Sector Performance

M&A activity in the aerospace and defense sector gradually strengthened throughout 2025 due to increased government spending on defense, particularly replenishing stockpiles and investing in next generation technologies. Continued geopolitical uncertainty, strong economic forces, and lowering interest rates also played a part.

The fourth quarter experienced strong upward momentum as market participants positioned themselves for growth in the United States and Europe, with heightened investment in AI, cyber, autonomous systems, counter-UAS, and electronic warfare technologies, space, and munitions. Private equity interest in the sector remained robust, with a continued focus on platform building and consolidation.

Hogan Lovells Activities

In 2025, our Aerospace and Defense team continued to support clients amid heightened defense and space activity. We advised on numerous cross-border transactions, innovative investments and financings, and strategically significant litigation.

We drew on our deep experience across government contracting, foreign direct investment, trade and export controls, AI, cybersecurity, and national security, while also helping clients navigate digital transformation across the industry. We hosted and participated in leading industry events and shared our perspectives through Aerospace and Defense Outlook, delivering analysis on key trends shaping the sector.