M&A transaction volume across aerospace, defense and government held firm at 76 total transactions in Q3 2026. A 48% surge in defense technology acquisitions and expanding government IT investments effectively counterbalanced a post-peak normalization in commercial aerospace M&A.
As global threat landscapes evolve and industrial base constraints persist, capital allocators are aggressively targeting multi-domain autonomy, counter-UAS, specialized energetics and core supply chain resilience.
Highlights and key industry themes
- Defense tech acceleration: Defense deal volume surged to 31 transactions (+48% QoQ), driven by strong strategic and private equity appetite for autonomous systems, electronic warfare and energetics capacity.
- Supply chain insourcing: Aerospace OEMs are pivoting from outsourcing to direct vertical integration (e.g., GE Aerospace acquiring CPP) to protect production ramp rates and mitigate raw material bottlenecks.
- Direct DOD equity injections: The U.S. Department of Defense is increasingly leveraging direct equity, warrants and preferred stock investments, paired with multi-year purchase guarantees, to secure vulnerable defense industrial base suppliers.
- Regulatory shift ahead: A proposed Small Business Administration (SBA) size standard overhaul could raise small business revenue thresholds significantly, altering mid-tier market eligibility and M&A strategies.
Q3 2026 median valuation multiples
- Aerospace - 15.2x
- Defense - 12.5x
- Government - 9.1x
Key questions answered in the full report
- Where are public market valuation multiples settling across aerospace, defense and government tech sectors heading into Q4 2026?
- How is transatlantic capital divergence impacting European vs. U.S. space tech companies?
- What are the complete transaction details and financial metrics for Q3 2026 top aerospace, defense and government sector M&A deals?
Access our aerospace, defense and government market analysis
Read the full report to access detailed transaction logs, public trading comps, sector breakdown analyses, and expert commentary from our senior investment banking team.
