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First Quarter 2015
Quarterly Transactions by Buyer Type
M&A Analysis
The McLean Group tracked 31 announced Defense and Government
Services sector transactions during Q1 2015. This is up from Q4 2014 but
slightly down from Q1 2014 which tracked 35 announced transactions. The
trend of increased public buyer activity has continued throughout Q1 with
public companies representing the most active buyer, accounting for 48%
of acquisitions YTD. Private companies receded as buyers, accounting for
only 16% of the acquisitions whereas private equity has significantly
increased activity, accounting for 35% of acquisitions up from 22% over the
previous year. Notable transactions in Q1 2015 include: Harris’ announced
acquisition of Aerospace & Defense systems provider Exelis for $4.8 billion;
SAIC’s announced purchase of Intelligence Community solutions provider
Scitor from Leonard Green Partners for $790.0 million; and MAXIMUS’
acquisition of Healthcare IT solutions provider Acentia from Snow Phipps
Group for $300.8 million.
Announced North American Aerospace M&A activity in Q1 continued a
gradual decline from the three year quarterly high in Q1 2014, but was
consistent with the three year quarterly average. Public buyers remained
the most active acquirers, representing nearly half of Q1 buyers. Alcoa
continued its acquisition streak, following its 2014 purchases of Firth
Rixon and TITAL GmbH with the $1.8 billion acquisition of RTI
International Metals. HEICO made dual purchases in Q1, acquiring
Aeroworks International Holdings and Harter Industries. TransDigm, RBC
Bearings and Onex Corp all made significant acquisitions valued at $500
million or larger. PE backed acquisitions shrank to just 16% of quarterly
activity, down from 31% in 2014. Meanwhile private buyers increased
their presence from 24% of buyers in 2014 to 41% in Q1 2015. Notable
private buyers in Q1 included Sierra Nevada Corp., STS Aviation Group
and StandardAero. Divestiture activity increased, comprising 38% of Q1
transactions, up from 22% and 21% in 2013 and 2014 respectively.
Bombardier, GE Aerospace, AAR Corp, UTC, Curtis-Wright, Rockwell
Collins and L-3 all had meaningful aerospace divestitures.
Recent Transaction Activity by Quarter
Source: InfoBase; Capital IQ as of 3/31/15
35
33
32
30
31
43
39
36
35
32
78
72
68
65
63
0
10
20
30
40
50
60
70
80
90
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Defense & Government Services
Aerospace
14%
26%
47% 43%
16%
20% 24%
13%
33% 35%
51%
51%
33% 40%
44%
51% 45%
47%
50% 48%
35%
23% 19% 17%
41%
29% 30%
41%
17% 16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15
Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15
Financial
Public Private
Aerospace
Defense & Gov. Services