Industries · Aerospace, Defense & Space
Selling an aerospace, defense or space manufacturing company
means transferring approvals, programs and compliance intact.
An acquirer of an AD&S manufacturer underwrites more than earnings. It underwrites the certifications, customer source approvals, program positions and regulatory registrations that took years to earn and must survive a change of ownership. We have sold aerospace and defense manufacturers to acquirers ranging from Pratt & Whitney to private family offices, and we represent founders of companies with roughly $5–100M in revenue through a full sale or a strategic recapitalization.
Qualification
Approvals competitors cannot replicate quickly: AS9100, NADCAP and customer source approvals.
Program position
Sole- and single-source parts on platforms with long production and sustainment lives.
Transferability
Evidence that registrations, approvals and contracts continue under a new owner.
In brief
How AD&S manufacturing M&A differs from other sectors
Aerospace, defense and space manufacturers make parts, assemblies and processes that customers must qualify before they can use them. That qualification, together with long program lives and regulatory registrations, is what an acquirer pays for. It is also what a poorly structured sale can put at risk, because many approvals are tied to a specific legal entity, site, quality system and team.
What drives value
Qualification depth, program position and contract coverage, and how cleanly all three transfer.
Who buys
Prime contractors and tiered suppliers, private equity platforms, family offices and, with added review, foreign acquirers.
What must transfer
ITAR registration, AS9100 and NADCAP status, customer source approvals, government contracts, SAM and CAGE records, and any facility clearance.
What lengthens diligence
Export classification, cybersecurity compliance for controlled unclassified information, and customer notice or consent requirements.
Ways to transact
Whether a manufacturer wants a full exit to facilitate retirement, or a partnership to facilitate growth, the Accelerated team will find the perfect fit in price, terms, culture, and talent to ensure the continuity of your company.
Companies we represent
Aerospace, defense and space manufacturers with roughly $5–100M in revenue, nationwide.
Capital infrastructure
The four forms of capital an AD&S acquirer is buying
The income statement shows what the business earns. The infrastructure that produces those earnings sits in four places, and diligence tests each one separately.
Qualification capital
The approvals that let a part fly
- AS9100 quality management system, with its certified scope and sites
- NADCAP accreditation for special processes
- Customer source approvals and approved-supplier status
- First article inspection records to AS9102
- Listing in the IAQG OASIS supplier database
Diligence evidence
Certificates and audit history, customer approval letters, and first article packages for key part numbers.
Program capital
The positions that turn approvals into revenue
- Platforms and programs served, with the phase of each
- Sole- and single-source part numbers
- Long-term agreements and blanket purchase orders
- Firm backlog by customer and program
- Share of revenue from spares and aftermarket work
Diligence evidence
Revenue by part number, contract terms, the backlog schedule, and the platform and program phase behind each major part.
Compliance capital
The registrations that keep the work lawful
- ITAR registration with DDTC and the export authorizations in use
- Export classification of products and technical data, USML or EAR
- NIST SP 800-171 controls, SPRS score and CMMC level
- Facility security clearance, where one is held
- SAM registration and CAGE code
- Specialty-metals compliance under DFARS 252.225-7009, with melt-source records
Diligence evidence
The registration statement, a classification matrix, the System Security Plan, clearance documents and the SAM record, plus mill certifications showing where specialty metals were melted.
Process & people capital
The capability behind the paperwork
- In-house special processes such as heat treating, nondestructive testing and plating
- Multi-axis machining and inspection metrology
- Experience with titanium, nickel alloys and other difficult materials
- Skilled machinists, inspectors and quality engineers
- Documented work instructions, travelers and process specifications
Diligence evidence
The equipment list and capacity, process specifications, the organization chart and training records.
Valuation mechanics
How aerospace, defense and space manufacturers are valued
An aerospace buyer starts where any buyer does, with normalized earnings, and then prices how long those earnings will last. They also price according to capacity, needed capex, culture, management bench, certifications, and more. In AD&S, the multiple applied to those earnings rests on how durable the revenue is, and durability comes from qualification, program life and contract structure.
Qualification barriers
Before a new supplier can ship a flight part, it typically has to pass first article inspection to AS9102, validate its special processes and satisfy customer audits. That cost and delay protect the incumbent, and acquirers pay for the protection.
Program life cycle
Revenue from a platform in full-rate production or a long sustainment phase is more predictable than revenue from a development program. Acquirers map each major part number to its platform and program phase.
Source position
A part for which the customer has approved only one supplier is hard to displace. Diligence separates true sole-source parts from parts that are single-sourced out of habit.
Contract coverage
Long-term agreements, blanket purchase orders and firm backlog show how much future revenue is already committed, and on what pricing terms, including how material cost increases are passed through.
