The GE Aerospace acquisition of CPP is in the news. But it’s not just defense tech that’s commanding massive multiples.
Meghan Welch returns with her colleague, Hubert de la Vauvre, to share the latest on M&A in aerospace, defense and beyond. Their experience leading Brown Gibbons Lang & Company (BGL) has them working with clients on both buy and sell side.
They’re seeing more companies related to missile systems, munitions, maritime or key programs commanding EBITDA multiple off of an earnings base a full year forward. Even instances of PE paying entirely in equity and then financing after the fact so they’re not subject to financing contingencies.
Meghan calls what she’s seeing, “A bit of the wild, wild west…it’s crazy.”
What You’ll Discover In This Episode
- Why GE Aerospace paid 26x forward earnings for CPP
- The overlooked capability every strategic buyer wants right now
- How long-term agreements went from Holy Grail to handcuffs
- What Chromalloy reveals about the fight for manufacturing capacity
- Two high-growth markets in data centers…& which is a safer bet
- Converging trends that can help US manufacturers catch up
- Much, much more
Chapters
[00:00:00] — Welcome and the GE–PCC deal
[00:00:34] — Hubert’s background and A&D’s turnaround with investors
[00:04:30] — The re-rating of precision manufacturing multiples
[00:06:35] — Leverage shifts from OEMs to small suppliers
[00:11:31] — Casting, forging, and Elon Musk’s casting ambitions
[00:14:51] — Industrial gas turbines, data centers, and competing end markets
[00:16:18] — Data center bubble risk, automation, and the labor gap
[00:22:05] — Onshoring, a new industrial revolution, and China
[00:26:16] — GE’s bet, Pratt & Whitney, RTX, and the jet engine market
[00:28:49] — Will A&D trade like tech?
[00:35:02] — What the Iran conflict exposed in the supply chain
[00:40:02] — Europe, the Strait of Hormuz, and chokepoint risk
[00:43:20] — The state of the US steel industry
[00:48:21] — Culture, religion, and the business of war
[00:50:46] — How OEMs are supporting their suppliers
[00:55:27] — How private equity is approaching A&D
[00:58:09] — Continuation vehicles and hold-vs-sell timing
[01:02:29] — Founder legacy and aging management teams
[01:03:51] — IPOs, carve-outs, and business aviation
[01:05:40] — Under-the-radar winners and fractional jet orders
[01:07:10] — Deal outlook for 2026–2027 and the pre-election rush
[01:09:48] — Wrap-up
More From This Episode
The FAQs and topics below cover the full range of what investment bankers Meghan Welch and Hubert de la Vauvre of Brown Gibbons Lang discuss with host Craig Picken on the Aerospace Executive Podcast, including aerospace and defense (A&D) valuations, supply chain leverage, reshoring, private equity strategy, and the 2026–2027 M&A outlook.
Frequently Asked Questions
Why are aerospace and defense precision manufacturing companies selling for higher valuations in 2026?
According to Brown Gibbons Lang bankers Meghan Welch and Hubert de la Vauvre, A&D precision manufacturers that once traded at around 10 to 11 times EBITDA are now trading in the mid-teens, a range that used to be reserved for proprietary A&D businesses. Welch explains that even build-to-print companies are commanding these multiples when they do high-complexity, low-volume work that makes them de facto sole-source suppliers, especially if they have content on missile systems, munitions, maritime programs, or other key platforms. In some deals, buyers are pricing these companies on earnings a full year forward. She also notes that the traditional size discount for businesses under roughly $10 million of EBITDA has largely disappeared, and that strategic buyers are paying high valuations regardless of scale. When host Craig Picken asked whether aerospace will now trade like tech, Welch said yes in the near to mid term, citing proprietary A&D above 20 times and some defense tech deals at 30 to 50 times, sometimes on revenue. Hubert de la Vauvre argues the difference from tech is that A&D valuations reflect genuine national need rather than speculative bets on pre-revenue companies.
What does GE Aerospace’s acquisition of CPP say about the aerospace M&A market?
