Tactical Products Market Update – May 2025

Domestic Demand for Replenished Ammo Stockpiles, Drones Boost M&A in the Tactical Products Market

Merger and acquisition (M&A) activity in the Tactical Products market has continued to gain momentum after rebounding in 2024. Elevated concerns over diminished ammunition and weapon stockpiles in the U.S. and a heightened focus on homeland and border security has provided the Tactical Products market with a shifting, but positive sales outlook. Drone technology—a mission-critical element of the conflict in Ukraine—has seen rising interest in the U.S. for border patrol and public safety applications. Relief efforts for California and Hawaii wildfires and Hurricane Helene have highlighted the importance of emergency preparedness, tactical gear, and the widespread use-cases for drones across end markets. This growing appetite for domestic tactical product stock and advanced drone capabilities has provided tailwinds for consolidation activity moving through the remainder of 2025 and into 2026.

Tactical products demand for domestic consumer use, public safety, law enforcement, and military is on the rise as border & homeland security and emergency preparedness has become a higher priority this year.

Pete BaileySenior Director, Capstone Partners

Border and Homeland Security in Focus as Ukraine Aid Winds Down, Drone Demand Grows

The Russia-Ukraine conflict has continued into its fourth year, supported by U.S. aid packages since tensions escalated in February 2022. Specifically, the U.S. has provided $70.6 billion in weapons, equipment, and other military support to Ukraine over the period, according to the Council on Foreign Relations.¹ Aid packages have created healthy demand for Tactical Products sector participants offering ammunition and other tactical gear to Military end markets. However, the new U.S. administration is working towards a cease-fire and peace agreement in Ukraine and there are concerns over the depleted domestic stockpiles. Tactical products demand will likely remain relatively stable as the U.S. aims to re-stock its own supply of guns, ammunition, and other tactical gear. Concurrently, recent global conflicts—including those in Ukraine and the Middle East—have showcased the significant offensive advantages drones possess, where militaries can detect the enemy movements and attack quickly. Unmanned drone technology has emerged as a high-growth tactical products category in particular. Moreover, drones have become less expensive than the munitions required to shoot them down, making the technology an equally effective and financially attractive solution for defensive military use cases. “Dedrone has sold a lot of stuff in Ukraine, but the far bigger picture is what happened in Ukraine has put drones on everybody’s roadmap. Every military in the world is thinking about how do you detect these small drones that traditional military systems are not designed to detect. How do you defend against them,” noted Patrick Smith, CEO of Axon Enterprises (Nasdaq:AXON), on the company’s Q4 2024 earnings call.² First person view (FPV) drone strikes deployed by both Ukrainian and Russian forces skyrocketed 1,734% over a six-month period at the end of 2023, exemplifying the rapid evolution of the technology in military engagements, according to Tochnyi.info.³

Issues such as border and homeland security emphasized throughout the 2024 U.S. presidential election have driven additional demand for tactical goods domestically. Drone adoption in the Commercial and Civilian end markets has proliferated in the U.S. and emphasized the need for equal, defensive capabilities. Rogue drone flights into the restricted air space above National Football League (NFL) stadiums increased more than 20,000% between 2017 and 2023, according to Combating Terrorism Center (CTC) Sentinel.⁴ Law enforcement, border patrol, and search and rescue drone technology adoption has surged due to the speed, efficiency, and safety benefits unmanned drones provide. Similar to drone-use observations in the Russia-Ukraine war, the Customs and Border Protection (CBP) has experienced a drastic increase in unmanned aircraft system (UAS) uses to facilitate personal and narcotic trafficking at the southern border. The CBP recorded more than 6,900 drone flights within 500 meters on either side of the border between October 1, 2024, and November 16, 2024, according to a Congressional Testimony of Deputy Executive Assistant Commissioner Keith Jones.⁵ The need for domestic defensive drone capabilities on the southern border of the U.S. has further supported a positive growth outlook for tactical products operators with drone solutions.

