Contract Manufacturing Sector Spotlight - Fall 2025

M&A Trends

Resilient growth and strategic expansion drove strong Contract Manufacturing M&A activity in Q3 2025 despite geopolitical headwinds and economic uncertainty.

Market Dynamics

• Economic activity in the Manufacturing sector has indicated stable, consistent performance for Q3 2025 with most sub sectors seeing a slight increase in QoQ EV/EBITDA multiples.
  • Aerospace & Defense Manufacturing remains particularly robust, supported by government procurement of hypersonic vehicles, autonomous systems, and drones.
  • In contrast, the Packaging sector was one of the only segments to experience a contraction in Q3 2025, primarily due to weakened consumer demand, elevated input costs from tariffs and raw material inflation, and persistent overcapacity and inventory buildup across plastic packaging markets.
• The Manufacturing sector faced renewed pressure as a federal government shutdown towards quarter end created uncertainty around federal spending and industrial investment. Compounding the slowdown, escalating tariff tensions (particularly the doubling of U.S. steel and aluminum duties and a retaliatory trade dispute with India) further strained the sector by driving up input costs, delaying capital projects, and complicating cross-border supply chains. These combined fiscal and trade headwinds tempered the broader industrial momentum that had carried through the first half of the year.

Learn More

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