Concentration in context
A small number of prime contractors and tier-one suppliers buy most aerospace and defense components, so customer concentration is structural in this sector. Acquirers weigh it against contract terms, qualification depth and the number of programs served.
Commercial, defense and space mix
Commercial aviation, defense and space follow different demand cycles. A balanced mix can steady earnings when any one of them slows.
Aftermarket and spares
Spare parts and repair work extend a program's revenue well beyond original production and often carry stronger margins than production parts.
Working capital intensity
Certified raw material, long-lead items and inspection time hold inventory on the balance sheet. The working-capital target in the purchase agreement has to reflect that normal level.
How the multiple is set in practice: Aerospace Manufacturing M&A Multiples: What Actually Determines the Multiple?
Deal structure
Why stock and asset sales play out differently in AD&S
In most manufacturing sales, the choice between buying stock and buying assets turns on tax and liabilities. In AD&S it also decides which approvals, registrations and contracts carry over on their own and which have to be re-established.
What has to continue
Stock purchase or merger
Asset purchase
Legal entity
Unchanged. The company that holds the approvals stays the same.
Changes. The buyer's entity takes over the business.
Government prime contracts
Generally continue without novation.
Transfer only through a novation agreement the government approves, under FAR Subpart 42.12.
ITAR registration
Stays with the company. DDTC is notified of the change in ownership or control.
The buyer must be registered, and existing export authorizations must be addressed before controlled work continues.
AS9100 and NADCAP
Continue, subject to the certification body's and PRI's rules for changes in ownership.
Often need updated certificates or special audits for the new entity.
Customer source approvals
Continue, subject to each customer's change-of-control terms.
May need customer re-approval and new first article inspections.
SAM and CAGE
Retained, with ownership information updated.
The acquiring entity must be registered in SAM with a CAGE code before it can hold the contracts.
Liabilities and tax
The buyer inherits the company's history, and the tax basis carries over.
The buyer chooses the assets and liabilities it takes and usually gains a stepped-up tax basis.
Some structures keep the approved operating entity intact while giving the buyer many of the tax results of an asset purchase. Preserving Certifications Through an LLC Partnership Reorganization explains one of them.
This page is general information, not legal or tax advice. Transaction counsel confirms the requirements for each sale.
Regulatory continuity
What has to survive the change of ownership
Each approval, registration and contract in an AD&S company has its own rule for a change of ownership. Planning for them before a buyer is chosen protects the value, the timeline and the closing.
Does ITAR registration transfer when an aerospace or defense company is sold?
Registration with the State Department's Directorate of Defense Trade Controls (DDTC) belongs to the registered company. The ITAR requires a registrant to notify DDTC of a change in ownership or control within five days of the event, and to give at least 60 days' notice before the company is sold to a foreign person.
In an asset sale the buyer must hold its own registration, and existing licenses and agreements must be addressed before ITAR-controlled work continues.
22 CFR §122.4
When does the sale of a defense supplier require CFIUS review?
The Committee on Foreign Investment in the United States (CFIUS) reviews foreign investment in U.S. businesses for national security risk. When a company produces critical technologies, which include ITAR-controlled defense articles, a foreign acquirer may be required to file a declaration before closing.
A purely domestic buyer does not trigger CFIUS, but a buyer with significant foreign ownership may.
31 CFR Part 800
Does AS9100 certification continue after a change of ownership?
AS9100 certificates are issued to a defined organization, site and scope under the IAQG certification scheme, and certified suppliers are listed in the IAQG OASIS database. A change in ownership or legal entity is reported to the certification body, which decides whether the certificate continues, needs updating or requires a special audit.
Keeping the same approved entity, site, quality system and responsible people gives the strongest basis for continuity.
AS9100 · IAQG OASIS
What happens to NADCAP accreditation in a sale?
NADCAP accreditation is administered by the Performance Review Institute (PRI) and applies to a specific site and special process. A change in ownership is reported to PRI.
Many prime contractors separately require notice before they will keep sourcing a special process from the site, so both notices belong on the closing checklist.
NADCAP · Performance Review Institute
Will customers' source approvals and purchase orders carry over?
Prime contractors and tier-one suppliers approve specific suppliers, sites and processes. Their purchase-order terms usually require notice of a change in ownership, management or manufacturing location, and some require consent or a new first article inspection.
Reviewing every major customer's terms early shows where notice, consent or requalification sits on the critical path to closing.
Customer terms and flow-downs
Do government prime contracts need to be novated?
In a stock purchase the contracting company stays the same, so government contracts generally continue without novation. In an asset purchase the government recognizes the buyer as successor only through a novation agreement, which the contracting officer must approve.
FAR Subpart 42.12
What changes for SAM, CAGE and small-business status?
SAM registration and the CAGE code identify a legal entity at a location, and SAM records report the company's immediate and highest-level owners, so both need updating after a sale.
