Seven Forces That Could Reshape DefenseByron Callan
The next 5-10 years are bound to see changes in the structure of the global defense sector. That structure has evolved since the 1990s consolidation from which emerged five major U.S. contractors—with defense sales in excess of $10 billion—and four national defense champions in Europe. The 2000s saw the rise and fall of companies that addressed the immediate needs of the wars in Iraq and Afghanistan, and more recently a bevy of public defense services companies in the U.S. have been created by portfolio reshuffling and divestitures.
It is tempting to conclude that today’s defense sector structure will be the same in 2021 or 2026, but there are factors and forces that are bound to bear on how company management teams and boards of directors envision creating value for shareholders—and how they can avoid value destruction. Here are seven to consider.
Contributing columnist Byron Callan is a director at Capital Alpha Partners.