On the Aerospace Executive Podcast, Meghan Welch of Brown Gibbons Lang describes GE Aerospace’s acquisition of CPP (Consolidated Precision Products), which had been owned by private equity firm Berkshire Partners, as highly representative of the current market. She says the deal priced at about 26 times forward 2027 EBITDA on an unsynergized, adjusted basis, before 2026 had even closed, showing that it is not only defense tech commanding very high multiples. Welch characterizes it as a preemptive deal that was being considered on a dual track with an IPO, and says GE recognized the same casting bottleneck that Elon Musk has publicly complained about. Host Craig Picken adds that Warren Buffett once called Berkshire Hathaway’s purchase of Precision Castparts (PCC) an overpayment, and suggests that view likely looks different today given the price paid for CPP.
How has the balance of power shifted between aerospace OEMs and their suppliers since COVID?
Craig Picken recalls how large OEMs such as GE once ran ballroom-style bidding events that pitted suppliers against each other and forced them to accept poor pricing and payment terms, and notes that COVID then wiped out many of those suppliers. Hubert de la Vauvre of Brown Gibbons Lang says leverage has now moved to the smaller precision manufacturers because OEMs need capacity and capabilities they can no longer easily access, to the point where a $25 million-revenue shop may have more leverage than GE. As a result, long-term agreements (LTAs), once seen as highly desirable, can now work against a supplier by locking it into terms. Meghan Welch adds that execution risk on commercial aircraft build rates now sits mainly with middle-market suppliers that act as single points of failure, and that Boeing’s Partnering for Success program created supplier distrust whose effects are still felt. Picken’s view is that a precision manufacturer holding an approved-supplier authorization with an OEM like Boeing, Raytheon, or GE holds a highly valuable asset on that basis alone.
Why are casting and forging capacity such a bottleneck in aerospace?
Meghan Welch and Hubert de la Vauvre explain that casting is controlled by a small number of companies that hold the intellectual property and know-how, which makes it a single point of failure in the aerospace supply chain. Welch says this is why she doubts Elon Musk can quickly stand up his own casting facility for turbine blades, citing the regulatory and technical difficulty, though Hubert believes Musk is the person most likely to pull it off. Hubert notes that casting has long been seen as a dirty, less attractive business with safety concerns and too few workers who understand it, yet it may be more strategically important than precision machining because far fewer facilities exist. Welch adds that casting and forging are very profitable during high production but expensive to operate when output is low or capped, which is why they were unattractive while Boeing’s production rates were restricted and are now critical as the supply chain ramps up.
How are data centers and industrial gas turbines affecting aerospace manufacturing capacity?
Craig Picken points out that industrial gas turbines (IGT), once expected to decline, are now competing with aero engines for capacity, citing Chromalloy’s move into PMA parts for IGT and his former client Allied Power Group. Meghan Welch says IGT, data centers, and A&D are all competing for the same manufacturing capacity and labor, and companies exposed to both IGT and A&D are seeing strong valuation gains. Hubert de la Vauvre believes A&D has a much longer runway than data centers, which he suspects may become something of a bubble, and advises investors that power generation tied to the electrical grid is the more durable part of that trend. He notes that manufacturers shift toward new end markets every few years, giving the example of roll former Hines, which moved from truck trailers, solar, and automated warehouses into data centers and now A&D. Both guests argue that automation is key to addressing labor shortages because it improves throughput and makes manufacturing jobs more appealing to younger workers.
How has the conflict with Iran exposed weaknesses in the US defense supply chain?
Craig Picken says the Iran conflict has revealed vulnerabilities in US war-fighting capacity, with commercial aircraft makers now competing for the same engineering talent and precision manufacturing capacity as missile producers. Meghan Welch expects prices for commercial aircraft to rise because Boeing and Airbus face the same labor, supply chain, and raw material constraints as defense, while defense will push toward lower-cost munitions, cruise missiles, drones, and unmanned platforms, and commercial aerospace will adopt more composites and advanced manufacturing over time. Welch also says the conflict has accelerated Europe’s recognition that it relies too heavily on the US for defense supply, creating investment opportunities in Europe. Hubert de la Vauvre argues that the real question is not whether the US will rebuild its industrial capacity but how quickly, and that this urgency is why large companies are buying further down their supply chains. Picken frames the Strait of Hormuz as a long-known choke point that should have been addressed earlier, comparing it to a business that depends on a single customer, client, or employee without a backup plan.
