Contact us
Industries Aerospace & Defense Automotive Medical Devices Private Equity Other Manufacturing
Services
Crisis Management Rapid Industrialization Logistics Mergers & Acquisitions New Product Introduction Operational Excellence Production.Net Project Management Relocation & Consolidation Restructuring & Turnaround Rapid Plant Assessment Software Defined Vehicles Strategy Development Supply Chain Resilience Tariff Mitigation Total Cost Management
Insights Articles Case Studies Reports & Guides Webinars & Podcasts
Industries Aerospace & Defense Automotive Medical Devices Private Equity Other Manufacturing
About Us Careers Leadership Approach Contact Us
Featured
Supply Chain Resilience: Building Manufacturing Supply Chains That Perform Under Disruption
Learn More →
Contact us

As European nations ramp up defence spending and seek strategic autonomy, alliances and joint ventures (JVs) have emerged as pivotal tools to meet soaring military demand, boost industrial capacity, and ensure resilience amid geopolitical uncertainty.  

From our extensive industry experience, we have condensed our strategic learnings on how to navigate, structure, and optimise such alliances. You’ll find this insight collated in our latest defence paper where we unpack the drivers, strategic value and benefits of JVs.  

We take a closer look at each of the essential steps that help maximise production efficiency:

8 Essential Steps to Optimise your Defence Manufacturing Joint Venture:

Next Steps: Is Your Target Ready?

At Seraph, we specialise in operational due diligence for defence manufacturers.

Contact us www.seraph.com/contact-us/ to schedule a rapid readiness review.

To access the full European Defence Manufacturing Joint Venture PDF now just complete this short form:

As Europe ramps up defence spending in response to heightened geopolitical threats, the defence manufacturing sector is undergoing a profound transformation.

For private equity firms and strategic buyers eyeing acquisitions in this space, the stakes have never been higher. Record order backlogs, growing capital inflows, and a renewed focus on European strategic autonomy mean that acquiring the right asset isn’t just about price—it’s about operational performance.

In this high-pressure environment, operational due diligence (ODD) is emerging as a critical success factor. Unlike traditional financial or legal diligence, which validates what a business has done, operational due diligence focuses on what a business can do. And for defence manufacturers, that difference is everything.

The announced value of private equity and venture capital-backed investments in aerospace and defence in Q1 2025 totalled over  $4.27 billion globally, nearly equalling the $4.31 billion invested in such deals in all of 2024.

Source: S&P Global Market Intelligence data

The New Defence Landscape

Since the Russian invasion of Ukraine, European nations have accelerated their defence budgets, leading to unprecedented order backlogs for manufacturers. The eight largest European defence companies saw a 19% increase in backlogs in 2024, totalling a record €291 billion.

EU-level initiatives like the €150 billion SAFE programme and national increases under the “ReArm Europe” strategy further fuel this demand.

But this boom brings challenges. Capacity constraints, supply chain fragility, and the pressure to scale rapidly have created operational bottlenecks. In parallel, private capital is flowing into the sector at pace, driving competition for assets and pushing valuations higher.

The Case for Operational Due Diligence

Too often, buyers rely solely on financial due diligence to assess acquisition targets. This may uncover the health of the balance sheet, but it misses the operational heart of a manufacturing business.

Operational due diligence fills this gap. It evaluates a company’s ability to deliver on future orders, meet customer expectations, integrate new technologies, and scale production profitably.

This insight is essential not just for risk management—but for unlocking hidden value. In our experience operational due diligence – done well – can pinpoint areas where improved performance can generate significant value and make a substantial contribution to a deal’s ultimate return. According to some estimates, operations can account for around half of all value creation.

Value Creation Starts Before the Deal Closes

Significant  value creation comes from operational improvements—not just from financial engineering or revenue growth.

Operational Due Diligence allows acquirers to:

Successful manufacturers the aerospace and defence sector will pursue acquisitions that add specific capabilities such as operational talent and advanced operating models — and rely on ODD to ensure those capabilities are viable and scalable.

What to Examine in Operational Due Diligence for Defence Assets

At Seraph our hands–on experience directs our key areas of focus when we deliver a manufacturing ODD for a defence asset:

Why is Defence Different?

Defence manufacturing brings additional complexities:

Operational due diligence, in this context, becomes more than just prudent—it’s essential. Without it, buyers risk underestimating the time, cost, and risk of scaling the business.

The 100-Day Edge: From Insight to Action

The best acquirers use the pre-close period to build their 100-day value creation plan.

ODD delivers the insight needed to:

Seraph believes that firms who embed operational planning early are best positioned to capture synergies and defend margins in dynamic markets.

Conclusion: Operational Diligence as a Differentiator

In today’s European defence landscape, competitive advantage is not just about acquiring the right target—it’s about knowing what to do with it.

