A Strategic Partnership: Baird Raises $2.3 Billion in Primary Capital for Kratos Since 2024

What was the progress of the Baird-Kratos relationship leading to these transactions?

Baird’s relationship with Kratos began in 2017, when the company was first hosted at Baird’s Industrial Conference. Since 2018, Baird’s Aerospace & Defense Research Team has released more than 100 research reports on Kratos. Over the years, our partnership expanded through additional conference appearances, corporate events and serving as an underwriter on Kratos’ $252 million follow-on offering in 2020.

Baird’s best-in-class, client-first approach earned the trust of the Kratos team and culminated in Baird being elevated to lead bookrunner on Kratos’ $345 million follow-on offering in 2024. This momentum continued into 2025, with Baird once again serving as lead bookrunner on Kratos’ $575 million follow-on offering. Most recently, Baird served as lead bookrunner on Kratos’ $1.4 billion upsized follow-on offering in Q1 2026. This achievement serves as a testament to the strength of the relationship, Baird’s thoughtful advice and premier execution capabilities. 

Following the completion of the 2025 follow-on offering, Kratos’ President & CEO, Eric DeMarco, shared the following remarks:

There is a generational, global recapitalization of technologically advanced strategic weapon systems underway, which Kratos is uniquely positioned to successfully execute on. We raised this capital to ensure that Kratos has the capability to move quickly, scale and successfully execute on large mission critical, National Security priorities. We have a significant number of new, substantial opportunities we expect to be successful on over the next 12 months; we expect our opportunity pipeline to continue to grow – and we must be ready.

Eric DeMarco, President and CEO, Kratos

We’re proud to have supported Kratos in executing timely and strategic capital raises over the previous two years – setting them up for continued success. These offerings drew interest from both key existing shareholders and new investors, who see big potential in Kratos and their leadership in the market. These successful raises show the confidence investors have in Kratos’ ability to put capital to work and keep growing.

Justin Holsen, Managing Director, Industrial Equity Capital Markets

What distinguishes Baird’s Equity Capital Markets execution capabilities from other investment banks?

Baird’s Equity Capital Markets team played a pivotal role in the success of Kratos’ recent follow-on offerings, demonstrating its commitment to excellence, relationship-driven execution and differentiated expertise. Key elements of Baird’s approach included:

• Hands-On, Relationship-Driven Execution – Baird’s senior team was fully engaged at every stage of the transactions. This hands-on approach ensured seamless communication, quick adaptability to changing timelines and a client-first focus that prioritized Kratos’ needs above all else.
• Differentiated Distribution Strategy – Leveraging its mid-cap focus and strong buy-side reputation, Baird effectively positioned Kratos’ offerings with high-quality investors. The result was exceptional demand generation for each offering and a well-balanced shareholder base aligned with Kratos’ long-term vision.

  Baird’s Equity Capital Markets execution model is highly differentiated with a strong focus on a more targeted, fundamental approach – emphasizing a thoughtful, high-quality investor list rather than relying on the more transactional, reciprocal approach often seen elsewhere.

  Institutional Buyside Investor

• Collaborative Syndicate Leadership - Baird ensured a balanced and collaborative syndicate structure, giving all active bookrunners a voice in the process. This approach fostered alignment across the syndicate, avoided dominance by any single bank and delivered premier execution for Kratos.

  What sets Baird apart is our inclusive and collaborative approach to equity offerings. We ensure that all active bookrunners are engaged and have access to the information they need to contribute effectively. This level of transparency and teamwork creates a smoother process and better outcomes for both the issuer and investors. It’s a noticeable difference in comparison to the approach seen at larger banks, where limited information flow can hinder the overall success of the transaction.

  Ryan Engelhardt, Managing Director, Head of Syndicate – Equity Capital Markets

• Deeply Rooted Investor Network - Baird’s relationships with decision-makers across large mutual funds, hedge fund complexes and accounts outside of traditional money centers proved instrumental in broadening Kratos’ investor base. By connecting with portfolio managers and key stakeholders in unique markets, Baird delivered impactful investor engagement that supported the transactions' success.

  We dedicated significant time upfront to identifying and targeting investors who would be strong long-term supporters of the company – those who truly understood its value and growth potential. By preparing extensively in advance and having in-depth conversations with the right investor pool, we streamlined the execution and marketing process, making it seamless and efficient for both the investors and the issuer.

  Jared Simons, Vice President, Syndicate – Equity Capital Markets

What should issuers and investors know about Baird’s Equity Capital Markets capabilities moving forward?

At Baird, equity offerings are not just "deals of the day." The firm’s approach is rooted in a deliberate, firm-wide commitment to supporting compelling stories and delivering exceptional outcomes for both issuers and investors. This philosophy was exemplified in Baird’s execution for Kratos over the last three follow-on offerings, where the team’s disciplined process drove outstanding results.

• Price Discovery - Baird achieved a tighter discount to last trade on each subsequent offering by leveraging deep investor feedback and fostering true price discovery. This approach ensured optimal pricing on each trade for both Kratos and its shareholders.  

  Baird’s ability to spend meaningful time with investors, understand where they truly care and conduct real price discovery sets their processes apart.

  Institutional Buyside Investor

• Value Creation - Baird played a pivotal role in crafting a compelling equity story for Kratos, helping to drive meaningful valuation creation and investor interest.

  Our deep expertise in the Defense & Government sector allowed us to identify and articulate the specialness of Kratos and why the Company is so well-positioned to capitalize on the industry’s tailwinds

  John Song & Jean Stack, Co-Heads of Defense & Government Investment Banking

• Thoughtful Allocations – Our disciplined allocation process rewarded accounts that engaged meaningfully with management, ensuring alignment with long-term investors. We prioritized quality over convenience and avoided pushing stock to specific accounts.

  Baird’s ability to deliver stability and upward price momentum amidst market volatility is a testament to their process. The relative outperformance against both the broader indices and direct comps speaks to the strength of their allocation process.

  Institutional Buyside Investor

• Aftermarket Performance - The culmination of these efforts resulted in both Kratos’ 2025 and 2026 follow-on offerings opening above offer price, recovering the deal discount within ~one week and outperforming the broader markets, delivering immediate value for investors and validating the strength of the offerings.  

  In a comparable situation, with a similar company and identical market backdrop, Baird delivered significantly better results as it relates to Kratos’ June 2025 follow-on offering. This is a true testament to Baird’s thoughtful strategy and flawless execution.

  Institutional Buyside Investor