Is the US steel industry becoming more attractive to investors?
Hubert de la Vauvre, who covers metals manufacturing at Brown Gibbons Lang, says demand for American-made steel is very strong, based in part on what he heard at the Steel Market Update (SMU) conference in August 2026. He views Nippon Steel’s acquisition of U.S. Steel as positive overall because a buyer with a long-term outlook will invest heavily in domestic production, even though Cleveland-Cliffs had wanted the asset. He says US mills are behaving with more pricing discipline, investing in new facilities, and keeping hot-rolled coil prices on a steadier path than in the past. Hubert also reports that many private equity firms have asked him how to invest across the steel supply chain, including mills and distribution, and he stresses that the US should avoid becoming dependent on Asian steel. Meghan Welch adds that defense programs often cannot legally source certain materials from Asia at all. Hubert notes that the reshoring push has held steady across the first Trump administration, the Biden administration, and the second Trump administration.
How are aerospace OEMs supporting their smaller suppliers without acquiring them?
Meghan Welch says OEMs are supporting middle-market suppliers mainly through more favorable working capital terms, low-interest loans, and help buying long-lead items at scale, and she expects some vertical integration through acquisition for the most critical capabilities, but not widespread minority equity stakes. Hubert de la Vauvre points to Toyota’s supplier approach in the auto industry as a model, where the customer wants suppliers to stay healthy rather than squeezing every dollar. He says it is common for a large customer to co-fund expensive equipment, such as a multimillion-dollar tube laser, in exchange for priority on that machine. Welch describes a current client whose major customer paid for machinery on that basis, with the supplier free to use any spare capacity or extra shifts for other clients, which lets it take on more complex work.
How are private equity firms approaching aerospace and defense acquisitions when valuations are so high?
Meghan Welch explains that private equity firms will pay high multiples when they see a clear path to consolidating fragmented, founder-owned businesses at lower prices to bring the average multiple down, or when a deal gives them access to specific programs and platforms. She says some PE firms are now paying strategic-level valuations and even closing deals entirely with equity, then financing afterward to remove financing contingencies. Buyers priced out of precision manufacturing are moving into adjacent areas such as advanced materials, specialty chemicals, packaging, and coatings. Both Welch and Hubert de la Vauvre are skeptical of continuation vehicles (CVs), which they say are sometimes used to hold underperforming assets or report returns on sales to the sponsor’s own funds; Hubert compares them to the SPAC boom. Welch believes CVs are driving more investors toward independent sponsors, and notes that some owners with strong backlogs are choosing to hold and generate cash rather than sell. The guests and Craig Picken also point to founders’ concern for their management teams and a scarcity of experienced executives who are not near retirement age.
What is the outlook for aerospace and defense M&A and IPOs in 2026 and 2027?
Hubert de la Vauvre says 2026 has been a strong year with many deals closing, compared with a difficult 2025, and that Brown Gibbons Lang’s industrial team expects to bring roughly ten businesses to market in the third and fourth quarters of 2026. He predicts 2027 will be an especially busy M&A year as owners try to sell before the 2028 election year. Meghan Welch says many companies are running dual-track processes that weigh an IPO against a sale, public markets are receptive to A&D assets, and she expects more take-private deals and more carve-outs from diversified industrials such as RTX, Parker, and Eaton as they follow the model of focused firms like GE Aerospace and Honeywell Aerospace. She also describes a renaissance in business aviation driven by fractional ownership models from companies like Flexjet and Wheels Up, and considers Apollo’s acquisition of Atlantic Aviation a smart infrastructure play. Craig Picken adds that fractional operators’ large firm orders give the business jet supply chain several years of predictability.
