A recent Grant Thornton Corporate Finance report shows North American aerospace and defense mergers and acquisitions activity increased nearly 20% in 2010 compared to 2009. As a result, firms are grabbing talent to drum up business. Lincoln International is one of them.
According to The Deal Pipeline, the firm just hired Razmig Arzoumanian as a managing director and head of the aerospace and defense group in North America. Arzoumanian hails from Bank of America Merrill Lynch, where he had been co-head of global aerospace and defense. Also, director Alyssa Morrisroe, covering A&D, joined Lincoln from Jefferies Quarterdeck, where she founded the London office.
Morrisroe offered some insight into the M&A uptick in the sector, saying, "We continue to see the North American M&A market in A&D gather steam. This is driven by a number of factors, with major influences, including the continued rebound of the commercial aerospace market (where investors are paying high multiples for content on the right platforms), concern on the part of defense players about budget cuts (which is driving portfolio realignment to try to 'pick the right horse' in terms of ongoing funding ) and, perhaps more importantly, deployment of strategic's significant cash reserves."
Lincoln isn't the only one tapping rainmakers. RBC Capital Markets, Morgan Keegan & Co., Bluestone Capital Partners LLC and Carlyle Group are paying special attention to the sector as well.
The Deal Pipeline shows RBC Capital hired managing director Doug Yablonski from Harris Williams & Co. for its M&A group, focusing on the industrials and diversified services and aerospace, defense and government sectors.
Morgan Keegan enlisted Dan Cornell for the firm's security and defense investment banking group as a managing director. He joined from Jefferies & Co., where he had been head of the Washington office and prior to that, built aerospace, defense and government services investment banking practices at Quarterdeck Investment Partners LLC, Legg Mason Inc. and Stifel, Nicolaus & Co.
Bluestone Capital, an investment bank specializing in midmarket aerospace, defense, information technology and professional services companies, hired Chris Taylor and Mike Ivey as senior vice presidents. Taylor was formerly president of the technical services business unit of VT Group Inc., the North American defense and government services operations of Babcock International Group plc. He was previously VT Group's vice president of corporate development. Most recently, Ivey was vice president of finance for NetStar-1 Inc., a Lake Capital portfolio company that provides IT and management consulting services to the federal government. Earlier, he was vice president of finance with Anteon International Corp., which went public in 2002 and was acquired by General Dynamics Corp. for $2.1 billion in 2006.
And Carlyle Group named A&D expert Peter Clare as co-head of the U.S. buyout group. Adam Palmer replaced Clare as head of the global aerospace and defense-sector team. Both are based in Washington. Clare joined Carlyle in 1992 as a member of the U.S. buyout group until moving to Hong Kong as a founding member of the Asia buyout group from 1999 to 2001. Palmer joined Carlyle in 1996 as a member of the aerospace, defense and government services sector team.
All these moves happened in the just the last month. It's one indication that the M&A trend shows promise. But Grant Thornton defense and intelligence sector principal Lou Crenshaw offers a grain of salt involving the government: "The current situation appears to be unusually unstable, and there are many indications that there may be substantial shrinkage in the number and amount of certain types of contracting opportunities at the DoD." - Baz Hiralal