Blue Skies Ahead for A&D Industry

John Gabbert | April 26th, 2016 | MMG
This story appears in full in the May/June 2016 issue of Middle Market Growth.

The first airplane flight took place on Dec. 17, 1903, at Kitty Hawk, North Carolina. More than a century later, the United States boasts the largest number of airports of any country—some 13,513, according to the most recent figures from the The World Factbook published by the CIA. By comparison, to round out the top three, Brazil comes in at just over 4,000 airports total, while Mexico has 1,714.

Those are just a few statistics that illustrate the scope of the U.S. aerospace industry. Here are a few more, courtesy of the General Aviation Manufacturers Association’s 2015 General Aviation Statistical Databook & 2016 Industry Outlook. In 2014, the United States exported 696 airplanes, accounting for 42.7 percent of total plane shipments that year and $5.4 billion in exported billings.

Given the extent of the domestic industry, it’s not surprising private equity investors completed 125 aerospace and defense deals in 2014 and 2015 combined, taking advantage of continued consolidation and technological changes. Aerospace and defense is a classic lodestar of private equity interest, aligning with the manufacturing and middle-market aspects of classic private equity strategies. Warburg Pincus’ $900 million buyout of Wencor Group in June 2014 is a good example, so let’s take a closer look at that deal. […]

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