Recent wildfires in Southern California and Hawaii, as well as Hurricane Helene in North Carolina, have made emergency preparedness top-of-mind, resulting in increased commercial and public demand for drones, tactical gear, and emergency equipment. Specifically, drones have headlined response and relief efforts in these disasters. More than 850 disaster response drone flights were conducted for Category 4 Hurricane Helene in 2024, helping first responders assess flooding and monitor structural damage while providing overwatch for search and rescue missions, according to Dronelife.⁶ In Southern California, drones allowed operators to monitor fire spread, identify high-intensity flame zones with thermal cameras, and support navigating hard-to-reach areas. The growing demand for drone use across emergency situations has supported technology advancement and business expansion. In March, Dryad Networks demonstrated a drone prototype able to autonomously detect, locate, monitor, and eventually extinguish wildfires. Additionally, ZenaTech (Nasdaq:ZENA) has acquired four land surveying engineering companies in 2025 to expand customer access to its Drone-as-a-Service (DaaS) offerings. Its artificial intelligence (AI) drone swarms use algorithms to communicate and share data to support coverage of natural disasters. The solution also uses thermal imaging and GPS to locate survivors, deliver supplies, relay communications, and collect data such as wind speed, pressure, and temperature. ZenaTech’s DaaS solutions serve multiple end markets including Governments and First Responders, Builders and Developers, Farmers, and Environmental Firms, among others.

As drone operations continue to gain popularity and momentum, sector participants have increasingly explored M&A as a way to expand or acquire drone offerings. Axon, a global public safety technology firm, has bolstered its drone and robotic security offerings through M&A in recent years. In May 2024, the firm acquired Dedrone Holdings for an enterprise value of $500 million. Dedrone manufactures counter-drone defense solutions to help organizations protect airspace from unauthorized unmanned aerial vehicles (UAVs). Additionally, Axon acquired Belgium-based Sky-Hero for an undisclosed sum in July 2023. Sky-Hero designs, tests, and sells tactical uncrewed ground vehicles (UGVs), UAVs, and cameras to support surveillance and data collection efforts in high-risk situations. The firm has been able to expand its total addressable market significantly due to its investments in real-time operations, drones, and robotics, and the space has continued to be a point of focus for the firm. “We think we are in an amazing position for drones and robotics. It’s an area we’re investing heavily. We’re currently either the leader or partnered with the leader in the key market segments,” commented Patrick Smith, CEO of Axon, in the Q4 2024 earnings call. Capstone expects rising drone demand to drive increased M&A activity in the Tactical Products sector as firms vie for leading market positioning in the burgeoning category.

Shifting Demand Landscape, Strategic Acquisition Appetite Bolster Tactical Products Market M&A

Geographic shifts in demand and technological advancements have supported a lively tactical products M&A environment. M&A activity in the Tactical Products market has jumped 83.3% year-over-year (YOY), increasing from six transactions announced or completed in year to date (YTD) 2024 to 11 in YTD 2025. Strategics have remained the dominant player in the M&A market, comprising 63.6% of the total sector deal flow to date. Private company business owners have shown a healthy appetite for growth via acquisitions, with these buyers recording six transactions YTD compared to four in the prior year period. Public strategic activity has held steady, limited to just one transaction in both YTD 2024 and 2025. Strategic deal activity to date has continued its positive momentum from 2024, where deal volume increased 45% YOY to 29 acquisitions. Capstone expects strategic buyers to act conservatively when evaluating M&A targets in 2025 amid elevated macroeconomic uncertainty. Targets with recurring revenue profiles operating in a niche market with limited large-capitalization competition, or other competitive moats, will likely see strong acquirer interest. Additionally, synergistic businesses that can expand product offerings and geographic reach, support vertical integration up and down the supply chain, and provide exposure to homeland and border security use cases may draw premium valuations in the current environment.

