TransDigm's Acquisition and Integration of Arkwin Industries
In May 2013, TransDigm, a company that manufactured a wide range of highly engineered aerospace parts for both military and civilian aircraft, announced it was buying Arkwin Industries for $286 million in cash (3 times Arkin’s sales of $91 million). Having acquired more than 40 companies in the past 20 years, TransDigm was an experienced acquirer with a unique business model focused exclusively on value creation. This case describes TransDigm’s acquisition, integration, and talent development processes as well as the changes made at Arkwin over the following three years. It serves as a complement to the TransDigm in 2017 case (HBS #720-422). Whereas the TransDigm case provides an overview of the company, its history, its value creation strategy, and its financial performance, the Arkwin Industries case provides a deep dive into a single transaction as a way to illustrate TransDigm’s value creation strategy in practice. That strategy consisted of three parts—value-based pricing, cost reductions, and new product development—and had the goal of doubling a target firm’s operating margins and cash flows within five years.
Citation:
Esty, Benjamin C., and Daniel W. Fisher. "TransDigm's Acquisition and Integration of Arkwin Industries." Harvard Business School Case 720-467, May 2020. (Revised June 2020.) View Details