Private Equity Dealmaking in Aerospace and Defense Falls 32% in Q2 Due to Tariffs and Geopolitical Uncertainty

Private equity dealmaking in the aerospace and defense sector experienced a sharp 32% year-over-year decline in deal count during the second quarter of 2025, according to PitchBook data [1]. This drop, particularly pronounced in the defense sub-sector where deal counts fell by 61%, reflects a temporary slowdown linked to new U.S. tariffs and the broader uncertainty of the global geopolitical landscape. The data highlights how external factors can influence transactional activity, even in industries traditionally seen as resilient [1].

Jim Corridore, senior industrials analyst at PitchBook, expressed surprise at the scale of the decline. “We are also surprised by the slowdown in defense dealmaking,” he noted in an email to Fortune. While the new $1 trillion U.S. defense budget and NATO’s commitments to increase defense spending signal long-term strength, Corridore suggested that shifting priorities and policy adjustments may have contributed to a pause in dealmaking during Q2 [1]. These delays, however, are not seen as indicative of a broader downturn in the sector.

Despite the recent decline, the long-term outlook for aerospace and defense remains optimistic. Corridore emphasized that funding in the sector continues to be robust, with strong interest from both venture capital and private equity investors. He pointed to companies like Anduril—valued at $30.5 billion—and Sarconic, which raised $600 million in a recent Series C round, as evidence of the sector's dynamism and innovation [1]. Corridore expects deal activity to rebound in the second half of 2025 as market participants adjust to the evolving environment.

The Q2 figures contrast with the broader narrative of a thriving aerospace and defense market, where new entrants and technological advancements continue to attract capital. However, the data underscores the sensitivity of private equity transactions to macroeconomic and policy shifts. As the sector moves forward, the pace of dealmaking may serve as a key indicator of how well the industry adapts to regulatory changes and shifting defense priorities [1].

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[1] Private equity dealmaking in aerospace and defense drops 32% in Q2, PitchBook says (https://fortune.com/2025/08/22/private-equity-dealmaking-in-aerospace-and-defense-drops-32-in-q2-pitchbook-says/)