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    Sell Your Aerospace and Defense Business

    Aerospace and defense is a $900 billion US market defined by long-duration contracts, regulatory barriers to entry, and a buyer universe that operates under constraints found in no other sector. Facility clearances, ITAR registration, CMMC certification, and the depth of a company's cleared workforce are not supplementary valuation factors. They are threshold requirements that determine which buyers can participate in a transaction and how that transaction must be structured. Businesses with Top Secret facility clearances and diversified program exposure across multiple prime contractors occupy a rare competitive position, and the current defense budget cycle combined with supply chain consolidation trends is driving acquisition activity to levels not seen in over a decade.

    FISART advises A&D business owners through a sell-side process built specifically for a sector where compliance, security clearance transfer, and regulatory sequencing are inseparable from value creation. Selling an A&D business is fundamentally different from selling a general industrial company. The clearance novation process, ITAR-compliant data room management, customer change-of-control notifications, and the limited universe of qualified cleared buyers all require a process designed around these realities from the start. A single misstep in ITAR compliance during diligence or a failed clearance transfer can end a transaction that looked financially compelling.

    The sell-side preparation phase is especially important in A&D. Clearance transfer through novation or proxy board sponsorship adds 3 to 6 months beyond a standard closing timeline, and buyers evaluate a company's readiness for that transfer as a primary screening criterion. FISART helps owners map clearance dependencies, organize compliance documentation, and qualify buyers for both financial capacity and clearance infrastructure before investing in the full diligence process.

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    6-12x EBITDA

    50+

    6-9 months

    $900B+

    Why aerospace and defense businesses command premium valuations

    A&D businesses occupy one of the most defensible positions in the industrial economy. The combination of facility clearances, ITAR registration, program-specific qualifications, and long-duration government contracts creates barriers to entry that are measured in years and millions of dollars. Once a supplier is qualified and embedded in a defense program, the cost and risk of requalification make customers extremely reluctant to switch. Buyers recognize and pay significant premiums for that durability, but only when the compliance posture and clearance infrastructure are documented and transferable.

    The current market environment is particularly favorable for A&D sellers. Defense budgets are at historic levels, with multi-year appropriations providing program visibility that extends well beyond typical commercial planning horizons. At the same time, supply chain disruptions and reshoring priorities are driving primes and mid-tier contractors to acquire rather than qualify new suppliers. Companies with cleared facilities, diversified contract backlog, and a proven delivery track record across multiple programs are seeing more inbound acquisition interest than at any point in recent memory.

    Private equity has become one of the most active buyer categories in A&D. Specialized funds like AE Industrial Partners, Veritas Capital, and Arlington Capital Partners maintain their own facility clearances and proxy board infrastructure, allowing them to acquire and hold classified businesses. These PE platforms are building multi-company A&D portfolios through buy-and-build strategies, targeting businesses with strong program positions and cleared workforces they can grow. For sellers, this PE demand adds competitive pressure alongside strategic acquirers and primes.

    International allied-nation defense companies represent another significant buyer category. UK, Australian, Canadian, Israeli, and select European defense groups regularly acquire cleared US companies to access the world's largest defense market. These transactions require special security agreements or proxy boards approved by the Defense Counterintelligence and Security Agency. The regulatory process adds timeline, but these buyers often pay premium valuations for US market access that would take a decade to build organically.

    What Buyers Evaluate

    • Security clearances (facility clearance level, key personnel clearances)
    • ITAR registration and compliance track record
    • Program diversity and contract backlog
    • Customer concentration across DoD and prime contractors
    • Workforce clearance depth (percentage of cleared employees)
    • Certifications (AS9100, NADCAP, CMMC)

    Who buys aerospace and defense businesses

    The A&D buyer universe is smaller and more specialized than in other industrial sectors. Mid-tier defense contractors, cleared PE platforms, defense primes, and allied-nation international acquirers each bring different capabilities, clearance infrastructure, and strategic rationales to the table.

