M&A activity snapshot
Defense logistics and sustainment covers base operations, equipment and aircraft maintenance, supply chain support and field logistics for the military. Demand rests on the cost of keeping systems running: operating and support costs are about 70 percent of a weapon system's total life-cycle cost, and DoD spends tens of billions of dollars a year sustaining them.
The segment has consolidated into a few large public companies, mostly built by private equity. American Securities and Lindsay Goldberg bought AECOM's Management Services business in 2020 at 11.6x trailing EBITDA, and later, as owners of Amentum, agreed to buy PAE for about $1.9 billion including debt. In 2023, Jacobs agreed to combine its Critical Mission and Cyber & Intelligence businesses with Amentum, creating a company with about $13 billion of annual revenue.
V2X followed the same pattern. Vectrus merged with Vertex Aerospace, which was controlled by funds managed by American Industrial Partners; Vertex holders received about 62% of the combined company. The combination had about $3.4 billion of revenue and about $11.3 billion of backlog. For the wider GovCon deal market, see the Government Contracting & Defense Services overview.
Who is buying
Public sustainment primes. Amentum, V2X and KBR buy to add programs, customers and capabilities. Tuck-ins are part of the model: Vectrus bought Zenetex, an aviation sustainment provider with over $200 million of revenue, for about $112 million, adding more than $700 million of backlog.
Large-cap and industrial-focused PE. American Securities, Lindsay Goldberg and American Industrial Partners built the two largest sustainment platforms before taking them public through mergers. Their exits show the main route for sponsors in this segment: sell or merge into a public company.
Mid-market PE platforms. Smaller sponsor-backed companies buy business units that large primes divest. Valiant Integrated Services bought Cubic's Global Defense Services business in 2018 at 7.6x trailing EBITDA.
What buyers look for
Large-program positions. A place on the major IDIQ contracts sets a ceiling on growth. LOGCAP V, the Army's worldwide logistics augmentation contract, carries an $82 billion cumulative ceiling. Subcontract positions on those vehicles also count, because they can lead to prime work at recompete.
Funded backlog. Large sustainment contracts carry big headline backlog but much less funding. Amentum reported $47.1 billion of total backlog at fiscal year-end 2025, of which $5.6 billion was funded, with a 1.2x book-to-bill. Buyers apply the same split to small targets.
Contract mix. Sustainment is cost-plus heavy. V2X's 2025 revenue was 61% cost-plus and cost-reimbursable, 36% firm-fixed-price and 3% time-and-materials. Fixed-price work earns higher margins if well run, and the V2X merger case cited a rise in the fixed-price and T&M share to 52% from 29% as a benefit.
Depot rules. Federal law caps private depot work: not more than 50 percent of a military department's depot-level maintenance funds may be used for contractor performance. That cap limits how much organic depot work can move to contractors, so private sustainment firms compete mostly for field-level, aviation and base-operations work.
What makes a strong company
A sustainment contractor that commands a premium typically has:
- Prime or key-subcontract positions on multi-year programs with long remaining periods of performance. V2X's LOGCAP V Kuwait task order runs through June 2030.
- No single task order that dominates revenue. That Kuwait order was 9.9% of V2X's 2025 revenue; a small firm with a larger single-contract share should expect that contract's recompete to shape the price.
- A high share of funded backlog, and a book-to-bill above 1.0x.
- Technical certifications for the platforms it maintains (aircraft types, ground vehicles, electronics), and qualified mechanics and technicians who will stay through a sale.
- A clean record on contractor performance assessments, since sustainment recompetes weigh past performance heavily.
- A NAICS code that fits its work. Facilities support (561210) has a $47.0 million size standard but applies only when a contract bundles three or more separate activities; aviation support (488190) is $40.0 million.
Valuation and deal structure
Disclosed multiples come mostly from SEC filings for deals between 2016 and 2022:
- PAE to Amentum: 9.7x trailing EBITDA, against a 9.8x mean and 9.2x median for nine government services precedents, ranging from 7.1x to 14.0x.
- AECOM Management Services to American Securities and Lindsay Goldberg: 11.6x; Cubic Global Defense Services to Valiant: 7.6x; Wyle to KBR: 8.9x.
- Zenetex to Vectrus: about 8.4x 2020E adjusted EBITDA, net of an $11 million tax benefit. On more than $200 million of revenue, that is under 0.6x revenue by Axia's arithmetic.
Public markets price logistics-heavy companies below technology-focused GovCon peers. Vectrus traded at 8.0x CY2021E EBITDA, against 11.8x to 15.4x for SAIC, KBR, Parsons, ManTech and Jacobs. Margins explain much of the gap: Amentum's FY2025 adjusted EBITDA was $1,104 million on $14.4 billion of revenue, about 7.7% by Axia's arithmetic.
No 2024-2026 lower-middle-market sustainment deal with a disclosed price and EBITDA was found, so the figures above are dated benchmarks, not current quotes.
Deal structure follows GovCon rules. An asset sale needs government consent through novation, and if the government refuses, the original contractor stays obligated, so most deals are stock purchases. Set-aside holders must recertify within 30 calendar days of a change in control.
This is market data, not a valuation of any business. For a starting range on your own company, use the valuation tool.
Outlook
Sustainment budgets are growing. DoD's FY2026 operations and maintenance request is $360.3 billion, $18.0 billion more than FY2025, including $48.4 billion for depot maintenance at public and contractor facilities. The FY2027 request seeks $1.5 trillion for defense, though Congress has not enacted it.
Cost pressure is also rising. DoD found critical operating and support cost growth on 14 of 36 weapon systems it reviewed for fiscal years 2023 and 2024. That favors contractors that can show lower sustainment cost, through fixed-price performance, better parts supply or data-driven maintenance.
Over the next 12-24 months, expect the large primes to keep buying aviation, overseas base operations and specialized maintenance firms. Sponsors will keep building smaller platforms for eventual sale to them.
Own a defense sustainment or logistics company and want a starting point before talking to buyers? Run the valuation tool. For how acquirers target niche markets, see how PE firms build buy-side pipelines.