If you sell one of your businesses to a prime and you value it at 10 times revenue, the prime would have to immediately destroy 80% of the value of that company in order to subsume it into their business.

And so typically on historically, primes have been very bad acquirers of early stage and even later stage startups in the space for exactly that reason.

52:26 / 53:07

you sell one of your businesses to a prime and you value it at 10 times revenue, and the prime would have to immediately destroy 80% of the value of that company in order to subsume it into their business. And so typically on historically, primes have been very bad acquirers of early stage and even later stage startups in the space for exactly that reason. I see that changing over the next few years. The two reasons. Firstly, we see the emergence of neo primes. So the likes of Anduril, of Helsing. We can also bucket TechAva and Quantum Systems into those. And they're gonna start to become, and in Anduril's case already, has become highly acquisitive.

Why this clip

Reveals a shocking structural inefficiency in defense M&A with specific numbers (10x revenue, 80% value destruction). This counterintuitive business mechanic explains why traditional defense primes struggle with acquisitions.

52:26 - 53:0741sBusiness Mechanics

Share

LinkedInX

More from this guest

Nicola Sinclair

1 appearance · 2 clips

More from this episode

From the blog

Want clips like this for your podcast?

We find your top 5-8 clips, write the hooks, and deliver ready-to-post content. First 2 episodes are free.

Get 2 Episodes Clipped Free