For M&A investors, 2021 will be a year to remember. How will 2022 stack up? As we head into the new year, Harris Williams Industry Group Heads share their views on which trends will drive growth, key investor considerations, and the opportunities to be found in each of the industries we cover. We look forward to pursuing these opportunities in partnership with our clients in the months to come. 

How do you feel about M&A conditions heading into 2022 within your industry? 

Overall, we feel good about 2022. There’s an abundance of dollars pursuing a limited number of high-quality assets. Financial and strategic buyers remain highly active, and less traditional investors are widening their apertures to pursue more opportunities. Infrastructure funds have made major investments in aviation services, a trend we expect to continue. We’ve also seen venture and growth equity being more active in our markets, especially withindefense technology.

Within aerospace, we expect continued activity in subsectors that proved resilient over the past 18+ months and that support the future aviation ecosystem, such as private aviation, air cargo, and aftermarket and aviation services. Within defense and government services, we expect buyers to aggressively pursue opportunities with defensible positions on long-life programs with clear budgetary priority.

What should M&A investors keep top-of-mind in your industry this year?

First, top-quality assets will continue to command premium valuations, so buyers should proactively look for opportunities to underwrite stronger growth, whether through operational improvements, a clear acquisition road map and post-acquisition playbook, or some other angle. Second, it’s important to get ahead of new dynamics such as talent sourcing in a hyper-competitive market, input sourcing and supply chain resilience, artificial intelligence, Web 3.0, and other advanced technologies.

China is another consideration: Buyers should be developing investment theses that aren’t dependent upon significant revenue growth or strategic sourcing from China, a departure from many narratives developed over the past two decades.

Finally, sellers should be able to enunciate their ESG strategy, as buyers are increasingly focused on what they’re inheriting in that regard.

ADG_quote-graphic_v1.pngName a few of the most significant trends that will drive growth in your industry in 2022.

Within commercial aerospace, the key trend is continued recovery, particularly within the aftermarket supply chain and services networks. Businesses with end market exposure beyond strictly commercial passenger – cargo, general aviation, government – will be viewed especially favorably.

Within defense, there is continued focus on capabilities relevant for near-peer adversaries: naval deterrence, advanced electronic systems, cyber, etc. Other growth areas include space, both for commercial purposes and for national security, and secure supply chains, which will include shifting some advanced manufacturing back to the U.S.

ADG_rogers-graphic.pngHow has your team delivered exceptional client service in this busy market?

Our commitment to providing clients with best-in-class M&A advisory coupled with deep industry expertise remains unchanged. But some of our tactics have evolved. We are increasingly emphasizing up-front preparation prior to a market engagement. Streamlined materials, analyses, and responses to likely questions help buyers focus early and allow sellers to play offense at every stage of an engagement, including potentially accommodating an aggressive buyer.

We’ve also evolved our use of technology, which includes faster and more comprehensive data analytics capabilities and more efficient communication channels. At the same time, interpersonal connections are fundamental to our business, and there’s no substitute for engaging in person.

Describe the market in three words: 

FOCUS, QUALITY, OPTIMISM

Select 2021 Transactions by the Harris Williams ADG Group

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The Harris Williams ADG Group offers strategic advice to a global base of leading aerospace, defense and government services clients. For more information on the ADG Group and other recent transactions, visit the ADG Group’s section of the Harris Williams website.

To learn more, please contact our senior bankers.