Acquire or Expire: Publicly Traded Defense Contractors, Financial Markets, and Consolidation in the U.S. Defense Industry

The U.S. government increasingly outsources important national security responsibilities to defense contractors. In addition to manufacturing hardware and weapons, corporations now supply much of the specialized labor used by American defense and intelligence agencies to execute cyber operations, train foreign militaries, analyze top-secret information, and pilot unmanned aerial vehicles. This study examines the current state of affairs in the U.S. defense industry and demonstrates that publicly traded corporations are awarded the lion’s share of U.S. contracting dollars spent on national defense. Subsequently, the inquiry argues that publicly traded corporations possess a competitive advantage over privately held companies in the U.S. defense industry because of their superior ability to raise capital through initial public offerings, follow-on share sales, and access to debt supplied by financial institutions. In recent years, publicly traded defense contractors have used these financial strategies to make major acquisitions, increase their competitiveness, and consolidate market share in the American defense industry.