A contractor that represents itself as a small business must generally re-represent its size status within 30 days after a merger or acquisition, which can affect eligibility for small-business set-aside work.
FAR 52.219-28
How are facility security clearances handled in an acquisition?
A cleared facility must report changed conditions, including a change in ownership, to the Defense Counterintelligence and Security Agency (DCSA). If the buyer brings foreign ownership, control or influence (FOCI), the clearance can continue only under a mitigation arrangement DCSA approves.
32 CFR Part 117 (NISPOM)
What happens to CMMC status when a defense supplier is sold?
CMMC status attaches to the information systems that were assessed, not to the company's owners, and it is recorded in the Defense Department's Supplier Performance Risk System by CAGE code. Depending on the contract, Level 2 is assessed by the company itself or by a certified third-party assessor every three years, with an affirmation each year.
In a stock sale the same systems and status continue as long as the assessed boundary does not change significantly. Moving the company onto a buyer's systems, or merging networks, changes the scope and generally requires a new assessment. A new entity in an asset sale needs its own CAGE code, and its status should be confirmed early.
32 CFR Part 170 · DFARS 252.204-7021
Can buyers see controlled drawings and technical data during diligence?
Showing ITAR-controlled drawings, specifications, travelers or CNC programs to a foreign person, even inside the United States and even by letting them look, is an export that needs State Department authorization. Technical data controlled under the Export Administration Regulations works the same way, although whether a license is needed depends on the item and the person's country.
Sellers commonly keep controlled files in a separate data room folder open only to screened U.S. persons, limit plant tours the same way, and seek authorization before any foreign member of a buyer's team sees them. The rule applies before closing, whatever the deal structure.
22 CFR 120.50 · 22 CFR 120.56 · 15 CFR 734.13
Do buyers check specialty-metals compliance?
Defense contracts generally require that specialty metals in delivered items, such as certain steels, nickel and cobalt alloys, titanium and zirconium, be melted or produced in the United States or a qualifying country. Suppliers show this with mill certifications that record where each heat was melted, and prime contractors flow the clause down.
Buyers sample those records in diligence, because a gap can mean rework, disclosure to the customer or a price adjustment. The obligation sits with the company and its contracts, so it continues in a stock sale and is assumed with the contracts in an asset sale.
DFARS 252.225-7009 · 10 U.S.C. 4863
Our aerospace and defense work
Aerospace and defense sales we have completed
Each is told from our Transactions record, without the seller's name.
From Frances Brunelle, Founder & President
Most aerospace manufacturers have a customer concentration, especially if they're doing anything of relevance in the industry. If a buyer is concerned about this and seeking to discount the valuation, they are restricted from continuing in the sale process because they don't understand the sector. Occasionally, we have someone qualified who needs an acquisition loan. If they are working with a lender that doesn't understand the sector, we'll get them to a lender who does.
Owner questions
What aerospace and defense owners ask us first
The answers draw on our completed aerospace and defense sales.
What multiple will my aerospace company sell for?
It depends less on a sector average than on how durable the revenue is: qualification depth, program phase, sole-source position and contract coverage. It is also connected to IP, especially as it relates to industry-disrupting new technologies.
What we tell potential clients on an initial call is that if anyone says they can achieve a certain multiple without evaluating the company, that person is telling you what they think you want to hear. What other aerospace manufacturers sell for is completely irrelevant. Every deal is unique. Two companies can have the same EBITDA and trade at multiples that are 10x apart. The only way to answer these questions accurately and honestly is to do a complete, thorough valuation that looks at more than the financials. How the multiple is determined →
How long does a sale take?
The Accelerated team is highly skilled at finding appropriate buyers and leading them through a competitive process quickly. We're also prepared for robust buyer due diligence with a detailed data room and request tracker that maps to it. We've done these deals in four months, while others have taken over a year. The difference is the selling client's sophistication and their ability to provide the information requested for due diligence and underwriting quickly.
Will customer concentration lower my price?
Not necessarily. In aerospace, a few primes and tier-one suppliers buy most components, so concentration is expected. One client had been told by other advisors that concentration would lower the price; our valuation was higher, and the sale beat it by $1 million. In another sale, twelve acquisition lenders declined a buyer over 65% customer concentration. We referred the buyer to a national lender that understands aerospace, and the deal closed.
Will the buyer keep my employees and my location?
This is the mandate from over 95% of our clients, and the Accelerated team is highly skilled at weeding out those who won't comply with it. Occasionally, a business has to move because of a landlord issue, or to facilitate order fulfillment and growth. We proactively work with the seller to develop the appropriate buyer-facing narrative and target audience to achieve the desired result.
In one sale the jobs were guaranteed to stay in the community, with a long-term lease in place. In another, the buyer committed to remain at the existing location long-term.