Private equity has grown its presence in the Tactical Products market YOY, contributing one platform and three add-on transactions to sector deal volume YTD. Sponsors have continued to express appetite for tactical uniform and gear companies. Of note, Charlesbank Capital Partners-backed Galls acquired police uniform and gear outfitter Her BlueWear Uniforms (undisclosed) and uniform, body armor, and gear provider Howard Uniform (undisclosed) in April 2025. The growing demand for drone solutions has also drawn interest from financial sponsors. In January 2025, Flock Safety acquired drone maker Uniform Sierra Aerospace for an undisclosed sum. Flock also acquired Aerodome, a provider of drone-enabled air support for public safety applications in October 2024 (undisclosed). Flock has received private equity growth and venture backing from Andreesen Horowitz, Tiger Global, and Y Combinator, among others. Despite healthy activity from the private equity universe, strategic buyers are expected to continue leading the Tactical Products M&A market for the foreseeable future due to limited partner restrictions on certain investments, particularly related to firearms.

Traditional Tactical Products Segments See Continued Consolidation, Defensive Drone Capabilities Emerging as a Hot Spot for M&A

Foreign aid to Ukraine and ensuing concerns over U.S. ammunition stockpiles have supported M&A activity for guns, ammunition, and lethal tactical products. However, emergency preparedness, and defensive drone demand, heightened by U.S. homeland and border security issues and recent natural disasters, have opened a new hotbed for transactions. The relatively nascent space is expected to see an influx of acquisitions as domestic producers look to gain control over input costs and mitigate potential tariff impacts on margins. Moreover, legacy tactical products players may leverage M&A to access the high-growth, emerging market for drone solutions. Several notable tactical products transactions are highlighted below.

• SC Products Group Merges with Desert Tactical (February 2025, Undisclosed) – In February 2025, SC Products Group merged with Desert Tactical (undisclosed). SC Products manufactures cleaning products for first responder, military, industrial, and household applications. Its products, including the SC-14 Gun Cleaner, focus on carbon, lead, and copper fouling removal. Desert Tactical is a family-owned business formed in 2024 to co-formulate, manufacture, market, and distribute the SC-14 Gun Cleaner together with SC Products Group.

“After a successful launch of the product and growing popularity of SC-14 Gun Cleaner, it makes sense to merge with SC Products Group and bring the sales, marketing, and distribution under SC Products Group moving forward. SC Products Group has manufactured and distributed safe cleaners and detergents with a focus on cancer prevention for more than 20 years for first responders, off-road vehicles, and now, firearms,” said Austin Stone, CEO of Desert Tactical, in a press release.⁷

• Olin to Acquire Ammunition Manufacturing Assets from AMMO (January 2025, $75 Million) – Olin (NYSE:OLN) subsidiary, Winchester, announced its acquisition of AMMO’s (Nasdaq:POWW) small caliber ammunition manufacturing assets for an enterprise value of $75 million in January 2025. Assets include AMMO’s brass shellcase capabilities and its 185,000 square foot production facility in Wisconsin, according to a press release.⁸ The company will also acquire the skilled workforce from the facility, enabling increased specialization and exposure to high margin specialty calibers. The transaction is expected to be immediately accretive to adjusted EBITDA. The deal also furthers Olin’s goal of vertically integrating Winchester across the ammunition value chain, providing economies of scale that are projected to produce $40 million of synergies within three years, according to Olin’s Q4 2024 earnings call.⁹
• Redwire (NYSE:RDW) to Acquire Edge Autonomy Operations (January 2025, $925 Million, 4.2x EV/Revenue, 12.9x EV/EBITDA) – In January 2025, Redwire (NYSE:RDW) announced its acquisition of Edge Autonomy Operations for an enterprise value of $925 million, equivalent to 4.2x EV/Revenue and 12.9x EV/EBITDA. Edge Autonomy is a vertically integrated developer of uncrewed, autonomous drone technology. The firm’s products, including its Stalker and Penguin series, have been used by the U.S. Department of Defense, Special Operations Forces, and allied governments. The acquisition of Edge Autonomy’s combat-proven airborne platforms expands its product suite beyond mission-critical space infrastructure, a notable pivot toward defense technology. “The combination of Redwire and Edge Autonomy creates a uniquely positioned space and defense company focused on two of the fastest growing trends in defense technology,” noted Peter Cannito, CEO of Redwire, in a press release.¹⁰
• Flock Safety Acquires Uniform Sierra Aerospace (January 2025, Undisclosed) – Public safety solutions provider, Flock Safety, acquired Uniform Sierra Aerospace in January 2025 (undisclosed). Uniform Sierra Aerospace offers small unmanned aerial systems (sUAS) primarily serving Public Safety Organizations and First Responder end markets. The deal continues Flock Safety’s buildout of National Defense Authorization Act (NDAA)-compliance drone offerings. In October 2024, the firm acquired Aerodome, a developer of Drone as a First Responder (DFR) technology, marking its first foray into drone products (undisclosed). Flock’s existing offerings include license plate recognition (LPR) cameras, gunshot detection sensors, and the FockOS Real-Time Crime Center (RTCC) software.

