IPOs are an increasingly viable exit route for equity investors with defense-related businesses in their portfolios. The universe of potential trade buyers for defense assets is likely to be limited in a world where governments have a significant say in any change of ownership, and therefore flotations are a good option for sponsors seeking a liquidity event.

Defense IPOs present distinctive legal and diligence challenges that set them apart from conventional listings. Government contracts are central to defense companies’ business models but are not standard commercial agreements; while they are often long-term, defense procurement requirements give government buyers significant negotiating power as well as the right to alter commercial terms. Potential investors will therefore want to carefully diligence these agreements in order to take a view on the quality and security of the company’s order book. READ MORE