Operational due diligence turns uncertainty into insight, risk into opportunity, and complexity into clarity.

Whether you’re a , operational due diligence is your edge in a crowded, high-stakes market.

Don’t just buy a factory. Buy the ability to deliver

Next Steps: Is Your Target Ready?

At Seraph, we specialise in European Defence Operational Due Diligence.

Contact us www.seraph.com/contact-us/ to schedule a rapid readiness review.

Download our European Defence Operational Due Diligence Acquisition Checklist here:

Let our experts help you go beyond the balance sheet so you can unlock real value – fast.

Sources:

Maximizing Value in Manufacturing Acquisitions

In private equity and strategic acquisitions, operational due diligence is crucial for maximizing value. Over the last decade, most returns in private equity have come from multiple expansion and revenue growth rather than margin expansion. However, significant value is often overlooked due to the lack of comprehensive operational reviews. By leveraging experienced teams for operational due diligence before closing a deal, acquirers can identify opportunities, mitigate risks, and accelerate post-acquisition growth.

The Power of Operational Due Diligence Insights

Vetting operations with the right people can:

Leveraging Expert Teams for Superior Results

It takes many unique skill sets to field a championship team. Opportunities are often missed unless you can bring:

Maximizing the Pre-Close Period

The 30 days before deal closure are critical for comprehensive operational due diligence. During this time, expert teams can:

Driving Sustainable Value Creation

The right process enables private equity firms and strategic acquirers to:

Long-Term Strategic Advantage

The true value of operational due diligence lies in setting the foundation for long-term success. Expert-led due diligence enables:

Conclusion: Unlocking Value Through Operational Due Diligence

Expert operational due diligence is a powerful tool for value creation. It reveals not just risks, but also hidden opportunities. By identifying weaknesses that can be transformed into strengths, it paves the way for significant improvements. This deep insight allows buyers to see the full potential of an acquisition, often spotting value others miss. With a clear roadmap for enhancements from day one, companies can accelerate growth and boost profitability faster. In the competitive world of manufacturing acquisitions, this ability to quickly create and capture value makes all the difference.

“Internally, within our company, we like teammates who not just find problems, but solve problems each and every day and prevent them from reoccurring… The problem solvers always rise to the top. People love to be around other people who can help them solve a problem. Customers love us because we help them solve problems.”

Chris Cummins

President and CEO, Micronics Engineered Filtration Group

In this episode, we’ll discuss:

“We’re transparent about the important aspects of our business that help us create value. We openly discuss what makes our business great, focusing on customer service. This includes on-time delivery, lead times, reducing past dues, minimizing warranty costs, and taking care of our customers should something go wrong.

Internally, we talk about the three things that are really important to our business each and every day:

  1. Cash flow: You can’t run a business without constant cash flow.
  2. Margins: How do we improve, reduce rework, remove quality defects, eliminate scrap and waste to make our company more profitable, enabling continued growth?
  3. Sales: How do we grow our business organically? Not just get new customers, but how do we do more for the really good customers we have? How do we take more tasks off their plate to make their lives easier? Can we be a one-stop-shop to make them better?

These areas are an essential part of who we are and ensure that our actions positively impact the three pillars of our business. We emphasize problem-solving and continuous improvement while holding ourselves accountable for doing the right thing.”

“We have an intensive engagement model, and our aim is to work closely with our teams to drive critical initiatives. It’s almost like being a co-pilot; we agree on the game plan, identify three or four key opportunities, and leverage each other’s capabilities to get the job done. As the saying goes, we’re changing the wheels on the car while it’s still moving. We’re still running the business, serving our customers, and managing employees. The key is to create the capacity and bring in the skill sets to make it happen.”

Doug McCormick

Managing Partner & Chief Investment Officer, HCI Equity

In this episode, we’ll discuss:

Operational due diligence is the process of evaluating the operational capabilities, efficiency, and effectiveness of a company as part of a potential investment or acquisition. It involves a thorough review of a company’s business operations, including its organizational structure, management team, business model, financial performance, systems and controls, and regulatory compliance. 

Operational due diligence is important in the private equity deal process because it helps investors understand the target company’s ability to generate profits and cash flow and identify any potential operational risks or issues that could impact the value of the investment. By conducting operational due diligence, private equity firms can make more informed decisions about whether to proceed with an investment and, if so, how to structure the deal in a way that minimizes operational risks and maximizes value creation. 

Gathering Information 

Before beginning the operational due diligence process, it is important to identify the key areas of focus that will inform the review. This may include the target company’s organizational structure and management team, business model and revenue streams, financial performance and projections, and legal and regulatory compliance. 

