Tactical Products Market Update – May 2026

Warfare Modernization and Stockpile Replenishment Fuels Tactical Products Market M&A Activity

Tactical Products market dealmaking accelerated sharply in 2025 and has remained active in 2026, supported by growing global security concerns and defense procurement prioritization. Current geopolitical tensions, combined with evolving warfare strategies, have increased both institutional and personal demand for munitions, mission-critical equipment, and readiness solutions. These dynamics have reinforced the sector’s durability, enabling it to outperform the broader Consumer Merger and Acquisition (M&A) market. Sustained government spending, replenishment mandates, and heightened consumer self-readiness efforts have converged to create favorable demand visibility across the sector, positioning operators to garner heightened investor and acquirer interest amid the rising level of global conflicts and uncertainty. Although combat timelines have remained difficult to forecast, M&A in the Tactical Products market is expected to persist throughout 2026.

We expect the recent increase in M&A activity to continue for Tactical Products companies that serve Consumer, Defense, Government, and International end markets and meet the dynamic changes in warfare and homeland security requirements, shifts in global alliances, and demand for personal protection and recreation.

Pete BaileySenior Director, Capstone Partners

Rising Geopolitical Tensions Pressure Broader Consumer Sentiment

Global conflicts and the rising price landscape have become defining forces shaping consumer behavior, impacting overall confidence, spending priorities, and decision-making. The Consumer Sentiment Index, a measurement of consumer confidence in the state of the economy, has fallen to 48.2, representing a 3.2% month-over-month (MoM) decline from 49.8 in April 2026, according to the University of Michigan.¹ In the current geopolitical landscape, consumer finances have grown increasingly strained as price inflation has accelerated—a headwind that has seen individual shoppers prioritize essential and durable purchases over discretionary spending. Notably, disruptions to the global macroeconomic landscape as a result of the Iran conflict have seen the consumer price index (CPI) increase 3.3% year-over-year (YOY) in March 2026, a significant expansion from the more moderate levels seen in February 2026 (+2.4% YOY) and March 2025 (+2.4% YOY), according to the Federal Reserve Bank of St. Louis.² Consumer spending has remained resilient (+3.5% YOY) however, inflationary pressures have resulted in uneven demand, raising pressure on lifestyle and impulse categories while products associated with utility and long-term value have demonstrated greater insulation, according to the U.S. Bureau of Economic Analysis.³ These dynamics have created a constructive demand backdrop for the Tactical Products market, where offerings such as protective equipment and accessories align closely with consumer priorities around personal safety and disaster readiness. The characterization of tactical products as an essential, preparedness-oriented purchase—even within the rising cost landscape—will likely help maintain consumer demand for the foreseeable future, further buoying sector outlook as funding from Military and Public markets has also continued to expand.

Evolving Warfare Dynamics Accelerate Demand for Mission-Critical Tactical Products

The conflict between the U.S. and Iran has evolved from a targeted, regional confrontation into a wider engagement with significant global implications, buoying Tactical Products market demand pipelines. Rather than developing into conventional warfare—characterized by ground operations, territory captures, and occupations—the conflict has exhibited a different set of dynamics. High-tempo precision strikes on one side have been confronted by asymmetric warfare strategies including cheap attritable loitering munitions and fragmented proxy actors. This unique posture has resulted in a conflict defined by operational endurance governed by supply chain capacity and replenishment ability, elevating munitions deployment rates and associated costs. Through the first six days of hostilities, an estimated 5,060 U.S. munitions—valued at ~$11.3 billion—were deployed, according to the Center for Strategic & International Studies.⁴ This new form of high-volume, churn-heavy warfare has exposed critical risks to U.S. supply chains, stockpiles, and replenishment capabilities. The Pentagon has requested ~$200 billion in supplemental funding to support Operation Epic Fury and its ripple effects on U.S. defense stock, according to a March 2026 New York Times article.⁵ The uncertainty of the ongoing conflict has bolstered expectations for additional tactical goods demand. Additionally, a heavier emphasis on military readiness and restocking of products such as smaller caliber ammunition and body armor may also provide long-term demand benefits. The conflict has also highlighted constraints within existing logistics practices, including limited reserve depth and elongated purchasing lead times. An incentivized structural reassessment of inventory capacity will likely lead to future procurement initiatives for small arms ammunition and tactical gear, leaving those with agile manufacturing capabilities well-positioned for market growth while also encouraging investments in production facilities for laggards.