    Mid-Tier Defense Contractors

    Companies in the L3Harris, Curtiss-Wright, and Mercury Systems category that acquire to fill capability gaps in electronics, manufacturing, or services. These buyers have existing facility clearances and established relationships with the Defense Counterintelligence and Security Agency, which simplifies the clearance novation process. They pay for program access, cleared workforce depth, and technology positions that complement their existing contract portfolios.

    PE Platforms with Security Clearances

    Specialized A&D private equity funds like AE Industrial Partners, Veritas Capital, and Arlington Capital Partners that build portfolio companies through acquisition. These firms maintain their own facility clearances and proxy board structures, enabling them to close transactions involving classified programs. They target businesses with $3M or more in EBITDA, diversified contract backlog, and a cleared workforce they can retain and grow.

    Defense Primes

    Lockheed Martin, Northrop Grumman, RTX, and General Dynamics acquiring to vertical-integrate their supply chains, bring critical capabilities in-house, or access technology positions in growth areas like space, cyber, and autonomous systems. Prime acquisitions tend to move on strategic timelines tied to program needs. They bring massive contract vehicles, facility infrastructure, and clearance coverage that can transform a smaller company's growth trajectory.

    Strategic International Acquirers

    Allied-nation defense companies from the UK, Australia, Canada, Israel, and select European countries entering or expanding in the US defense market through cleared acquisitions. These transactions require proxy board or special security agreement structures approved by the Defense Counterintelligence and Security Agency. The regulatory process adds 3 to 6 months but opens doors to buyers willing to pay premium valuations for US market access and cleared facility infrastructure.

    What your aerospace and defense business is worth

    A&D businesses in the lower middle market typically trade between 6x and 12x EBITDA, a range that reflects the significant impact of clearance level, program diversity, and compliance maturity on valuation. Businesses operating at the Top Secret facility clearance level with diversified exposure across multiple primes, strong contract backlog, and a deep cleared workforce consistently command the upper end of that range. The clearance infrastructure alone, which takes years and substantial investment to establish, represents value that buyers cannot replicate quickly. Companies with Secret-level clearances, concentrated customer exposure, or thin cleared workforce depth trade at the lower end, and buyers frequently use earn-outs or holdback structures when clearance transfer or customer retention presents risk.

    Beyond clearance level, buyers weight program diversity and backlog visibility heavily. A company with revenue spread across four or five prime contractors and 15 to 20 active programs presents a fundamentally different risk profile than one concentrated in a single prime or program. Contract backlog extending 18 months or more provides the revenue visibility that supports premium pricing. Certifications like AS9100, NADCAP, and CMMC Level 2 or higher further differentiate businesses and expand the qualified buyer pool.

    FISART normalizes EBITDA for government-unique costs, compliance overhead, facility clearance maintenance expenses, and owner-related adjustments that are common in A&D businesses. We then position the business against the specific factors that drive A&D multiples: clearance level, program diversity, backlog duration, cleared workforce depth, and compliance maturity. The preparation phase, where compliance documentation is organized, clearance dependencies are mapped, and the buyer universe is pre-qualified for clearance capability, is where the achievable multiple is established.

    Valuation-Relevant Factors

    • Security clearances (facility clearance level, key personnel clearances)
    • ITAR registration and compliance track record
    • Program diversity and contract backlog
    • Customer concentration across DoD and prime contractors
    • Workforce clearance depth (percentage of cleared employees)
    • Certifications (AS9100, NADCAP, CMMC)

    Aerospace and defense segments we cover

    FISART advises A&D business owners across every major segment. Buyer groups, clearance requirements, compliance protocols, and valuation benchmarks vary significantly by subsector and customer base.

    MRO and aftermarket services
    Avionics and defense electronics
    Aerostructures and assemblies
    Satellite and space systems
    Unmanned systems and autonomy
    Defense IT and cybersecurity services

    Is your aerospace and defense business a fit

    FISART typically works with A&D businesses that have established clearance infrastructure, diversified program exposure, and a compliance track record that can withstand buyer scrutiny. Early preparation, covering clearance dependency mapping, ITAR documentation, and compliance posture review, is especially important in A&D because the clearance transfer process adds complexity and timeline that must be planned for from the start of the sell-side engagement.

