Monday, September 25, 2023

Young space firms are driving acquisition activity

TAMPA, Fla. — Young space companies made more acquisitions than their older peers over the last 12 months, according to analysis from British investment firm Seraphim Space.

Satellite maker York Space Systems, launcher Firefly Aerospace, defense contractor Anduril, and other “NewSpace” ventures formed the bulk of the 28 mergers and acquisitions (M&A) Seraphim tracked over the period.

More established space firms and other companies have traditionally led M&A activity in the industry.

However, Seraphim vice president Maureen Haverty said its data shows acquisitions are no longer reserved for the deep pockets of legacy space players.

More acquisitions from companies founded in the last decade is a sign of the broader sector’s maturity, Haverty said, and come alongside an uptick in the number of acquisitions led by institutional private equity firms.

Credit: Seraphim Space Index Q2 2023

Private equity firms are increasingly responsible for some of the largest transactions in the industry, such as Advent’s recently completed $6.4 billion deal for legacy satellite maker and operator Maxar Technologies.

The rise of private equity investors suggests there are many undervalued businesses in the space industry that could be acquired at low cost, Haverty said, and then sold for profit once they ramp up revenues.

“They clearly see the potential for further consolidation and are likely to drive some of this themselves,” she said.

Space investment activity shows signs of potential recovery after declining last year amid economic uncertainty, according to Seraphim Space data for the first half of this year.

Credit: Seraphim Space Index Q2 2023

While investments and mega-rounds have fallen from 2021 highs, Haverty said startup activity and later-stage funding are higher than ever for space technology companies — which Seraphim defines as space-dependent application firms, such as ride-hailing service Uber, in addition to rocket, satellite, and other more conventional space businesses.

U.S.-based early-stage investor Space Capital also recently pointed to signs of a rebound for the space industry following its own research.

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