The extensive use of autonomous systems in the U.S.-Iran conflict has signaled that the new era of warfare, ushered in by the Russo-Ukrainian war, is here to stay. In a first for U.S. combat operations, the U.S. Central Command announced the formation of Task Force Scorpion Strike, a one-way attack squadron, which will be equipped with Low-Cost Uncrewed Combat Attack System (LUCAS) drones, according to the U.S. Department of War (DOW).⁶ These inexpensive and accessible weapons have enhanced intelligence, surveillance, and reconnaissance (ISR) capabilities while providing low-cost alternatives to precision strikes. Similarly, Iran has heavily relied upon its Shahed-136 unmanned aerial vehicles (UAV) to inflict damage to surrounding U.S. military installations and American allies. Total production cost for these systems has ranged between $20,000 and $50,000 per unit, significantly below the $1.4 to $2.5 million price tag of traditional U.S. munitions such as the Tomahawk missile, according to the Council on Foreign Relations.⁷ This shift has fostered an efficiency-first mindset within the Pentagon, straying from the warfighting norms of past decades as military decision-makers increasingly embrace new solutions that offer similar tactical effectiveness at a fraction of the cost.

Proposed funding for the Defense Autonomous Warfare Group (DAWG), a unit tasked with the rapid fielding of unmanned systems, has expanded 24,166.7% YOY from a relatively meager $225 million in fiscal year (FY) 2025 to $54.6 billion in FY 2026, according to Aviation Week.⁸ This robust funding increase has signaled a material prioritization of autonomous and unmanned capabilities within future force initiatives. Sector participants have actively embraced opportunities within the Unmanned Systems (UxS) market to gain access to evolving procurement demands. “The Counter-UAS [Unmanned Aerial System] market represents a particularly compelling growth vector. We are optimistic that the new offerings position us to compete meaningfully in drone-related markets to supply and support both defense and public safety applications,” stated Jared Novick, President & COO of Wrap Technologies (Nasdaq:WRAP), in the company’s FY 2025 earnings call.⁹ The company has recently entered the UAS market with the launch of its MERLIN-Interdictor drone in October 2025, targeting government customers. Elsewhere, traditionally recreation-focused manufacturers have pivoted, aggressively focusing growth strategies to capitalize on growing opportunities within Defense markets. The rapid proliferation and asymmetrical efficacy of precision mass methodologies have propelled outsized demand for scalable production capabilities, driving acquirer interest in operators across the Tactical Products market. Against a tense, uncertain geopolitical backdrop and significant inflection point in warfare, Capstone anticipates sector M&A activity to continue growing throughout 2026.

Defense Procurement Budget Expansion Propels M&A Momentum in the Tactical Products Market

Tactical products dealmaking climbed 54.3% YOY to 54 transactions announced or completed in 2025, reflecting elevated demand for mission-critical gear as persistent political uncertainty reinforced government-funded procurement efforts. This growth represented significant strength compared to the broader Consumer industry (-18.9% YOY deal volume) and aligns more with the Aerospace & Defense (A&D) industry (+13.9% YOY). Positive M&A momentum within the Tactical Products market has continued through year-to-date (YTD) 2026, increasing to nine deals compared to seven in the prior year period. U.S. defense budget growth has served as a key catalyst sustaining elevated deal volume in the space, with FY 2026 funding totaling $961.6 billion (+10.6% YOY), according to a February 2026 Congress.gov article.¹⁰ Furthermore, the DOW has fundamentally shifted its acquisition process, leaning away from a risk-averse, requirements-heavy approach in favor of lean and agile production, procurement, and fielding of weapon systems and technologies, a development further explored in Capstone’s February 2026 C4ISR Market Report. The new procurement approach, prioritizing speed and commercial off-the-shelf (COTS) options, has created more opportunities for smaller operators outside of the prime defensive realm to gain access to government contracts and experience further top line growth. Many of these companies possess niche manufacturing capabilities, positioning them as attractive consolidation targets for buy-and-build strategies. Moreover, acquirers in the Tactical Products space have continued pursuing transactions that expand product breadth and diversify end market exposure across both Consumer and Defense channels.

M&A within the Tactical Products market has continued to center around consolidation as acquirers look to expand product lines and addressable markets. Private equity (PE) deal volume experienced momentum in 2025, increasing to 12 deals (+20% YOY). Dealmaking from financial buyers has normalized through YTD, remaining stagnant YOY at two deals. Sponsors have targeted add-on transactions, which have accounted for the entirety of PE dealmaking thus far in 2026. Persistent geopolitical and macroeconomic uncertainty has prompted sponsor-backed operators to prioritize consolidation opportunities that offer clear synergies, faster integration, and lower execution risk. Of note, Gamber-Johnson, a portfolio company of Main Street Capital (NYSE:MAIN), acquired Blac-Rac Manufacturing (BRM) in January 2026 for an undisclosed amount. The transaction strengthens Gamber-Johnson’s position as a holistic weapon retention platform, aligning with broader Tactical Products market roll-up playbooks. Consolidation within the sector has been driven largely by strategic acquirers, as incumbents prioritize scalability and diversified customer concentration. These buyers maintained the majority (77.8%) of Tactical Products sector M&A in 2025, completing 42 transactions—a 17 deal increase from 2024. Both private and public strategics have increased YTD M&A activity by one deal YOY, with buyers focusing inorganic growth efforts on businesses that expand existing product portfolios and production capabilities. Sector participants are likely to maintain meaningful M&A engagement and growth throughout 2026 as both government procurement visibility and capital deployment are expected to continue progressing.

