The Complete Guide to Selling Your Aerospace & Defense Business

Selling an aerospace and defense (A&D) business is a significant and complex undertaking, requiring meticulous preparation, industry expertise, and the right team to guide you. The specialized nature of the A&D industry, combined with its high regulatory requirements, complex global supply chain and unique and constantly changing market dynamics, makes it critical to approach the sale strategically.

At Janes Capital Partners, we have helped countless businesses in the aerospace and defense sector successfully navigate mergers, acquisitions, and exits. This guide provides an overview of the key steps, considerations, and best practices for selling your aerospace and defense business.

Why Choose Aerospace Business Sale Advisors?

Engaging experienced aerospace business sale advisors is essential. The aerospace industry’s unique challenges, such as complex global market dynamics, changing technologies, stringent compliance and regulations, specialized buyers, and valuation intricacies, make general business brokers less effective.

Benefits of a Specialized Aerospace Business Broker:

1. Industry Expertise: Specialized brokers, like Janes Capital Partners, understand the nuances of the aerospace and defense sectors, enabling us to identify ideal buyers, understand the value attributes of your business and how best to present each attribute--as well as realize potential buyer synergies.
2. Targeted Buyer Network: Aerospace brokers have established relationships with key buyers including: OEM’s and other strategic investors, private equity firms, and international buyers (both strategic and financial).
3. Maximized Valuation: Advisors with industry experience know how to highlight your company’s unique strengths, from intellectual property to long-term contracts, ensuring maximum value in the sale.

Step 1: Preparing Your Aerospace Business for Sale

Evaluate Readiness

Before entering the market, assess your company’s readiness. Buyers will look for financial stability, operational efficiency, and potential for profitable future growth.

Key Preparations Include:

• Financial Documentation: Prepare audited financial statements, profit and loss reports, and balance sheets; as well as detailed financial projections.
• Operational Review: Streamline operations, resolve inefficiencies, ensure compliance with industry and other regulations (both local and federal) and maintain/optimize key performance indicators (KPI’s).
• Market Positioning: Highlight your company’s unique value proposition, such as technological innovations, proprietary processes, or key contracts.
• Marketing Materials: Update your website and other marketing collateral so that they are contemporary, accurate and convey not only where your company is today—but where it is going—and where it will be tomorrow.
• Strong Management: The bench strength of management (both breadth and depth) is a key factor, the importance of which should not be overlooked.

Pro Tip: Engage an aerospace business broker or aerospace investment banking firm early in the process to conduct a business assessment and identify areas for improvement.

Step 2: Establishing the Right Valuation

Determining the fair market value of an aerospace and defense business is a sophisticated process, given the sector's intricacies. Unlike general businesses, factors such as OEM and government contracts, proprietary IP, platform concentration, customer mix, aftermarket exposure, supplier ratings (quality and OTD) and qualifications/certifications can significantly impact valuation.

Valuation factors:

1. Revenue Streams: Recurring revenue from long-term contracts adds stability and value.
2. Market Position: A niche specialization or competitive advantage (e.g., proprietary technology) increases appeal.
3. Margin Profile: High margin businesses will attract much greater interest than low margin businesses.  Loss making businesses may attract no buyer interest at all.
4. Regulatory Compliance: Demonstrated compliance with FAA, DoD, EAR, NIST or other regulatory requirements is imperative.
5. Growth Potential: Buyers prioritize companies with a clear path for growth and expansion, including market share gains, customer acquisition, pricing leverage or product innovation

Step 3: Finding the Right Buyers

Identifying suitable buyers is critical to ensuring a successful sale. Buyers of aerospace and defense businesses typically include:

• Strategic Acquirers: Companies looking to expand their market share, geographic reach, customer base, capabilities or product offering.
• Private Equity Firms: Investors seeking high-growth opportunities in the aerospace and defense space.
• International Buyers: Companies aiming to enter or expand in the U.S. market, particularly in defense-related sectors—or US buyers looking to expand overseas.

The Role of a Broker: As a leading aerospace business sale advisor and aerospace investment banking firm, Janes Capital Partners specializes in: (i) creating liquidity events and superior financial outcomes, (ii) connecting sellers with buyers who align strategically, financially, and culturally.

Step 4: Navigating the Sales Process

The sale of an aerospace and defense business typically involves these stages:

1. Initial Discussions: Define your goals, timeline, and expectations with your broker or advisor.
2. Marketing Your Business: Create various marketing materials including a confidential information memorandum (CIM) and management presentation (MP) to present your business to potential buyers.
3. Buyer Screening: Vet prospective buyers to ensure they have the financial capability and strategic alignment.
4. Negotiations: Negotiate terms that maximize value while protecting your legacy.
5. Due Diligence: Buyers will conduct thorough due diligence, reviewing financial, operational, and compliance records.
6. Closing the Deal: Finalize the sale agreement and transition ownership.

Step 5: Addressing Common Challenges

Selling an aerospace business comes with its share of challenges, including:

• Regulatory Compliance: Ensure adherence to ITAR, CFIUS, DFARS, and countless other regulations to avoid unexpected delay or interruption.
• Confidentiality: Maintain strict confidentiality in order to shield customers from M&A related rumors and to protect sensitive business information.
• Timing: Timing matters. Market conditions (including the potential gain or loss of a major contract), geopolitical events, and industry trends (including build rates) can and should influence the timing of your sale.

How Janes Capital Partners Can Help: Our extensive experience in the aerospace and defense sectors enables us to navigate these challenges seamlessly, ensuring a smooth transaction.

Why Partner with Janes Capital Partners?

Janes Capital Partners has earned a strong reputation as a leading aerospace business broker, and investment banking firm specializing in M&A advisory services for middle-market businesses in the Aerospace & Defense sectors. Here’s why our clients trust us:

• Proven Expertise: Decades of experience in facilitating complex transactions.
• Tailored Solutions: Customized strategies to meet your business goals.
• Global Network: Access to a vast network of strategic buyers and industry contacts.
• Commitment to Success: A client-focused approach ensures your business achieves its maximum value.

FAQs: Selling Your Aerospace & Defense Business

1. How long does it take to sell an aerospace company?

The process typically takes 7–9 months, depending on factors like business readiness and market conditions.

2. Do I need an aerospace business broker?

Yes. The specialized nature of the industry makes working with a broker/investment banking firm critical to achieving the best results.

3. How do I start the process?

Begin by consulting an aerospace business sale advisor to evaluate your business and develop a tailored strategy.

Selling your aerospace business is a once-in-a-lifetime decision. Partnering with the right team, like Janes Capital Partners, ensures that you maximize value, minimize transaction risks and transition your legacy successfully and profitably. Ready to take the next step? Click the button below or visit Connect With a Banker to begin your journey.