Aerospace & Defense Sector Spotlight - Fall 2025

M&A Trends

Resilient growth and strategic expansion drove strong Aerospace & Defense M&A activity in Q3 2025. Expanding worldwide defense budgets provide a foundation for sustained sector growth.

Market Dynamics

• The Aerospace & Defense sector experienced a mixed Q3 2025, with surging demand in Aircraft & Engines and Defense Contractor markets, and weaker growth within Components and Specialty Systems.
• The defense sector is experiencing significant expansion, propelled by a notable rise in government expenditures globally linked to the conflicts in Ukraine and the Middle East.
  • Globally, governments continue to allocate investments in advanced technologies such as hypersonic missiles, autonomous systems, and advanced drones in response to these geopolitical tensions.
  • Defense Contractors are increasingly utilizing AI and digital engineering, enhancing capabilities such as predictive maintenance, supply chain management, and development of unmanned systems. Defense Contractors experienced a quarterly EBITDA multiple appreciation of (+9.7%).
• With new aircraft deliveries constrained and demand returning to pre-covid levels, airlines are utilizing older fleets for longer periods, boosting demand for MRO services. MRO has experienced a (+36.8%) increase in YoY index value.

Learn More

Reach out to Dinan Capital Advisors Managing Director Tom Gerlacher for more report insights.