10 . 10 . 2025

Expert's View Fundraising, consolidations, and contrasts in M&A defense – Europe vs. the US

10 . 10 . 2025

Expert's View
What will you find in this article?

The mergers and acquisitions market in the defense and dual-use technology sector is growing at an unprecedented rate. Startups involved in AI, drones, and cybersecurity are attracting billions, with funds and governments competing to invest. But the dynamics vary from continent to continent—the US is running like a well-oiled machine, while Europe is still finding its rhythm.

Global context

According to PitchBook and PwC, global transactions in aerospace & defense in the first half of 2025 reached $21.7 billion—the highest figure since 2021. However, Europe and the US have completely different approaches to building this market.

Europe – potential hampered by regulations

What are the positives?

  • Greater involvement of venture capital and private equity funds,
  • EU support programs for military and dual-use technologies,
  • Growing activity in Central and Eastern Europe.

What is slowing things down?

  • fragmentation of national markets,
  • complex legal and political procedures,
  • still high dependence on imports from the US (over 60% of NATO Europe’s arms purchases are made there).

Expert advice: Europe faces a choice – either accelerate the consolidation of “Made in Europe” or continue to depend on American suppliers. However, there is a growing determination to build its own technological champions.

Key figures and transactions (H1 2025)

  • M&A value in Europe: $2.3 billion (+35% y/y),
  • Safran acquires Preligens (AI, France) for $243 million; Safran, a global aerospace and defense company, strengthens its expertise in AI and intelligence data analysis. This is one of the first examples of a major M&A deal in European defense AI.
  • Rheinmetall acquires Loc Performance (US) for $950 million; the German giant is moving deeper into the US supply chain, increasing its presence in that market. The transaction shows the reverse direction of investment – from Europe to the US.
  • Daniel Ek’s fund invests €600 million in Helsing (drones and AI); a symbol of the entry of large private investors into defense tech.

Source: EY, Reuters, investing.com

CEE – a young but dynamic hub of innovation

Central and Eastern Europe is increasingly attracting the attention of investors. There are already over 170 defense startups and over 270 cybersecurity companies operating in the region.

Selected examples:

  • Delian Alliance (Poland) – electronics and AI, €7.1 million in funding,
  • Origin Robotics (Latvia) – precision weapon systems, €8.5 million,
  • Helsing (Germany/CEE) – AI and drones, valued at ~€1.36 billion.

Sources: Rzeczpospolita, evertiq

Expert advice: CEE could be a “sandbox for innovation” for NATO – young companies test solutions faster and cheaper than large players. This is a huge advantage for the region that should not be wasted.

The US – a consolidated giant

The US remains the largest player in the defense M&A market and the main supplier of equipment to Europe.

Advantages of the US market:

  • high liquidity and consolidated structure,
  • rapid transaction completion,
  • flexibility in investments and partnerships.

In 2024, American investors completed over $80 billion in transactions involving assets in Europe.

Expert advice: The American M&A market operates like an express train – short due diligence, quick decisions, greater risk tolerance. This is an advantage that Europe will not catch up with for a long time.

Summary

The M&A market in the defense and dual-use technology sector is growing rapidly worldwide. Thanks to consolidation and liquidity, the US remains the global leader and a model for others. Despite fragmentation and regulatory constraints, Europe is consistently increasing its investment attractiveness thanks to EU initiatives.

Central and Eastern Europe deserves special attention – it is a young, dynamic hub for startups and innovation, gaining increasing international importance.

Expert advice: The coming years will show whether Europe can combine its scattered forces and create its own champions. If so, it is the CEE region that could be the driving force behind the new face of European defense tech.

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