Aerospace M&A Near Record High as Jet Production Ramps Up in 2024
Surge in Aerospace Mergers and Acquisitions Driven by Production Growth
By Dan Catchpole and Sabrina Valle
SEATTLE, Sept 10 (Reuters) - Mergers and acquisitions are accelerating in the aerospace supply chain as clearer Boeing and Airbus production schedules give buyers more confidence in long-term demand, according to industry data and interviews with dealmakers and suppliers.
Through August, aerospace and defense-focused investment bank Janes Capital Partners tracked 154 publicly disclosed commercial aerospace transactions this year, just shy of the annual record of 159 set in 2019.
Key Drivers of M&A Activity
Buyers are targeting suppliers with scarce workers, specialized manufacturing capabilities and capacity that can help meet rising jet output. Major manufacturers are also seeking to secure supplies of critical components.
Notable Deals in 2024
GE Aerospace this week announced the $12 billion purchase of castings supplier Consolidated Precision Products, as it races to expand engine production. In another large deal, Parker Hannifin agreed in May to buy Circor’s aerospace division, which makes actuation and landing-gear systems, from private equity firm KKR for $2.6 billion.
Strategic and Private Equity Buyers
Most transactions, however, have involved strategic buyers and private equity firms acquiring midsized or smaller suppliers.
The 154 deals announced through August, which do not include the GE deal in September, had a combined value of $14 billion, compared with 157 worth $37.5 billion in all of last year, Janes Capital data showed.
Deal numbers last peaked at 159 in 2019, with a combined value of $21.3 billion, before falling to 82 worth $3.3 billion in 2020 as the pandemic hit. The highest annual value was recorded in 2015, when 106 transactions totaled $59.4 billion.
Boeing and Airbus Production Trends
Boeing Production Stabilizes
Boeing’s jetliner deliveries swung sharply over several years as the company faced a series of crises, falling from 806 in 2018 to 157 in 2020. They recovered to 528 in 2023 before production-quality problems pushed them back down to 348 the following year.
Under a new CEO, Boeing has stabilized production of its best-selling 737 MAX and begun raising output, giving suppliers a clearer view of future demand. It delivered 600 jets last year, the most since 2018, and is on track to surpass that figure this year.
Airbus Output Recovery
Airbus’ output also fell during the pandemic but has risen steadily since. It aims to deliver 870 jets this year, exceeding its pre-pandemic record of 863 in 2019.
"You could index the rate of increase in build and the rate of increase in deals, and it'll track pretty closely," said Anita Antenucci, founder of 3Wire Partners investment bank.
Market Dynamics and Seller Activity
Backlog of Sellers and Valuation Challenges
A backlog of potential sellers is also coming to market, bankers said. Many private equity firms held onto portfolio companies far longer than they typically would as pandemic-era production swings and bloated inventories made it difficult to value businesses with confidence.
"There was no way a buyer — or you — had any idea what your revenues were going to be," said Stephen Perry, managing director at Janes Capital.
Increased Buyer Confidence
As build rates stabilize and their trajectories become more predictable, buyers are growing more comfortable pricing in a target's future performance — even against the backdrop of Boeing's well-documented struggles.
Case Study: DEMGY’s Acquisition of Tool Gauge
That calculus played out last year when France-based DEMGY expanded into Boeing's supply chain by acquiring Tool Gauge, a family-owned, midsized supplier of jetliner interior parts.
Boeing was still struggling to stabilize production when DEMGY began looking at Tool Gauge, which is based in Tacoma, Washington, near Boeing's 737 plant.
DEMGY bet Boeing's fortunes would turn around, and by moving early, it largely avoided a bidding war for Tool Gauge, said Mike Walter, president of DEMGY's North American operations.
"Sometimes when you see an opportunity, you have to take it. We saw an opportunity," he said.
He declined to disclose the purchase price. DEMGY had global revenue of €125 million in 2025.
Competition for Suppliers Intensifies
Private Equity Interest and Labor Shortages
Competition for even small suppliers is increasing, though, particularly due to increased interest from private equity firms, dealmakers said.
Boulevard Machine: A Target for Buyers
Susan Kasa is on the receiving end of that scramble. The owner of Boulevard Machine, a small machine shop with a couple dozen workers outside Springfield, Massachusetts, said she now fields "two to three calls a day" from prospective buyers.
Kasa said her trained workforce — a scarce commodity in an industry grappling with labor shortages — is part of what makes her company such an appealing target.
(Reporting by Dan Catchpole in Seattle and Sabrina Valle in New York; Editing by Jamie Freed)
