Q3 2026 M&A Insider Report
Defense, Government & Intelligence | Security | Critical Infrastructure | Maritime
Download Full Report
Major News Stories
Fed Hikes Rates for First Time in Three Years
- The Fed raised its benchmark rate 0.25% to 3.75%–4.00% on September 16, its first hike in more than three years, in a unanimous 12-0 vote.
- The move followed an energy-driven inflation reacceleration, with CPI up 3.4% year over year in August and gasoline above $4 a gallon every day that month, a first.
Treasury Yields Surge to Multi-Decade Highs
- The 10-year Treasury yield passed 5% in Q3, the largest quarterly rise in benchmark yields since 2009; the 30-year hit 5.6%, a high since 2002.
- Government bond supply and corporate issuance drove the selloff, with US hyperscalers issuing over $200 billion in long-term bonds this year to fund the AI buildout.
National Debt Tops $40 Trillion
- Total public debt outstanding hit $40.05 trillion on August 18, a first, arriving months ahead of CBO's forecast of $39.4 trillion by the end of FY2026.
- Net interest payments reached $827 billion through the first nine months of FY2026, exceeding defense spending of $713 billion and trailing only Social Security; the $41.1 trillion debt limit is expected to be reached in 2027.
Congress Avoids a Shutdown Before the Midterms
- Government funding was set to lapse when the fiscal year ended September 30; a continuing resolution extending FY2026 levels through December 11 cleared the Senate 90-6 and the House 370-48, signed September 2.
- Lawmakers moved unusually early to avoid a shutdown during campaign season, leaving the full FY2027 appropriations fight for a December deadline after the midterms.
Market Commentary
In September 2026, Boeing won the Navy's full-scale development contract for the sixth-generation carrier strike fighter, the F/A-XX. The initial contract is worth more than $20B, and the program is intended to augment and eventually replace older F/A-18E/F Super Hornets and EA-18G Growlers beginning in the 2030s. The award settles years of competition between Boeing and Northrop Grumman and is the second sixth-generation fighter contract awarded to Boeing following the Air Force's F-47 program in March 2025.
In early September, the House approved and President Trump signed a stopgap bill to fund the government into December. The Pentagon started FY2027 on the continuing resolution, which holds funding at FY26 levels and bars starts on new projects or programs that were not funded during the previous fiscal year. The White House's FY2027 budget request proposes $1.5T of defense spending, a 44% increase over the previous fiscal year for personnel pay raises, shipbuilding, missile defense technology, and munitions replenishment.
The 12 members of the Federal Reserve's Federal Open Market Committee voted unanimously to raise the federal funds rate by a quarter point to a target range of 3.75% to 4.00% at the September 15–16 meeting, the first increase since 2023. All three DGI indices saw negative performance in September as a Senate NDAA provision sought to restrict defense industry stock buybacks and shareholder dividends and the Fed's rate hike weighed on the constituent companies.
Transactions by Quarter
View in report · p. 4 →EBITDA Valuation Multiples
View in report · p. 4 →Multiples reflect public company trading values as of September 30, 2026 and are provided for reference purposes only. Public market multiples may differ materially from private company transaction pricing. Public company comparables: report p. 9 →
Select Q3 Transactions
View in report · p. 5 →* Announced, not yet closed
Notable Contract Awards
View in report · p. 6 →| Value | Customer | Awardee | Scope |
|---|---|---|---|
| $131,230M | U.S. Air Force | Boeing | "F-15 Eagle Crest" production, integration, modernization and sustainment of aircraft for the Air Force and other DoW customers |
| $65,000M | U.S. Navy | Integrity Technologies (WEXMAC multi-award team) | Worldwide expeditionary logistics support: theater opening, sustainment, distribution and stability operations |
| $53,859M | U.S. Army | Lockheed Martin | Multiyear production of PAC-3 Missile Segment Enhancement (MSE) interceptors to replenish Patriot air-defense stockpiles |
| $20,699M | U.S. Air Force | Raytheon | Advanced Medium-Range Air-to-Air Missiles (AMRAAM) All Up Rounds, Guidance Sections, Direct Charge, and FMS Offsets |
| $11,738M | U.S. Navy | General Dynamics Electric Boat; HII Newport News Shipbuilding | Construction of five Columbia-class ballistic-missile submarines and nine Virginia-class attack submarines |
| $6,990M | U.S. Navy | Oracle | Enterprise Software Agreement consolidating DoD-wide Oracle software licenses, maintenance, SaaS, and consulting |
| $5,712M | U.S. Transportation Command | FedEx; UPS; Polar Air Cargo | Next Generation Delivery Service-2: domestic and international express and ground small-package delivery |
| $5,100M | U.S. Navy | Newport News Shipbuilding, a division of HII | USS Harry S. Truman (CVN 75) Refueling and Complex Overhaul (RCOH) |
Market Commentary
In July 2026, an autonomous AI agent compromised portions of Hugging Face's production infrastructure, chaining multiple vulnerabilities including a zero-day to escalate privileges, harvest cloud credentials and move laterally through internal systems. Google later confirmed that its Gemini models had reached the systems of three real companies during a scoped capture-the-flag exercise. Together the incidents show that containment assumptions for agentic systems are not holding in practice.
