Aerospace and Defense Deal Activity Surges in Q2 Driven by Strategic Buyers

Global aerospace and defense deal activity surged in Q2, driven by strategic buyers, according to a report from investment bank Stout. The rebound was led by mega deals and public strategic buyers, as financial sponsors took a backseat. The report highlights a significant shift in the landscape, with strategic buyers driving the market and financial sponsors playing a lesser role.

Global aerospace and defense deal activity surged in the second quarter of 2025, according to a report from investment bank Stout. The rebound was led by mega deals and public strategic buyers, while financial sponsors took a backseat [1].

The report indicates a significant shift in the landscape, with strategic buyers driving the market. M&A volumes rose 13% in Q2 compared to the previous quarter, driven by an 180% increase in mega deals (valued at more than $1 billion). Lower middle market transactions also gained traction, with an 18% quarter-over-quarter rise. In contrast, middle market and large deals declined by 11% and 19%, respectively [1].

Strategic acquirers, particularly public companies, reclaimed the driver’s seat. Acquisition activity among public strategics jumped 75% in the United States and 64% globally. Private strategic buyers also expanded their presence, with U.S. activity up 71% year-over-year. Meanwhile, private equity firms retreated, with deal volumes down 17% both domestically and internationally [1].

Aerospace and defense dominated global M&A growth, with deal volumes rising 24% and 55% quarter over quarter, respectively. In the United States, aerospace deals climbed 27% year-over-year, while defense jumped 37%. Government services, after a strong Q1, saw an 18% quarterly decline [1].

Noteworthy transactions in the quarter included Digital aviation solutions divestiture by Boeing ($10.55 billion), Motorola Solutions’ (MOT) $4.4 billion pending acquisition of Silvus Technologies, and multiple bolt-on acquisitions in edge computing, electro-optical systems, explosive hazard detection, and aerospace maintenance [1].

Public valuations across the sector remained strong, with government services firms like Booz Allen (BAH) and Leidos (LDOS) trading at median enterprise value-to-ebitda multiples of 11.0 times, and diversified engineering names like EMCOR (EME) and Jacobs (J) hovering around 13.8 times. Aircraft OEMs were notably rich, with Safran (OTCPK:SAFRF) (OTCPK:SAFRY), Rolls-Royce (OTCPK:RYCEF) (OTCPK:RYCEY), and GE Aerospace (GE) trading at forward multiples above 20 times [1].

Bel Fuse Inc. (BELFB) also reported strong Q2 performance, with sales reaching $168.3 million, reflecting a 26.3% increase from the second quarter of 2024. The company's Power Solutions and Protection segment contributed $86.8 million, with growth largely driven by aerospace and defense exposure. Connectivity Solutions reached $59.2 million, and Magnetics Solutions recorded $22.3 million [2].

Looking ahead, Stout expects strategic buyers, especially public companies flush with cash, to continue leading the deal pipeline through the second half of 2025. Aerospace and defense assets, particularly those aligned with modernization, sustainment, and national security technologies, remain hot targets [1].

References:
[1] https://seekingalpha.com/news/4472568-global-aerospace-and-defense-deal-activity-surged-in-q2-fueled-by-strategic-buyers
[2] https://seekingalpha.com/news/4472524-bel-fuse-signals-sequential-growth-with-q3-sales-guidance-of-165m-180m-backed-by-strong-q2