What Happened
Capital Abounds But Market Conditions Inhibit Critical Investments
A new report by Bain & Company and the Aerospace Industries Association finds that the US defense investment gap is driven by market barriers and a shortage of investable opportunities, rather than a lack of capital. The report notes that while private defense investment has grown, market conditions inhibit capital from flowing to critical areas such as R&D, production capacity, and emerging technologies. According to the report, large defense companies trade at low valuation multiples, indicating capped returns, and private equity has largely stayed out of defense-focused businesses. The report was published by Bain & Company.