Gathering information is a crucial part of the operational due diligence process. It allows investors to gain a deep understanding of the target company’s operations and identify any potential risks or issues that could impact the investment’s downstream value. By thoroughly reviewing the company’s business model, financial performance, systems and controls, and regulatory compliance, investors can make more informed decisions about whether to proceed with an investment and, if so, how to structure the deal in a way that minimizes operational risks and maximizes value creation. Additionally, gathering information from a variety of sources, including the target company’s management team, employees, customers, and suppliers, helps to provide a more holistic view of the company’s operations and enables investors to identify potential areas for improvement or value creation. 

There are several sources of information that can be used to gather information for operational due diligence. These may include the target company’s financial statements, management presentations and materials, customer and supplier contracts, and internal documents such as policies and procedures. It may also be helpful to speak with the target company’s management team, employees, customers, and suppliers to gather additional insights into the company’s operations. In some cases, it may be necessary to engage third-party experts, such as consultants or legal advisors, to provide additional analysis or guidance. 

Assessing the Target Company’s Operations 

As part of the operational due diligence process, it is important to assess the target company’s operations in order to understand its capabilities, efficiency, and effectiveness. This includes examining the target company’s organizational structure and management team, as well as analyzing its business model and revenue streams. 

Examining the target company’s organizational structure can provide insight into how the company is structured and how decisions are made. It is important to assess the effectiveness of the management team and their ability to lead the company. This may involve reviewing the team’s experience, track record, and succession plans. Analyzing the target company’s business model and revenue streams is also critical for understanding the company’s operations. This includes understanding the company’s products or services, its customers, and its distribution channels. It is important to assess the sustainability and potential for growth of the company’s revenue streams. 

Finally, evaluating the target company’s financial performance and projections is another key aspect of operational due diligence. This may involve reviewing the company’s financial statements and projections, as well as analyzing key financial metrics such as revenue growth, profitability, and cash flow. It is important to understand the company’s financial health and identify any potential financial risks or issues that could impact the value of the investment. 

Identifying Risks and Potential Issues 

Identifying risks and potential issues is an important part of the operational due diligence process, as it allows investors to understand the potential challenges or liabilities that could impact the value of the investment. There are several key areas to focus on when identifying risks and potential issues, including: 

  1. Reviewing the target company’s legal and regulatory compliance: It is important to assess the target company’s compliance with relevant laws and regulations, as non-compliance can create significant risks for the company and the investors. This may involve reviewing the company’s policies and procedures, as well as its record of compliance with relevant laws and regulations. 
  2. Examining the target company’s financial and operational systems and controls: It is important to understand the target company’s financial and operational systems and controls, as these can impact the company’s efficiency and effectiveness. This may involve reviewing the company’s internal controls, financial reporting processes, and risk management systems. 
  3. Assessing the target company’s environmental, social, and governance (ESG) performance: ESG issues are increasingly important to investors, as they can impact the long-term viability and reputation of a company. It is important to assess the target company’s ESG performance, including its impact on the environment, its relationships with stakeholders, and its governance practices. 

By identifying risks and potential issues, investors can better understand the potential challenges and liabilities that could impact the value of the investment and take steps to mitigate or address them. 

Communicating Findings and Recommendations 

After completing the operational due diligence process, it is important to communicate the findings and recommendations to the private equity firm’s investment committee. This typically involves preparing a report on the findings of the operational due diligence review, which should detail the key areas of focus, the sources of information used, and the key findings and recommendations. The report should be structured in a clear and concise manner, with the key findings and recommendations highlighted for easy reference. It is important to provide a thorough and objective analysis of the target company’s operations, including both the strengths and weaknesses identified during the review. 

In addition to the report, it may be helpful to present the findings and recommendations to the investment committee in person. This can provide an opportunity to discuss the report in more detail and answer any questions the committee may have. It is important to be prepared to clearly articulate the key findings and recommendations and to provide supporting evidence for the conclusions reached. Effectively communicating the findings and recommendations of operational due diligence is critical for helping the private equity firm make informed decisions about whether to proceed with an investment and, if so, how to structure the deal in a way that minimizes operational risks and maximizes value creation. 

Conclusion 

Operational due diligence is an essential part of the private equity deal process, as it helps investors understand the target company’s ability to generate profits and cash flow and identify any potential operational risks or issues that could impact the value of the investment. However, conducting operational due diligence can be a complex and time-consuming process, and it is important to have expert third parties, like Seraph, assist in the review to ensure that it is thorough and objective.  

Thanks to our team of specialized operational consultants, Seraph can come alongside a new company and act as a support structure and begin adding value from day one. Our advisors are former management at many suppliers and OEMs and are experts in performing operational due diligence. Contact us today to schedule a discovery call, or see our case studies for more information.

Seraph delivers long-term operational improvements that help our clients transform their manufacturing operations.
What We Do
Services Industries
What We Think
Articles Case Studies Reports & Guides Webinars & Podcasts
Who We Are
Careers Leadership Approach Contact Us Privacy Policy