activity in Q2 with acquisitions of EOIR Technologies, Columbia Ultimate
Business Systems, Kreisler Manufacturing Corp, and iRobot’s Defense & Security Business. As a whole, private equity activity was down when
compared to the prior quarter, 18% to 38%. Through the first half of the year we have noted 23 divestitures, almost double the previous year, as
companies continue to shed non-core assets and shape their portfolios.
North American Aerospace M&A activity receded in Q2, falling to 31 announced transactions. Acquisitions by buyer were spread fairly evenly
across the board, with private equity buyers outpacing public and private company buyers 35% to 32% and 32% respectively. The largest
reported transaction of the quarter was TransDigm’s acquisition of ILC Holdings, Inc. the parent company of Data Device Corp. from private
equity group Behrman Capital for $1 billion, representing a five times multiple of revenue. Many of the large primes have stated that they are still
pursuing transformational M&A, such as Honeywell even after it cancelled its $90.7 billion offer to buy United Technologies earlier in the year.
Divestitures
Buyer Type
11
9
12
23
1H 2013 1H 2014 1H 2015 1H 2016
43
27
34
32
33
52
33
36
35
31
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Defense & Government Services
Aerospace
37%
21%
38%
18%
37%
50%
47%
39%
26%
29%
16%
42%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q3'15 Q4'15 Q1'16 Q2'16
Financial
Public Private