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Innovative Defense Procurement Drives Training & Simulation M&A
Capstone Partners released its latest Training & Simulation Sector Update, reporting that the Training & Simulation sector has benefited from several converging defense modernization trends that have elevated force readiness and soldier development as strategic priorities across the Military landscape. Rising defense budgets, increasing geopolitical tensions, and the growing complexity of next-generation military platforms have reinforced demand for advanced training solutions capable of preparing personnel for complex and evolving operational environments. U.S. defense spending has maintained a healthy growth trajectory as policymakers have prioritized military technology innovation, strategic deterrence, and force readiness amid an increasingly complex global security landscape. This elevated level of spending has supported the development and procurement of next-generation training systems, advanced simulation solutions, and digital infrastructures designed to enhance warfighting effectiveness, positioning businesses with exposure to these categories as key merger and acquisition (M&A) targets.
Heightened global tensions have increased the importance of continued investment in operational preparedness and force modernization initiatives. Escalating geopolitical conflicts across Eastern Europe, the Middle East, and the Indo-Pacific have drawn U.S. and Allied forces into multiple operational theaters. Rapid mobilization and deployment of carrier strike groups, unmanned airborne infantry divisions, and marine expeditionary units (MEUs) have highlighted the importance of maintaining high levels of real-world combat readiness. Beyond expanding training capacity, advancements in simulation technology have also reduced training costs and shortened pre-deployment timelines. The adoption of innovative, artificial intelligence (AI)-enabled training methodologies has allowed for the replication of real-world battlefield conditions while avoiding the costs and disruptions associated with large-scale, live instruction.
Training & Simulation M&A activity has remained strong through year-to-date (YTD) 2026, with announced and completed transactions rising 1.9% year-over-year (YOY) to 53 deals. Deal volume growth has been reinforced by clear demand signals for virtual, mission-critical technologies capable of supporting the personnel development needs of global defense organizations. Investors have capitalized on force modernization and readiness tailwinds, recognizing the ability of simulation-based instruction platforms to enhance warfighter lethality while reducing the costs associated with real-world training exercises. Strategic buyers have accounted for the majority (67.9%) of Training & Simulation M&A in YTD 2026. Public strategic acquisitions have grown by nine deals to 20 to date, marking the highest level since 2021. Sponsor buy-and-build strategies have fueled the private equity (PE) cohort’s outsized jump in add-on activity. The number of add-on acquisitions increased from seven to 12 YOY as PE firms have pursued acquisitions that bolster military training and simulation within existing portfolio companies. Platform deals have eased in YTD 2026 to five (-16.7% YOY). The limited availability of high-quality, commercially-viable assets has encouraged investors to pursue lower-risk expansion opportunities through existing holdings rather than establishing new platform investments.
Also included in this report:
Analysis of Training & Simulation M&A activity, including buyer composition, valuation trends, and PE participation.
A breakdown of military training and simulation procurement initiatives in 2026.
How public companies in the sector have bolstered their proprietary training software solutions.
Capstone Partners’ ADGS Investment Banking Team provides M&A, capital formation, and financial advisory services to the owners of middle market businesses in the Training & Simulation sector. Our team partners with leading mid-to-large sized industrials and manufacturing businesses that serve growing end-markets.
For more information on the Training & Simulation M&A Update featured in this report or to speak with one of our ADGS M&A Team members about how to grow, value, and/or sell your company, we are here to help. Contact us today to start a conversation.
