Kerry Lynch stepped into the role of editor of the&nbsp;Aviation International News&nbsp;monthly magazine in May 2022 after serving with&nbsp;AIN&nbsp;for eight years. She joined&nbsp;AIN&nbsp;in December 2014 as a senior editor covering Washington and business aviation news. She has also served on Convention News teams, including as editor of&nbsp;HAI Convention News. Lynch previously spent 25 years with Aviation Week. During her time there, she reported for and later steered&nbsp;The Weekly of Business Aviation, oversaw business aviation content on the&nbsp;Aviation Week Intelligence Network, served on the&nbsp;Show News&nbsp;staff, and held roles as the Washington columnist for&nbsp;Business &amp; Commercial Aviation&nbsp;and&nbsp;Overhaul &amp; Maintenance&nbsp;monthly magazines. In 2021 she was honored with the National Business Aviation Association Platinum Wing Award for lifetime achievement in journalism and was the 2004 recipient of the National Air Transportation Association’s Aviation Journalism Excellence Award. She also has been a recipient of an Aerospace Media Award for business aviation (2022) and NBAA Gold Wing Award (2003, 2024). Lynch graduated from The Ohio State University with a bachelor of arts in journalism.

Editor, AIN monthly magazine

Kerry Lynch

Investment firm Canaccord Genuity sees aerospace and defense merger and acquisition (M&amp;A) activity flourishing, with strong interest coming from potential suitors globally and organizations looking to either build up their technology bases or realign their portfolios.

 


The first half of 2018 from an M&amp;A perspective proved “one of the strongest…we’ve ever seen,” said managing director of investment banking Miles Cox, who steers Canaccord’s aerospace and defense activity from London. Of note to Cox, a breadth of activity—from the smaller end of the market to the top end—has contributed to the market's strength. “It’s a much more balanced market,” he said. “It goes to show how healthy the market is.”

 


Cox and his colleague Greg Agnew, also managing director of investment banking who steers Canaccord’s aerospace defense activity from Washington, D.C., agree that activity at the smaller end of the market has always been fairly active, but more activity is coming in the higher end. The industry is seeing a larger number of transactions and a larger number in the middle market, between $100 million and $1 billion, Cox noted. Private equity interest is increasing its aerospace and defense investment—now accounting for one-third of the deals—marks a high point, he added.

 


“We expect M&amp;A to remain strong,” Agnew said. Confidence in the market, he noted, underpins the activity. Agnew pointed to the healthy stock prices of aerospace and defense firms and high valuations, along with balance sheets that are “generally in good shape.”

 


Overall confidence in the economy and a tax bill in the U.S. that the industry believes will spur further investment have also bolstered the trend. Investors favor the long-term contracts that such firms offer and aerospace and defense firms tend to feature good cash flows, which encourages access to financing, he said.

 


While specific factors driving growth might differ from the commercial and defense sides, they both use M&amp;A to boost technologies, not just to bring scale, added Agnew. "Scale for scale's sake is not why buyers are doing transactions,” he said, noting that companies now take a more strategic approach.

 


On the defense side, companies look at emerging technologies that capture attention and align with defense department budgets. On the commercial side, with OEMs relying increasingly on suppliers, the market is experiencing consolidation in the supply chain, because OEMs seek reliable partners that produce high quality and make the production process more efficient, he said.

 


Cox added that interest is growing in areas that modernize manufacturing techniques, provide innovation such as additive manufacturing&nbsp;and digitization, as well as new materials. Agnew also sees solid activity in the MRO side and, within that, on the component side, where significant fragmentation remains.

 


This interest has assumed a global scope. “We've seen as a lot of transatlantic consolidation and that obviously certainly continues as…suppliers continue to try to diversify and get scale,”&nbsp;Cox added. Asia-Pacific-based companies are showing more interest in the commercial aerospace supply chain. &nbsp;

 


At the same time, international transactions face a bit more scrutiny, Cox said. Cox and Agnew agreed that potential buyers and sellers are both watching progress on Brexit and the tariff talks, but at this point, it has not deterred activity. “Interest still continues in having global consolidation,” Cox said.

 


Canaccord’s aerospace and defense business, which specializes in global middle market transactions, welcomes the scenario. Agnew said that a transatlantic team that can provide cross-border capabilities represents one of its strengths.

Canaccord: Industry Confidence Bolstering M&A Activity

The first half of 2018 was extremely busy for Canaccord Genuity's aerospace and defense M&A business.

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