    We work with A&D businesses that

    • generate $3M or more in annual revenue with active DoD, intelligence community, or prime contractor relationships
    • hold a facility clearance at the Secret or Top Secret level with key personnel clearances in place
    • maintain current ITAR registration and a clean compliance track record without unresolved violations
    • have a diversified contract backlog with program visibility extending 12 months or more
    • prefer a confidential, advisor-led process with outreach limited to pre-qualified cleared buyers

    Common questions about selling an aerospace and defense business

    Direct answers on A&D valuations, security clearance transfer, ITAR compliance during transactions, and the regulatory details that shape every stage of the sell-side process.

    A&D businesses in the lower middle market typically trade between 6x and 12x EBITDA, with the range driven by clearance level, program diversity, contract backlog, and the depth of the cleared workforce. Businesses with Top Secret facility clearances and diversified program exposure across multiple primes consistently command the upper end of that range. Companies with single-customer concentration or clearance gaps trade lower, often with earn-out or holdback structures. FISART normalizes EBITDA for compliance overhead, government-unique costs, and owner-related adjustments, then positions the business against the specific factors that A&D buyers use to determine value.

    The buyer universe for A&D businesses is smaller and more specialized than in other industrial sectors, but the acquirers are well-capitalized and acquisitive. Mid-tier defense contractors fill capability gaps through targeted acquisitions. Specialized PE funds with existing clearances build A&D portfolio companies through buy-and-build strategies. Defense primes vertically integrate critical suppliers. Allied-nation international acquirers enter the US market through cleared acquisitions under proxy board agreements. FISART identifies which buyer type aligns with your clearance level, program portfolio, and technology position to maximize competitive tension within a compliant process.

    Security clearances are the single most consequential factor in A&D transactions. A facility clearance cannot simply be transferred like a business license. It must be novated through the Defense Counterintelligence and Security Agency, a process that requires the buyer to either hold their own clearance infrastructure or establish a proxy board or special security agreement. This novation process typically adds 3 to 6 months to the transaction timeline and eliminates buyers who lack the clearance infrastructure or willingness to sponsor one. FISART structures processes around this reality from day one, qualifying buyers for clearance capability before investing diligence time.

    A&D transactions typically close in 6 to 9 months, longer than general industrial deals because of the additional regulatory and compliance layers. Clearance novation or proxy board establishment adds time. Customer notification requirements under change-of-control provisions in government contracts require coordination. ITAR compliance reviews during data room access and diligence create sequencing constraints that do not exist in other sectors. FISART structures the preparation phase to address these requirements before marketing begins, which compresses the active process timeline and reduces the likelihood of buyer dropout during the extended diligence period.

    ITAR compliance is a threshold issue in any A&D transaction involving defense articles, defense services, or technical data. The sell-side process itself must comply with ITAR because sharing certain technical data with prospective buyers, particularly foreign buyers, can trigger export control requirements. Data room access must be structured with ITAR sensitivity in mind, often requiring tiered disclosure that reveals ITAR-controlled information only after the buyer's authorization status is confirmed. FISART manages this sequencing to maintain compliance while giving qualified buyers enough information to make informed offers. Unresolved ITAR violations or incomplete registration are among the fastest ways to kill an A&D transaction.

    Yes, but the transaction requires a proxy board agreement or special security agreement approved by the Defense Counterintelligence and Security Agency. Under these arrangements, cleared operations are overseen by US citizen board members who manage all classified activities, creating a governance structure that satisfies national security requirements while allowing foreign ownership of the parent entity. Allied-nation buyers from the UK, Australia, Canada, Israel, and select European countries regularly acquire cleared US defense companies through these structures. The DCSA approval process typically adds 4 to 6 months beyond the standard transaction timeline. FISART has experience structuring these cross-border A&D transactions and qualifying international buyers before committing to the extended regulatory process.

    Find qualified buyers for your aerospace and defense business

    Get a confidential assessment of your clearance infrastructure, program portfolio, and market value. See which mid-tier contractors, specialized PE platforms, and defense primes in our network are actively acquiring businesses with your clearance level and capability set.

    Schedule a Confidential Consultation