Tactical Products M&A Update – January 2023
Technology & Apparel Investments Drive Sector Growth, Support Healthy Tactical Products M&A Activity
Capstone Partners released its January 2023 Tactical Products M&A Update, reporting that the rise in outdoor recreation activities during the pandemic has served as a boon to growth in the sector and supported healthy Tactical products M&A activity levels. While consumer spending has moderated in recent months, personal consumption expenditures on sporting equipment, supplies, guns and ammunition increased 6.2% year-over-year (YOY) in November. National Instant Criminal Background Check System (NICS) firearm background checks have slowly retreated from pre-pandemic highs, declining to 1.7 million in December 2022, marking a 2.5% decrease YOY according to The Reload. While December background checks were down YOY, 2022’s total numbers were well ahead of pre-pandemic years. The FBI ran 16.4 million total NICS background checks in 2022, well ahead of pre-pandemic levels of ~13.2 million. Increasing background checks serve as a strong barometer for rising sales in new and pre-owned firearms.
Elevated demand for firearm alternatives used by law enforcement and increased consumer spending on personal protection has created a healthy backdrop for the Non-Lethal Weapons segment. The global market for non-lethal weapons used by military personnel, law enforcement, and citizens is expected to grow to $12.5 billion by 2028 from $7.4 billion in 2020, equivalent to a compounded annual growth rate (CAGR) of 7.4%. Notably, violent crime rates in the U.S. increased 3.0% YOY in September 2022. Products such as pepper spray and rock salt launchers have been developed to allow the user to use non-lethal, but effective, force against assailants.
Deal activity has remained strong through year-to-date (YTD) 2022, with 30 transactions announced or completed, mirroring prior year levels. A shift towards acquisitions that focus on apparel and non-lethal technologies have fueled the merger and acquisition (M&A) market. Emerging from the COVID-19 pandemic, where ammunition and gun sales drove sector deal activity, many firms have looked for ways to diversify product lines away from firearms.
“Tactical companies with differentiated technology, product innovation, direct-to-consumer reach, and attractive margins will continue to stand out from the pack and attract M&A interest” said Capstone Director Peter Bailey, the lead contributor in the newly released report.
Also included in this report:
- Insights into federal spending on new weapons systems development and production, and how it is expected to provide significant revenue opportunities for sector participants.
- Summaries of recent Tactical sector transactions, and the main drivers behind each deal.
- A breakdown of public company data in the Tactical sector, broken down into three major segments: Firearms, & Ammunition, Less-lethal, and Sporting Goods Retailers.
Related Transactions
Insights for Middle Market Leaders
Receive email updates with our proprietary data, reports, and insights as they’re published for the industries that matter to you most.