Baird Defense & Government: 2026 Outlook and 2025 Year-In-Review
Defense & Government Companies Refine Strategy in a Market That Rewards Innovation and Growth
2025 In Perspective
The past year was a relatively volatile one for the Defense & Government industry. It challenged traditional business models while rewarding firms that adapted to structural shifts in the market. Baird’s Defense & Government team’s 2025 successes underscore some of the major market themes:
- High Priority M&A: Robust activity in Space, C4ISR, Electronic Warfare and Offensive Cyber
- Strategic Portfolio Shaping: Divestitures of non-core assets and refinement of corporate strategy
- Preemptive Approach: Increase in ​preemptive or very narrow M&A processes
- Global Defense: Strong interest in international and cross-border transaction
- Capital Markets Momentum: Acceleration of IPO and follow-on offerings in Defense Tech and New Space
Our team was proud to work on 16 successfully closed transactions aggregating more than $6.4B in value.
2026 Outlook: A Year of Acceleration
Looking ahead to 2026, we anticipate a rapid acceleration of transaction activity across the industry. We expect the upcoming year to be defined by several trends:
- Private Equity & Liquidity Inflection: Expect a surge in platform investments and add-on acquisitions, alongside significantly increased volume in platform liquidity events via strategic sales and IPOs
- European Cross-Border Highs: International activity within European defense and national security is projected to reach record levels
- Venture Capital Maturation: Late-stage VC funding will remain at heightened levels, driving a new wave of consolidation and IPO activity as venture-backed companies reach scale
- Large Strategics Actively Repositioning: M&A and strategic divestitures will remain a critical tool for corporates looking to aggressively refine their competitive posture
This past year was a pivotal one, with market shifts that will have lasting effects. We are grateful to have worked with some amazing companies. The Baird Defense & Government team is looking forward to an active 2026.
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Annual Defense & Government Conference
In November we proudly hosted our 8th Annual Defense & Government Conference. With over 2,000 registered guests, this premier industry event showcased over 80 distinguished speakers including senior government officials, recognized industry executives, and leading private equity / venture capital investment professionals. We look forward to seeing you at our 2026 Defense & Government Conference on Tuesday, November 17th.