Do I have to stay on after the sale?
The transition period is linked not just to the seller's desired timeframe, but the bench of managers that exists in the company, the documented SOPs, and where the tribal knowledge lives. Accelerated has always been able to find a buyer that will honor the client's exit wishes. However, if some of the above is not in place, it can take a little longer.
A retiring owner of a landing gear component maker agreed to work part-time for a limited period, which is exactly what the client asked us to aim for. Another owner chose to stay with the buyer in a sales role.
The buyer universe
Who acquires aerospace, defense and space manufacturers
Qualifying a buyer in AD&S means testing technical and regulatory capability as well as financing. The right acquirer can keep the approvals, the programs and the people in place.
Strategic acquirers
Prime contractors and tiered suppliers adding a process, capacity or content on a platform they already serve. They value qualified processes and program positions they cannot build quickly.
Private equity platforms
Investors assembling groups of aerospace and defense suppliers, directly or through a portfolio company. They look for documented processes, management depth and room to grow.
Family offices and independent sponsors
Capital with longer holding periods that often keeps a company's name, leadership and culture intact, and can suit a founder who wants to stay involved. One of our aerospace and medical component clients was acquired by a private family office that owns manufacturing companies nationally.
Foreign acquirers
Possible for many companies, but they add CFIUS review, ITAR notice and, for cleared facilities, FOCI mitigation, which shape both the timing and the structure of a deal.
Sensitive company information is protected until a prospective party has met defined professional and financial standards.
Before going to market
Preparing an AD&S company for a sale or recapitalization
The work that protects value in an AD&S transaction is easiest to do before buyers are in the room.
Build a certification matrix
List every certificate, accreditation, registration and customer approval with the legal entity, site, scope and renewal date each one depends on.
Map revenue to programs
Show revenue by part number, customer, platform, program phase and source status.
Collect contract terms
Gather long-term agreements, blanket orders and purchase-order terms, including change-of-control, assignment and notice clauses.
Confirm export classifications
Classify products and technical data under the USML or the EAR, and list the export authorizations in use.
Document cybersecurity posture
Keep the System Security Plan, SPRS score and CMMC readiness current for any controlled unclassified information the company handles.
Check specialty-metals records
Confirm mill certifications show where each heat of specialty metal was melted, for parts on defense contracts.
Spread key relationships
Make sure quality, engineering and customer relationships sit with a team, so a buyer is not relying on the founder alone.
Normalize earnings
Adjust for owner-specific costs and one-time program events so the quality of earnings holds up in diligence.
Choose the structure early
Weigh stock, asset and reorganization structures against the approvals and contracts that must continue.
Terms of art
A working vocabulary for AD&S transactions
The terms buyers, lenders and counsel use when they diligence an aerospace, defense or space manufacturer.
AS9100
The quality management system standard for aviation, space and defense organizations, published by the IAQG as 9100 and in the Americas as AS9100.
CAGE code
The Commercial and Government Entity code that identifies a contractor's legal entity at a location.
CFIUS
The Committee on Foreign Investment in the United States, which reviews foreign investment in U.S. businesses for national security risk.
CMMC
The Defense Department's Cybersecurity Maturity Model Certification program, which requires defense contractors to protect federal contract information and controlled unclassified information at one of three levels.
Controlled unclassified information (CUI)
Information the government creates or holds, or that a contractor holds for it, that law or policy requires to be safeguarded. Many defense drawings and specifications are CUI.
DDTC
The State Department's Directorate of Defense Trade Controls, which administers the ITAR and its registration program.
First article inspection (AS9102)
A documented check that the first production item meets every design requirement.
FOCI
Foreign ownership, control or influence, which DCSA must see mitigated before a cleared facility can continue classified work.
ITAR
The International Traffic in Arms Regulations, which control defense articles and services listed on the U.S. Munitions List.
Long-term agreement
A multi-year supply agreement that sets pricing and terms for defined parts or programs.
NADCAP
An industry-managed accreditation program for special processes such as heat treating, chemical processing and nondestructive testing, administered by the Performance Review Institute.
Novation
A government agreement that recognizes a new company as successor to a contractor's government contracts.
Recapitalization
A transaction in which a founder sells a majority or minority stake to a new investor and keeps a share of ownership in the company.
Sole source and single source
A sole-source part has only one approved supplier. A single-source part is bought from one supplier even though others could qualify.
Source approval
A customer's authorization for a specific supplier, site and process to produce a part.
Specialty metals
Certain steels, nickel and cobalt alloys, titanium and zirconium that defense contracts generally require to be melted or produced in the United States or a qualifying country.
SPRS
The Supplier Performance Risk System, where defense contractors post their NIST SP 800-171 assessment scores.
From the Learning Center
Weighing a sale or a strategic recapitalization of an aerospace, defense or space manufacturer?