Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Featured

Managed Services

Strategic Alliances

Engineering Future Relevance – with Data & AI

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Back (see screen at page 12)

Loading Results

European Aerospace & Defence Capital Market Insights

Defence Monitor

Kampfjet vor Sonnenuntergang

Your experts for questions

Blaser & Schnieders

Thorsten Schnieders
Partner at PwC Germany
E-Mail

Tobias Blaser
Partner at PwC Germany
E-Mail

Who is the next competition?

Following the successful launch of the Aerospace & Defence Monitor, we are pleased to present the H1 2026 edition. This time we took a particular look at the start-up ecosystem, as the industry is undergoing a rapid competitive reset. 

Established structures are being challenged as capital, innovation, and strategic relevance increasingly shift towards new players, new technologies and new forms of collaboration.

Download the latest issue for deep insights

Defence Monitor H1 2026

European Aerospace & Defence Capital Market Insights, Q2 2026

Lead Insight

European Aerospace & Defence sector continues to benefit from structurally embedded government demand, accelerated rearmament programmes and the growing strategic relevance of space. 

At the same time, the sector is entering a more selective phase of capital allocation.  

Investors are no longer rewarding Aerospace & Defence exposure broadly, but increasingly focus on companies that combine demand visibility with execution strength, profitable delivery and resilient cash flow generation. 

Shifting Innovation Centre of Gravity

The traditional R&D monopoly of Europe's primes is eroding. 

While hardware capabilities remain anchored with incumbent industrial players, start-ups are gaining relevance in software-defined domains such as AI, autonomy, mission software and Space technologies. 

Access to start-up-led innovation is becoming a strategic differentiator as the sector moves towards faster capability development and shorter innovation cycles. 

Capital Market Dynamics

Capital markets continue to reflect the sector’s long-term demand visibility, but investor behaviour has become more selective. 

Defence and Aerospace indices remain supported by Europe’s strategic autonomy agenda, geopolitical uncertainty and the increasing role of Space as critical infrastructure. 

Recent earnings reactions show that strong backlogs alone are no longer sufficient, with markets increasingly focused on delivery performance, profitability and cash conversion.

A&D Industry Risk 

Aerospace & Defence cost of capital continued to remain below the market portfolio, with the increase primarily linked to the risk-free rate growth.  

Implications for Corporates

Innovation leadership is shifting beyond the primes. Corporates that secure access to startup-led innovation will benefit most through faster capability development and shorter innovation cycles.

Capability gaps can no longer be addressed via internal development alone. Strategic partnerships provide access to expertise, accelerate scaling and improve responsiveness to rapidly evolving customer requirements.

Industry leadership will increasingly be determined by ecosystem position rather than standalone scale. Successful players combine the capabilities of primes with the agility and innovation speed of startups.

Acquisition strategies should focus on closing technology and capability gaps rather than adding volume. Value creation will increasingly depend on securing access to differentiated IP, software capabilities and sovereign technologies.

Implications for Investors

Startups able to commercialise capabilities across defence and civilian end-markets (e.g. space data, cybersecurity, AI) benefit from larger addressable markets, broader buyer universes and structurally higher valuation potential.

Given regulatory complexity and buyer universe limitations, investors should prioritise assets with clearly identifiable exit routes and scalable business models capable of attracting both strategic and financial buyers.

Funding increasingly flows to a small number of category leaders. Early identification of technology champions and emerging platforms will become a key determinant of investment performance.

As corporates seek access to critical technologies and sovereign capabilities, strategic acquisitions are expected to accelerate. Investors positioned in consolidation targets may benefit from scarcity premiums and strategic buyer demand.

Download the latest issue and sign up for our newsletter so you don’t miss out on future updates.

(PDF of 1.98MB)
Follow us

Contact us

Thorsten Schnieders

Thorsten Schnieders

Partner, FS Deals und Industry Leader Real Assets, PwC Germany

Tel: +49 89 5790 6448

Email
Tobias Blaser

Tobias Blaser

Partner, German Industrial Manufacturing Deals Leader, PwC Germany

Email
Hide

© 2017 - 2026 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure↗ for further details.