Although this is not particularly welcome news for those involved, it is not surprising—especially given the current security situation—that major transactions in the defense industry are subject to significant political influence, as the recent example of ThyssenKrupp Marine Systems (TKMS) shows; see F.A.Z. of October 31, 2024.
However, it is clear that companies in the security and defense industries represent a highly attractive asset class. And private equity has already made significant investments in larger companies in this sector.
In Germany, however, according to BDSV—the Federal Association of the German Security and Defense Industry , around 90% of companies in this sector are small and medium-sized enterprises with no more than 300 employees. In addition, there is a rapidly growing number of startups whose focus is less on “traditional” defense equipment and more on “Smart Defense” and deep-tech solutions in sensor technology, command and control support, effector control, and so on. This segment is rounded out by suppliers of “dual-use goods,” whose sales focus could shift significantly toward military applications in light of current developments.
Since all signs indicate that the defense industry will continue to grow strongly for a long time and will undergo increasing consolidation—even across national borders—attractive opportunities are emerging for small and medium-sized enterprises (SMEs) whose products represent a valuable addition to strategists’ portfolios. These companies can significantly boost their growth with the help of suitable investors or realize the value of their business through a sale.
Please feel free to contact us at any time if you’d like to discuss this matter with us—with no obligation—or if you’ve already given it some thought. We have in-depth expertise and excellent connections in this field.
