Deloitte has released an industry report forecasting an increasing pace of mergers and acquisitions in the aerospace and defense industry in 2012.
The company predicts that most consolidations will occur at the supplier level due to pent-up demand, accessible capital and favorable valuations.
In “stark contrast” with large deals of the past, defense contractors will makes moves that focus on operational and specific-supplier segments, according to the report.
“Recent U.S. Department of Defense budget cuts have brought renewed focus to competitive positioning, ” said Tom Captain, vice chairman of Deloitte LLP.
“Defense contractors need a strategy for growth to fill the pending revenue gap. Carefully planned and executed acquisitions can provide a transformational opportunity to gain new customers and to get into new products and services in this post-Iraq war era.”
Deloitte indicated M&A opportunities lie in “new reality” technology segments, such as:
- intelligence, surveillance and reconnaissance
- precision attack
- mission assurance
- logistical and energy-related services