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Future of A erospace industry Role of M&A in it’s forthcoming growth Global Trends. Adam Czechanowski Senior Manager, Audit Jakub Podleśny Manager, Tax. Rzeszów, 26 June 2012. Deloitte’s Survey. Mergers and Acquisitions in A&D industry Deloitte’s Survey. - PowerPoint PPT Presentation
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Future of Aerospace industryRole of M&A in it’s forthcoming growthGlobal Trends
Rzeszów, 26 June 2012
Adam CzechanowskiSenior Manager, Audit
Jakub PodleśnyManager, Tax
© 2012 Deloitte Poland
Deloitte’s Survey
Footer2
© 2012 Deloitte Poland3
Mergers and Acquisitions in A&D industryDeloitte’s Survey
• Research sample: 89 public companies from all over the world• Survey Time: April 2011• Scope of the study: M&A transactions from 31/12/2000 to 31/12/2010 – 10 years
• In total study includes 70 North Americancompanies (79%), 16 European companies(18%) and 3 companies representing therest of the world (3%)
• Sectors: Services, OEM, Tier 1&2 Suppliers
• 89 analyzed companies made 1,995 acquisitions for a combined value of $336 billion
© 2012 Deloitte Poland
Historical and macroeconomic factors
© 2012 Deloitte Poland5
Mergers and Acqusitions in A&D industryHistorical and macroeconomic factors
• The A&D industry has traditionally seen dramatic increases in M&A activity following periods of decline (such as 2007-2008).
• As a response to the general economic uncertainty, many A&D companies have been stockpiling cash. Current total cash balances of the US’ A&D companies exceed an estimated $70 billion.
• Valuations of A&D firms appear to be at historic lows.
© 2012 Deloitte Poland
Subsectors - characteristics
© 2012 Deloitte Poland7
Mergers and Acqusitions in A&D industrySubsectors characteristics (1): Services and OEM
• Out-performers invested 40% of their investments in services companies, roughly four times as much as the segment’s under-performers.
• OEM are among the only industry entities whose leading prospects in M&A lie outside their segment.
• Many OEMs have made expansion into aftermarket, IT, and mission system-related services a strategic imperative, and acqusitions can help to accelerate OEM’s entry into those spaces.
• Services companies can enhace their market position by acquiring other companies from the same segment.
© 2012 Deloitte Poland8
Mergers and Acqusitions in A&D industrySubsectors characteristics (2): Tier 1&2 Suppliers
• The activities of OEMs in the 1980s and 1990s demonstrated how consolidation in the A&D industry could lead to scale economies and improved negotiating positions with suppliers and channel partners
• As their customers’ negotiating power has improved, perceptive Tier 1 suppliers have begun imitating them and consolidating as well.
• Tier 2 suppliers have begun responding in kind. The consolidation trend continues down the value chain.
© 2012 Deloitte Poland
Summary
© 2012 Deloitte Poland10
Mergers and Acqusitions in A&D industrySummary
• The era of mega-mergers of large defence contractors is behind us.• Targeting companies whose business models enhance the company’s market power.• Consolidation within Tier 1 and 2 suppliers, and services companies – an increasingly
attractive target for OEMs.
• Services companies predominantly acquire other services companies.• OEMs, as a segment, are the most acquisitive segment, comprising over 50 % of M&A
activity.• Both OEMs and Tier 1 suppliers are using M&A to expand their position in the value chain,
moving into both upstream and downstream segments.• Tier 2 suppliers predominantly buy other Tier 1 and Tier 2 suppliers.
© 2012 Deloitte Poland11
A&D industry forthcoming growthDeloitte – value added. We are right here.
• Globaly Deloitte has extensive industry experience with aircraft manufacturers, suppliers, operator and services companies
• We have helped our clients execute effectively across the full M&A life cycle: strategy development, target screening, due diligence (including accounting and tax), tax structuring and valuation as well as integration planning.
• Our R&D and Government Incentives Team can assist with the whole process of filing a R&D claim from scoping through document preparation and submission.
• Our Audit Department employes professionals with an experience working with major A&D companies, such as AVIO.
• We are in Rzeszów since 2011. Our regional office is headed by Grzegorz Koszel, Senior Manager in Deloitte Audit and Jakub Podleśny, Manager in Deloitte Tax Advisory.
© 2012 Deloitte Poland
DeloitteContact Details
Adam CzechanowskiSenior Manager, AuditKrakow OfficePhone: +48 664 19 98 04e-mail: [email protected]
Jakub PodleśnyManager, Tax AdvisoryPhone: +48 662 213 682e-mail: [email protected]
Rzeszów OfficeTel: +48 17 230 47 00Fax: +48 17 230 47 01
ul. Rejtana 2035-310 Rzeszów
www.deloitte.com/pl
© 2012 Deloitte Poland
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/pl/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.