The Playbook Behind a $78 Billion Aerospace EmpireBy Joel Litman, chief investment officer, Altimetry
 Nick Howley and Doug Peacock turned their looming job loss into a $78 billion opportunity...
Howley and Peacock were senior executives at a small conglomerate called Imo Industries. Imo owned a handful of aerospace businesses in the twilight of the Cold War. It used the junk-bond market to fund several major purchases that boosted its offerings... like power-transmission supplier Incom, and Varo, which made night-vision equipment. This acquisition strategy helped Imo triple its revenue between 1987 and 1991. It seemed like the good times would never end. Then the Soviet Union collapsed. With the Cold War over, the U.S. no longer needed such a robust defense budget...Imo's biggest customer just wasn't buying like it used to. The company went from its heyday to an all-out panic. Revenue was shrinking... right as bondholders came knocking. To make matters worse, the company was facing roughly 7,000 lawsuits alleging asbestos-related injury. It looked like it might be the end of Imo. But Howley and Peacock weren't ready to give up.
The duo worked in Imo's aerospace division. They oversaw businesses like Wiggins Connectors, which made fluid system fittings... Adel Fasteners, a producer of clamps and fastening systems... and Aeroproducts, which supplied pumps and power-control components. These aerospace segments were still profitable. But as defense spending fell, they'd been receiving less and less attention. Imo's management team was focused on scraping together enough cash to pay off its mounting debt. Nobody at Imo had time for a shrinking aerospace industry anymore. Nobody, that is, except Howley and Peacock. They led a leveraged buyout of Imo Industries' aerospace businesses for roughly $56 million...Imo got enough cash to keep the lights on. And Howley and Peacock's business got a second shot at life. The pair named their new company TransDigm (TDG). They set out with a simple, if ambitious, business model...
- It would gobble up other small, unloved aerospace suppliers...
- While focusing on companies that had already received approval from the Federal Aviation Administration ("FAA")...
- Meaning aircraft makers pretty much had to buy from them.
FAA approval is a long, complicated process. Aircraft operators rarely change suppliers once a part is approved. It's just too much hassle. That creates a huge opportunity... if you know how to take advantage of it. Suppliers like TransDigm enjoy decades of "replacement demand" after their parts are installed. TransDigm started small...Its first "major" deal came in 1999, when it spent $41 million on Adams Rite Aerospace. That was about one-third the size of TransDigm's entire business. Two years later, it dropped $160 million for Champion Aerospace. By 2007, it could afford to spend $442 million a pop. And just three years later, in 2010, it bought a business called McKechnie Aerospace for a cool $1.4 billion. All told, TransDigm has scooped up more than 100 smaller players since Howley and Peacock struck out on their own in the '90s. It grew from a handful of orphaned part-makers into a $78 billion industry giant. TransDigm's rise was never really about aerospace. It was about a formula – find a supplier with a captive customer base, buy it cheap, and let the replacement demand do the rest. That formula still works today. Watch for strategic acquirers rolling up niche, regulatory-approved suppliers with locked-in customers. That's the exact setup that turned a $56 million buyout into a $78 billion behemoth. Regards, Joel Litman
August 24, 2026
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