Key People, Companies & Topics Mentioned
- Craig Picken — host of the Aerospace Executive Podcast and founder of NorthStar Group, an aerospace executive search firm.
- Meghan Welch — A&D investment banker at Brown Gibbons Lang; discusses valuations, the CPP deal, defense supply chains, and PE strategy.
- Hubert de la Vauvre — director at Brown Gibbons Lang focused on advanced metals manufacturing; discusses steel, automation, data centers, and continuation vehicles.
- Brown Gibbons Lang — investment bank where both guests work, partnering across A&D and precision manufacturing.
- GE Aerospace — acquirer of CPP; also cited as the model of a focused aerospace company.
- CPP (Consolidated Precision Products) — casting company acquired by GE Aerospace at what Welch says was about 26x forward 2027 EBITDA.
- Berkshire Partners — private equity owner of CPP before the GE deal.
- Larry Culp — GE Aerospace CEO, cited by Picken for paying a premium for CPP.
- Precision Castparts (PCC) / Warren Buffett / Greg Abel — Picken contrasts Buffett’s past regret over PCC with today’s casting valuations.
- Elon Musk — cited for wanting to build his own casting facility due to turbine blade backlogs.
- Precinmac — acquirer rolling up precision machining firms, including two of Picken’s clients.
- Machine Sciences and Precision Aerospace Holdings — machining companies acquired by Precinmac.
- Pratt & Whitney / RTX — discussed regarding vertical integration strategy, a possible spin-out, and future divestitures.
- Honeywell Aerospace — cited for engine production (HTF engines) and as a focused aerospace model.
- Textron and Williams International — mentioned in the context of business jet engine demand.
- Boeing and Airbus — discussed for build rates, supply chain execution risk, and rising costs.
- Boeing’s Partnering for Success program — cited by Welch as a source of lasting supplier distrust.
- Chromalloy — example of a company benefiting from both IGT and A&D demand through PMA parts.
- Allied Power Group / Dave Feiss — former Picken client in industrial gas turbine repair, founded by Feiss in Houston.
- GE Vernova — mentioned as an IGT competitor.
- Hines — roll former that Brown Gibbons Lang sold to Crossplane Capital, used as an example of shifting end markets.
- Crossplane Capital — private equity buyer of Hines.
- ADC Aerospace — casting business cited as a PE platform built on belief in the casting sector.
- Nippon Steel, U.S. Steel, and Cleveland-Cliffs — discussed regarding the U.S. Steel acquisition and domestic steel investment.
- Steel Market Update (SMU) conference — steel industry conference Hubert attended in August 2026.
- Toyota — cited as a model for supporting supplier health.
- Intel — referenced for the US government’s equity investment, raising the question of OEM stakes in suppliers.
- AE Industrial Partners, Arcline, Apollo, BlackRock, Veritas, Carlyle — private equity firms named as active in A&D.
- Apollo / Atlantic Aviation — Apollo’s roughly $10 billion acquisition of the FBO operator, per Picken.
- Flexjet, Wheels Up, NetJets — fractional ownership providers driving business aviation demand.
- Parker and Eaton — diversified industrials expected to divest aerospace assets.
- Innovative Solutions & Support (IS&S) — Exton, Pennsylvania avionics company praised for its growth.
- Celestica — cited for its stock rising on data center electronics demand.
- Strait of Hormuz — discussed as a long-known energy choke point exposed by the Iran conflict.
- Mark Carney / Canada — Picken’s aside on Canada’s oil revenue at high prices.
- Topics: A&D valuation multiples, forward EBITDA pricing, precision and five-axis CNC machining, casting and forging, supply chain leverage, long-term agreements (LTAs), industrial gas turbines, data centers and power generation, automation and labor shortages, reshoring and US industrial policy, China competition, defense munitions and drones, continuation vehicles, independent sponsors, dual-track IPOs, corporate carve-outs, business aviation, 2027 M&A outlook.
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