We told you in March of last year that aerospace and defense M&A activity had rebounded after a pullback in 2013. In July, we reported that M&A activity in the aviation and aerospace sectors was strong. Now, PwC’s Mission Control report for Q4 2015 has confirmed that 2015 was a record year for aerospace and defense M&A.
Total deal value in this sector in 2015 reached $61.7 billion, more than 50% higher than the previous highest year in 2007. The most recent report by PwC for Q1 2016 indicates that deal volume is down slightly as compared to Q4 2015, but deal value is up.
A key issue for the aerospace and aviation industries going forward involves technological change in the Maintenance, Repair and Overhaul (MRO) segment. PwC reports that the future of “digital aviation” is on the horizon, which will present opportunities for revenue growth in the $60 billion MRO market. Aviation Week similarly reports that investment in civil aviation MRO is up, and deal activity is expected to increase in 2016 as a result.
The increase in aerospace M&A is good news for Canada, where the aerospace industry employs more than 180,000 Canadians according to a 2015 report by the Aerospace Industries Association of Canada. MRO activity in particular represents 27% of the Canadian aviation industry, and grew 37% between 2004 and 2014. Projected M&A activity in this sector may provide an updraft to Canadian businesses.
The author would like to thank Jacqueline Byers, articling student, for her assistance preparing this legal update.
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