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M&A Trends and Activity from 2010 to Today

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Government services M&A for 2010 finished with 98 transactions closed, a level not reached since 2007 when 99 acquisitions closed.  Acquisition focus for the year was predominately on cybersecurity and intelligence targets, accounting for ~40% of total deal volume, followed by civilian (21%), DoD (21%), and diversified services (17%).  KEYW was the most active buyer of government services companies with three transactions, followed by CACI, SAIC, and SRA each with two transactions.  Compared to 2010, there has been increased activity in DoD / national security and diversified services, which comprise approximately two-thirds of total government services deal volume.

Defense M&A in 2010 was flat from 2009 levels, with 71 acquisitions completed in 2010 compared to 69 in 2009.  Defense firms continued to utilize M&A in order to reposition their focus and tap into priority funding areas.  Specifically, large companies have gobbled up a majority of the mid-sized C4ISR firms to bolster their capabilities in this area, including Esterline’s acquisition of Eclipse Electronic Systems, Raytheon’s purchase of Applied Signal, and Boeing’s acquisition of Argon ST.

The commercial aerospace industry experienced a considerable rebound in M&A activity in 2010, with 61 closed transactions, 20% more than in 2009.  There were a number of large deals completed in the commercial aerospace components market as strategic buyers sought to expand their presence on major platforms and add complementary offerings to their portfolios.  $500+ million deals have included Meggitt’s acquisition of Danaher’s Pacific Scientific Aerospace business, ATI’s purchase of Ladish, TransDigm’s acquisition of McKechnie, and Triumph’s purchase of Vought.