M&A activity snapshot
Defense training and simulation covers flight and weapons simulators, synthetic training environments, simulation software, curriculum development and instructor services. Deal activity is rising. Capstone Partners counted a 47.5% increase in training and simulation deal volume in 2025, and 14 deals announced or completed in 2026 through early June, up 133.3%. Capstone's count covers civilian as well as military training.
The benchmark deals are a few large transactions. CAE agreed to buy L3Harris's Military Training business for US$1.05 billion, about 13.5x estimated 2020 adjusted EBITDA. BAE Systems bought Bohemia Interactive Simulations, a military simulation software company, for $200 million. Veritas Capital and Evergreen Coast Capital took Cubic private in a deal valued at about $3.0 billion including debt, though most of Cubic's business is transit fare systems, not training.
For the wider GovCon market, see the Government Contracting & Defense Services overview.
Who is buying
Global training and simulation strategics. Strategic buyers did 72.9% of training and simulation deals in 2025, with volume up 79.2% to 43 transactions. CAE and BAE Systems are the largest examples. Both are non-U.S. parents buying U.S. capability.
Defense technology companies. Newer defense tech firms buy simulation and visualization to support their own products. Shield AI announced the acquisition of Aechelon Technology, an immersive visualization company, from Sagewind Capital.
PE-backed platforms. Private equity re-engaged in 2026 after two flat years, with six PE deals year to date, five of them add-ons. For example, By Light, a Sagewind Capital portfolio company, acquired Dignitas Technologies, a modeling, simulation and training firm.
Large-cap private equity. Sponsors have also bought whole public companies with training businesses inside, as with Veritas and Evergreen's purchase of Cubic, and Greenbriar Equity's purchase of Arotech, which had a training and simulation division.
What buyers look for
Program positions. Buyers pay for seats on long-running training programs. CAE's announcement highlighted that L3Harris Military Training brought backlog and positions on the USAF SCARS simulator architecture program, the USAF F-16 simulator training program and Navy/Marine Corps F/A-18 aircrew training.
Proprietary software and devices versus instructor labor. This is the main valuation divide. CAE paid about US$1.05 billion for a business with about US$500 million of 2020 revenue, roughly 2.1x revenue by Axia's arithmetic. Cubic sold its training services unit, with $378 million of revenue and about 3,500 employees, for $135 million in cash plus a $3 million earnout, about 0.36x revenue by Axia's arithmetic.
Backlog depth. Training programs run for years. CAE's Defense and Security segment ended fiscal 2026 with C$10.8 billion of adjusted backlog and a 1.10x trailing book-to-sales ratio. Buyers ask small targets for the same backlog and book-to-bill data.
Segment margin. CAE's Defense and Security adjusted segment operating income was 9.2% of revenue in fiscal 2026, up from 7.5%. That gives owners a public benchmark for defense training margins.
What makes a strong company
A defense training or simulation company that commands a premium typically has:
- Proprietary simulation software, visual databases or device designs that the customer cannot easily re-compete to another vendor.
- Positions on named aircrew, weapons or synthetic training programs, with years of remaining period of performance.
- Recurring revenue from device sustainment, instructor support and software licenses, not only one-time device sales.
- Engineers and instructors with the clearances and platform certifications the programs require.
- A customer base spread across services (Air Force, Navy, Army) or across U.S. and allied militaries.
- The right NAICS coding for its work. The 611430 training size standard is $15.0 million, while flight training (611512) and computer systems design (541512) are $34.0 million.
Valuation and deal structure
The two tiers show up clearly in disclosed multiples:
- Simulators, software and programs. CAE/L3Harris Military Training: about 13.5x estimated 2020 adjusted EBITDA, or about 10x including expected cost savings. Arotech, sold to Greenbriar Equity, was priced at 15.7x LTM adjusted EBITDA, though it also owned a power-systems division.
- Labor-based training services. Cubic Global Defense Services to Valiant: 7.6x trailing EBITDA, below the 9.8x mean of that government services precedent set.
- Reference point for civil aviation training. CAE's purchase of Bombardier Business Aircraft Training for $645 million was recorded at 10.0x.
These multiples are from deals between 2018 and 2021. Recent deals named by Capstone, including Aechelon and Dignitas, were undisclosed, so there is no current public multiple for a lower-middle-market training firm.
Structure points:
- Earnouts tied to wins. Cubic's sale included $3 million of contingent consideration tied to contract wins expected over the next 12 to 24 months.
- Set-aside status. Owners selling to a larger or foreign strategic must recertify size within 30 calendar days of a change in control.
- Stock versus asset deals. In an asset sale, the government may refuse novation, leaving the original contractor obligated, so most deals are stock purchases.
This is market data, not a valuation of any business. For a starting range on your own company, use the valuation tool.
Outlook
Expect deal activity to stay elevated over the next 12-24 months. Capstone's 2026 data shows volume up 133.3% year to date and private equity returning through add-ons, and the FY2027 budget request seeks $1.5 trillion for defense, though Congress has not enacted it.
The buyer mix is shifting toward software. Defense technology companies are buying visualization and simulation capability, and PE platforms are adding modeling and simulation firms. Owners with proprietary software, synthetic-environment capability or aircrew program positions will draw the most interest. Instructor-heavy services businesses will still sell, but at labor-services prices.
Own a defense training or simulation business and want a starting point before talking to buyers? Run the valuation tool. For how acquirers source in niche markets, see why vertical-specific buyers outperform generalists.