How to get match-fit for a defence M&A process

Heligan’s Defence and National Security team is tracking record deal volumes in 2026, with private equity and trade buyers competing harder than ever for the right assets. Before any of that activity turns into a strong outcome for an individual business, the owner has groundwork to do. 

Heligan’s own approach reflects this with preparation starting well before a formal process begins and support continuing long after a deal completes. Being match-fit rests on three basics: strategic clarity, demonstrable resilience and a credible route to market.

Clarity: Define where you play, and where you don’t

There was a time when buyers didn’t mind the generic “defence supplier” label but with increased competition delivering innovative industry solutions, that time is long gone. Now, they are targeting specific capability gaps in their own portfolios, so a business needs a tight definition of where it plays. That might mean positioning as a dual-use data and AI specialist serving secure government environments, a maritime electronic systems provider with exportable IP, or a precision engineering firm focused on a small number of critical components. 

We expect the window for businesses that still describe themselves as “purely commercial” to stay open for around 18 months before new entrants become harder to displace. 

Regional defence clusters are one of the most reliable sources of new connections and introductions. They bring together a broad group of people working towards a common purpose, and most are easy to join and genuinely supportive. Owners who are not yet involved in their local cluster are missing an easy way to build the government and prime relationships buyers look for.

Resilience: prove the business can withstand scrutiny

Resilience covers cash generation, working capital control and the depth of a management team, and it shapes how easily a business can raise finance. Investors and banks will only commit capital where there is a genuine banking and investment case: solid cash generation, a clear growth strategy, a stable management team and good visibility over the order book and pipeline.

Five trade associations have published data showing that 91% of ADS member SMEs report problems raising finance, and some are turning down contracts they cannot fund. That pain is concentrated among businesses that are not yet investment-ready. Multiple specialist defence investors and lenders have emerged in recent months with capital available for deployment, and the market for raising finance is improving, even if it remains slower than owners would like.

“Raising finance is like a full-time job in itself – our guidance is to get ready early (whether with Heligan or another advisor). Being ‘match-fit’ is critical, as it gives confidence to investors and lenders.”

Credibility: Build a route to market buyers can see

Even strong technology struggles without a credible way to reach government and prime customers. Defence procurement is complex, and building a track record typically takes years. Joining a regional defence cluster, building relationships with primes and systems integrators and investing early in bid and capture capability all help buyers see a path from today’s order book to tomorrow’s revenue.

Treat preparation as its own project

Preparation is worth treating as a project in its own right, well before any formal process begins. That means tidying contractual documentation, stress-testing forecasts against realistic programme timings, mapping the key dependencies in your supply chain and identifying any regulatory or clearance issues up front. All of this shortens diligence once a process starts and tends to support stronger offers.

Focus on the factors (or factor) you can control

Heligan’s mid-year data shows a market moving quickly, with dual-track processes between private equity and trade buyers now standard and valuations continuing to trend upwards. Owners cannot control that pace, but they can control how ready their business is for it, from the earliest planning conversations through to life after completion. Strategic clarity, resilience and a credible route to market are worth getting right well before a process starts.

If you want an honest view of how match-fit your business is, Heligan’s Defence and National Security team can help. Contact Matt Croker, Head of Defence and National Security, at [email protected].