There’s still plenty of mergers and acquisition interest for aerospace and defense companies in the U.S., but the prices companies are willing to pay have started to come down from recent highs.
Some of the smaller companies were fetching double-digit earnings multiples just a short time ago, but those have now dropped slightly to around 8%, says Michael Richter, managing director of Lazard'’ aerospace and defense group. The global credit crisis and some uncertainty over the way forward have contributed to the turn around, he suggests.
But that doesn’t mean deals aren’t still in the works. EADS is looking for a big acquisition in the U.S. next year, says Marwan Lahoud, the company’s chief marketing and strategy officer. Safran, Thales, Elbit are also on the prowl for buying opportunities.
So how is the looming U.S.presidential election affecting the M&A business. Not too much, argues William Farmer, a second managing director at Lazard. There’s a feeling intelligence, surveillance and reconnaissance business, as well as support activities will remain healthy, so interest in those type of companies remains solid.