Machine shops, while prolific throughout the U.S. and produce lower complexity parts, have demonstrated their ability to operate at exceptional profit margins and present unique opportunities for scale by geographic expansion.
Small family-owned companies with manufacturing and distribution business lines in the tiered supply chain maintain meaningful strategic control points in aerospace production with a long tail of follow-on aftermarket revenue.
Parts manufacturers and distributors with robust defense businesses have stable cash flow and are resilient from the demand-side shocks we are witnessing today; DOD continues to spend significant capital in its supply base and our fund's technology investments will play a central role in accelerating that opportunity.
The global pandemic has shocked the aviation industry accelerating aircraft retirements, which will flood the market with Used Serviceable Material (USM) and re-balance supply-demand equilibrium in the next 2-3 years with tremendous growth onwards.
Tech-enabled businesses, especially those with proprietary mechanisms to create and capture new value bring immense opportunity to the aerospace industry and are pivotal to new growth through aerospace and defense, especially as digital transformation accelerates throughout the industry in the wake of the global pandemic.
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