| This article is part of Fenwick's "Buy-Side M&A Playbook" series, published as part of the Silicon Valley Defense Group's Industry Collaboration Toolkit. Access the full playbook here. |
Acquiring a company in the aerospace, defense, and critical manufacturing sectors requires more than just financial readiness. These industries come with unique regulatory challenges, security concerns, and government contract obligations. Before diving into a deal, buyers must strategically assess key factors that could impact the transaction.
Understanding Strategic Fit
The first step in an M&A deal is determining whether the target aligns with your long-term goals. Does the company bring valuable technology, intellectual property, or a key talent pool? Will its government contracts or security accreditations enhance your current capabilities? Buyers should assess these factors early to determine if the acquisition is worth pursuing.
Choosing the Right Deal Structure
Buyers must also evaluate whether they should pursue a full acquisition, asset purchase, or acquihire. Each approach has different financial, regulatory, and operational implications. Payment structures should also be considered—cash, stock, and earnouts may play a role, especially when government contracts or technology milestones are involved.
Regulatory & Compliance Risks
Aerospace and defense transactions require regulatory approval from bodies such as CFIUS (Committee on Foreign Investment in the U.S.) and adherence to ITAR/EAR (International Traffic in Arms Regulations/Export Administration Regulations). Early engagement with regulatory experts is essential to avoid deal delays or disapprovals.
By addressing these factors before entering negotiations, buyers can position themselves for a smoother M&A process.
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