Sector participants will likely aim to capitalize on the reprioritization of domestic tactical product inventory after years of steady military aid flowing overseas. Additionally, border security and public safety demand for autonomous drones is expected to drive market-leading growth over the mid- to long-term, offering many tactical products companies’ opportunities for significant expansion. Capstone anticipates these factors will support company earnings, M&A activity, and valuations for the remainder of 2025.

To discuss growth opportunities in the Tactical Products space, provide an update on your business, or learn about Capstone’s wide range of advisory services and Tactical Products market knowledge, please contact us.

Andrew Woolston, Associate, was the lead Market Intelligence contributor to this article.

Endnotes

1. Council on Foreign Relations, “Here’s How Much Aid the United States has Sent Ukraine,” https://www.cfr.org/article/how-much-us-aid-going-ukraine, accessed April 22, 2025.

2. Axon Enterprise, “Q4 2024 Axon Enterprise, Inc. Earnings Conference Call,” https://vimeo.com/1060310473, accessed April 22, 2025.

3. Tochnyi.info, “Update on FPV Drone Warfare (27-01-2024),” https://tochnyi.info/2024/01/update-on-fpv-drone-warfare-27-01-2024-2/, accessed April 22, 2025.

4. CTC Sentinel, “On the Horizon, The Ukraine War and the Evolving Threat of Drone Terrorism,” https://ctc.westpoint.edu/on-the-horizon-the-ukraine-war-and-the-evolving-threat-of-drone-terrorism/, accessed April 22, 2025.

5. U.S. Customs and Border Protection, “Testimony of Deputy Executive Assistant Commissioner Keith Jones for a December 10, 2024, Hearing on UAS Threats,” https://www.cbp.gov/about/congressional-resources/testimony/Jones-CHS-CLI-TMS-10DEC24#_ftn3, accessed April 22, 2025.

6. Dronelife, “Lessons from Hurricane Helene: How UAVs Supported Emergency Response in Western North Carolina,” https://dronelife.com/2025/03/11/lessons-from-hurricane-helene-how-uavs-supported-emergency-response-in-western-north-carolina/, accessed May 5, 2025.

7. SGB Media, “SC Products Group Merges with Desert Tactical,” https://sgbonline.com/sc-products-group-merges-with-desert-tactical/, accessed April 22, 2025.

8. PR Newswire, “Olin – Winchester to Acquire Ammunition Assets of AMMO, Inc.,” https://www.prnewswire.com/news-releases/olin–winchester-to-acquire-ammunition-assets-of-ammo-inc-302355699.html, accessed April 22, 2025.

9. Olin Corporation, “Olin Corporation Fourth Quarter 2024 Earnings Conference Call,” https://app.webinar.net/0Pgo8k4LaZq, accessed April 22, 2025.

10. Redwire, “Redwire Announces Acquisition of Edge Autonomy; Transformational Transactions Creates Multi-Domain Scaled and Profitable Space and Defense Tech Company,” https://redwirespace.com/newsroom/redwire-announces-acquisition-of-edge-autonomy-transformational-transaction-creates-a-multi-domain-scaled-and-profitable-space-and-defense-tech-company/, accessed April 22, 2025