In September 2026, the Pentagon disclosed a breach of a Defense Manpower Data Center system that exposed unencrypted names, Social Security numbers and military specialties for more than three million people, with unauthorized access persisting undetected from October 2025 to July 2026. Days earlier, ShinyHunters defaced the FBI's jobs portal and claimed to have stolen data on every employee and applicant in it. Both incidents highlight how long dwell times and third-party data handling continue to undermine federal personnel security.
Transactions by Quarter
View in report · p. 12 →EBITDA Valuation Multiples
View in report · p. 12 →Multiples reflect public company trading values as of September 30, 2026 and are provided for reference purposes only. Public market multiples may differ materially from private company transaction pricing. Public company comparables: report p. 13 →
Select Q3 Transactions
View in report · p. 12 →Market Commentary
American Water proposed acquiring the City of Rocky Mount, NC's water and wastewater utilities for $175 million in September. The city council discussed the offer at a work session, and the city will seek public input before any sale. The bid continues American Water's municipal acquisitions while the company expects its merger with Essential Utilities, which forms a ~$40 billion utility, to close by the end of Q1 2027.
On September 16, the House approved the Water Resources Development Act of 2026 by a 415–9 vote. The bipartisan bill authorizes $7 billion in Army Corps of Engineers projects, 133 new feasibility studies and 14 Corps-vetted projects across ports, waterways, flood protection and water supply. The Senate takes up the bill next.
In August, New York's governor issued an executive order that paused certain permits for new data centers over 50 MW until the state sets rules on grid costs, water use and host community benefits.
Transactions by Quarter
View in report · p. 16 →EBITDA Valuation Multiples
View in report · p. 16 →Multiples reflect public company trading values as of September 30, 2026 and are provided for reference purposes only. Public market multiples may differ materially from private company transaction pricing. Public company comparables: report p. 17 →
Select Q3 Transactions
View in report · p. 16 →Market Commentary
In August and September 2026, drought in the Gatun watershed forced the Panama Canal Authority to cut daily transits from 36 to 34 on September 3 and to 32 on September 15, with Neopanamax draft reduced to 48 feet. The squeeze hit U.S. trade directly, since the canal carries Asia–East Coast container traffic and Gulf Coast LNG exports: one vessel paid a record $5.3 million for a single transit slot, and CMA CGM imposed a $500-per-TEU surcharge. The ACP eased the limits on September 28 but warned the water deficit persists.
On August 10, the administration extended its Jones Act waiver another 90 days through November 14, continuing the longest suspension of the 1920 law on record. The extension narrowed relief to energy commodities and fertilizers and required the Pentagon to consult the Maritime Administration on U.S.-flag vessel availability before approving individual voyages. By early August, 208 voyages across 169 vessels had moved more than 31 million barrels of fuel under the waiver, drawing opposition from domestic maritime groups and senior House Republicans.
Transactions by Quarter
View in report · p. 20 →EBITDA Valuation Multiples
View in report · p. 20 →Multiples reflect public company trading values as of September 30, 2026 and are provided for reference purposes only. Public market multiples may differ materially from private company transaction pricing. Public company comparables: report p. 21 →
Select Q3 Transactions
View in report · p. 20 →Speak With the Team
Download the Full Q3 2026 Report
Complete deal tables, valuation multiples, public company comps, and contract awards across all four sectors.
The information provided in this newsletter is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any of the securities mentioned herein. Past performance does not guarantee future results. None of the information or analyses presented are intended to form the basis for any investment decision, and no specific recommendations are intended. Any performance mentioned does not include transaction fees and costs, which would reduce an investor's return. An investment cannot be made directly in these custom market indices. Public market valuation multiples are provided for reference purposes only and reflect traded equity values, which may differ materially from private company transaction pricing.
The logos and company names used in this report are for illustration purposes only, and the report is not associated with or supported by the owners of the trademarks.
© 2026 The McLean Group. All rights reserved. Securities transactions are conducted through McLean Securities, LLC, a member of FINRA/SIPC.