Public Strategics Remain Focused on Tactical Products Portfolio Enhancements

Rising tensions in the Middle East have propelled global demand for mission-critical tactical gear and equipment as law enforcement, government agencies, and consumers alike prioritize readiness efforts. Against this backdrop, Tactical Products market demand has remained robust, creating a robust environment for public companies to accelerate both organic and inorganic growth initiatives. Certain companies have embraced M&A as a tool to expand market share, product offerings, and manufacturing capabilities. Global manufacturer and distributor of safety and tactical products, Cadre Holdings (NYSE:CDRE), has utilized M&A to widen product offerings, expand geographic reach, and scale operations. The company operates under a bifurcated model that separates its product and distribution platforms. Cadre delivers fundamental tactical solutions—including body armor, holsters, duty gear, and other protective equipment—through its 22 operating subsidiaries, according to the company’s website.¹¹ Of note, Cadre has acquired three businesses between 2025 and YTD 2026, with plans to continue inorganic growth efforts for the foreseeable future. Deal rationale has focused on expanding the company’s product breadth, enhancing manufacturing capacity, and strengthening exposure across both Government and Commercial end markets. “Cadre maintains a relentless focus on disciplined M&A, and we are pleased to have capitalized on two more highly attractive opportunities in 2025. Looking ahead, we have a robust acquisition pipeline in both the Public Safety and Nuclear markets and intend to continue to grow our diversified portfolio of mission-critical safety businesses through patient and disciplined capital allocation,” stated Warren Kanders, CEO and Chairman of Cadre Holdings, in the company’s 2025 earnings release.¹² Cadre’s intentional inorganic growth strategy has resulted in strong revenue, which increased 7.5% YOY to $610.3 million in 2025, according to the company’s 2025 earnings report. Select company transactions are outlined below.

• Cadre Holdings to Acquire Assets of Tedder Industries (March 2026, $10.3 Million) – In March 2026, Cadre Holdings announced its acquisition of select assets of Tedder Industries—including Alien Gear Holsters—for $10.3 million. Tedder Industries designs and manufactures a broad range of firearm holsters and complementary personal protection accessories, including lock boxes, gloves, and hearing protection products. The acquisition of the highly recognizable consumer brand strengthens Cadre’s position within the Holster & Carry-Gear segment. The integration of Tedder’s manufacturing capabilities and proprietary designs is expected to enhance Cadre’s existing offerings across both Professional and Recreational end markets. Additionally, this combination provides the company with access to Tedder’s well-established, direct-to-consumer (DTC) sales model, enabling sales channel diversification beyond traditional distribution models.

“Alien Gear brings an experienced team with a customer-first mindset, and we are excited about the attractive business synergies and growth opportunities ahead. As always, the Cadre operating model will guide our execution, driving continuous improvement across our businesses and reinforcing our market leadership over the long term,” stated Brad Williams, President of Cadre Holdings, in a recent press release.¹³

• Safariland Acquires TYR Tactical (October 2025, $170 Million) – Safariland, an operating subsidiary of Cadre Holdings, acquired TYR Tactical for an enterprise value of $170 million in October 2025. Safariland manufactures and distributes safety, survival, and tactical equipment across the Military, Law Enforcement, and Sporting end markets. TYR Tactical is a premium manufacturer of mission-critical tactical gear, including plate carriers, ballistic vests, belts, and load-carriage systems designed for military, law enforcement, and elite special operations units. The acquisition significantly enhances Safariland’s position in the high-growth Tactical Gear market by adding TYR’s advanced materials expertise, proprietary design capabilities, and strong reputation among elite military and public safety customers. The addition of TYR’s product suite provides Safariland access to a complementary customer base and strengthens its penetration of the defense and government contracting procurement channels. Overall, the acquisition supports Cadre’s core growth strategy focused on building a comprehensive ecosystem of premium brands within the Safety and Tactical Equipment segments.

