Heightened Consumer Access and Robust Demand Drives Tactical Products M&A Resilience
Capstone Partners released its September 2023 Tactical Products M&A Update, reporting that public companies in the sector have increased net sales by spinning off hunting, fishing, and commercial firearm product lines into publicly traded subsidiaries. Businesses with advanced technology product offerings serving the Attachment and Accessory segments have experienced healthy merger and acquisition (M&A) interest from buyers.
Sector M&A activity has declined year-over-year (YOY) through year-to-date (YTD) 2023; however, quality companies with proven cash flows have continued to draw acquirer appetite. The broader Consumer industry has historically been sensitive to economic cycles, often resulting in an M&A volume decline amid downturns or uncertainty. While deal volume in the Tactical Products space has slowed, quality companies with unique product offerings have still commanded buyer attention and healthy transaction multiples. Additionally, volume in the Federal Bureau of Investigation’s (FBI) National Instant Criminal Background Check System (NICS) has remained elevated, showcasing healthy consumer interest in firearm purchases. Stable background check levels and interest rate clarity from the Federal Reserve are expected to provide healthy optimism for dealmaking in the second half of 2023 and into 2024.
Businesses in the space offering the latest firearm accessory technology have penetrated a congested Commercial end market utilizing M&A and strategic partnerships to bolster product offerings and drive sales. Of note, True Velocity Ammunition (TV Ammo), a Texas-based composite manufacturing company with a focus on acquiring advanced firearm technology companies, acquired advanced suppressor technology provider Delta P Design in July for an undisclosed sum. Public companies in the space have also used strategic partnerships to increase product sales. Cadre (NYSE:CDRE), a tactical equipment manufacturer serving the Law Enforcement and Commercial end markets, experienced a 10% YOY sales increase in its Duty Gear Commercial segment in Q2 2023 stemming from the launch of its new commercial firearm holsters. In collaboration with veteran-owned Haley Strategic Partners, Cadre’s new holster line through its Safariland brand includes the Solis commercial holster with Automatic Locking System (ALS) technology.
Also included in this report:
• How the expansion of constitutional carry laws has affected the Small Caliber Ammunition market.
• A breakdown of trends in U.S. firearm manufacturing.
• Public company performance broken out by segment.
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