“We are pleased to have closed this strategic acquisition, which immediately provides Cadre with world-class engineering capabilities, substantial exposure to the European Defense market, and a broader network of elite defense and law enforcement customers. Co-founders Jason and Jane Beck have established TYR Tactical as a best-in-class brand, delivering must own tactical defense products, and we look forward to continued collaboration to capitalize on compelling growth opportunities. Looking ahead, Cadre maintains robust M&A pipelines in both the Public Safety and Nuclear markets, and we remain committed to expanding our portfolio, while continuing to enhance the Company’s market leadership across categories,” mentioned Warren Kanders, CEO and Chairman of Cadre Holdings, in a company press release.¹⁴

Geopolitical tensions have continued to underpin strong Public sector demand across the Tactical Products market. Consumer preparedness purchasing behavior has strengthened in tandem with growing and shifting military procurement initiatives. Concurrently, the DOW has increasingly favored COTS solutions to accelerate procurement timelines, improve scalability, and reduce unit costs, creating incremental opportunities for manufacturers and distributors with adaptable product portfolios. These initiatives are expected to bolster acquirer interest for sector participants with diversified end market exposure and strong manufacturing and distribution capabilities. Publicly traded operators have increasingly capitalized on this dynamic through M&A to deepen penetration across government and commercial channels and meet rising demand with manufacturing capacity. Collectively, these converging trends are expected to elevate tactical products M&A activity throughout 2026 as buyers position themselves to benefit from both commercial and defense opportunities.

To discuss tactical products procurement, provide an update on your business, or learn about Capstone’s wide range of advisory services and Tactical Products market knowledge, please contact us.

Matt Milone, Analyst, was the lead Market Intelligence contributor to this article.

Endnotes

1. University of Michigan, “Preliminary Results for April 2026,” https://www.sca.isr.umich.edu/, accessed April 2, 2026.

2. Federal Reserve Bank of St. Louis, “Consumer Price Index for All Urban Consumers: All Items in U.S. City Average,” https://fred.stlouisfed.org/series/CPIAUCSL, accessed April 2, 2026.

3. U.S. Bureau of Economic Analysis, “Personal Consumption Expenditures Price Index,” https://www.bea.gov/data/personal-consumption-expenditures-price-index, accessed April 2, 2026.

4. Center For Strategic & International Studies, “Iran War Cost Estimate Update: $11.3 Billion at Day 6, $16.5 Billion at Day 12,” https://www.csis.org/analysis/iran-war-cost-estimate-update-113-billion-day-6-165-billion-day-12, accessed April 2, 2026.

5. New York Times, “Pentagon Seeks $200 Billion to Fund Iran War,” https://www.nytimes.com/2026/03/19/world/middleeast/pentagon-200-billion-iran-war-funding-hegseth.html#:~:text=, accessed April 2, 2026.

6. U.S. Department of War, “Centcom Launches Attack Drone Task Force in Middle East,” https://www.war.gov/News/News-Stories/Article/Article/4347258/centcom-launches-attack-drone-task-force-in-middle-east/, accessed April 2, 2026.

7. Council on Foreign Relations, “First Ukraine, Now Iran: A New Era of Drone Warfare Takes Hold,” https://www.cfr.org/articles/the-new-era-of-drone-warfare-takes-root-in-iran, accessed April 2, 2026.

8. Aviation Week, “Debrief: Pentagon’s Little-known DAWG Fetches $54.6B In Spending Plan,” https://aviationweek.com/defense/budget-policy-operations/debrief-pentagons-little-known-dawg-fetches-546b-spending-plan, accessed April 2, 2026.

9. Wrap Technologies, “2025 Q4 and Year End Call,” https://ir.wrap.com/news-events/ir-calendar/detail/20260326-2025-q4-and-year-end-call, accessed April 2, 2026.

10. Congress.gov, “FY2026 Defense Budget: Funding for Selected Weapon Systems,” https://www.congress.gov/crs-product/R48860#:~:text=, accessed April 1, 2026.

11. Cadre Holdings, “Brands & Affiliates,” https://www.cadre-holdings.com/company-information/brands-affiliates, accessed April 1, 2026.

12. Cadre Holdings, “Cadre Holdings Reports Fourth Quarter and Full Year 2025 Financial Results,” https://www.cadre-holdings.com/news-events/press-releases/detail/91/cadre-holdings-reports-fourth-quarter-and-full-year-2025, accessed April 1, 2026.

13. Cadre Holdings, “Cadre Holdings to Acquire Assets of Tedder Industries, Including Alien Gear Holsters,” https://www.cadre-holdings.com/news-events/press-releases/detail/92/cadre-holdings-to-acquire-assets-of-tedder-industries, accessed April 1, 2026.

14. Cadre Holdings, “Cadre Holdings Completes Acquisition of TYR Tactical,” https://www.cadre-holdings.com/news-events/press-releases/detail/88/cadre-holdings-completes-acquisition-of-tyr-tactical, accessed April 1, 2026.