VSE Corporation Agrees to Acquire Precision Aviation Group for $2 Billion in Transformational MRO Deal

January 29, 2026 · by Fintool Agent

VSEC

Vse Corporation+2.16% announced this morning it has signed a definitive agreement to acquire Precision Aviation Group (PAG) for approximately $2.025 billion—the largest deal in the company's history and the capstone of a six-year transformation that has turned VSE into a pure-play aviation aftermarket platform. 1

The acquisition will boost VSE's pro forma 2025 aviation revenue by approximately 50%, create a 2,600-employee operation spanning 60 locations across eight countries, and put the company on a path to achieve consolidated EBITDA margins exceeding 20%—a threshold management calls "best-in-class" for independent aviation aftermarket providers. 2

Shares traded down 2.6% to $206.02 on elevated volume as the market digested the leverage implications, though the stock has more than doubled over the past year.

The Deal: Cash, Stock, and Earnout

Under the terms of the agreement, VSE will pay: 4

Inclusive of full run-rate synergies, the total upfront consideration represents approximately 13.5x PAG's expected 2025 Adjusted EBITDA—a premium valuation reflecting PAG's 20%+ margins and proprietary content. 5

The transaction marks VSE's second major purchase from GenNx360 Capital Partners in five weeks. The private equity firm sold Aero 3—a wheel and brake MRO provider—to VSE for $350 million in late December 2025.

"This is the deal for us that was going to really transform the business," CEO John Cuomo said on the conference call. "What I love about the business... as you look at our culture and our business was really built off of execution... they have much more of a hustle culture. Bringing the cultures together is really going to take one plus one greater than two." 7

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What VSE Is Buying

Precision Aviation Group is a best-in-class global MRO provider supporting commercial, business and general aviation (B&GA), rotorcraft, and defense platforms through four complementary business units: 1

PAG operates 29 locations across six countries, employs approximately 1,000 people, and completes more than 175,000 repairs annually. Pro forma for its own 2025 acquisitions, PAG generated approximately $615 million in adjusted revenue for the full year ended December 31, 2025. 2

Critically, PAG's adjusted EBITDA margin exceeds 20%—significantly higher than VSE's standalone ~16%—driven by integrated MRO-parts solutions and over 2,000 proprietary DER repair capabilities. 3

The Combined Platform

The merged entity creates one of the broadest independent aviation aftermarket capability sets in the industry:

Scale metrics post-close: 4

End market mix (pro forma): 5

• Business & General Aviation: ~50%
• Commercial: ~45%
• Military: ~5%

Revenue composition:

• MRO: ~60% (up from ~41% pre-deal)
• Engine-related: ~50%

Cuomo emphasized the strategic logic: "This is not a deal solely about size and scale. It's a deal where the strategic logic is clear on day one: more capabilities, more customer relevance, more geographic reach, more repair content, more proprietary solutions, and ultimately, an anticipated stronger margin and cash flow profile." 6

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Synergies and Margin Pathway

Management expects to realize over $15 million in annualized synergies through: 1

• Cross-selling and insourcing repairs
• Procurement savings
• Network optimization across 60 shared locations
• Supply chain and working capital improvements

CFO Adam Cohn noted that PAG's cash flow conversion is "much less working capital intensive than our distribution business," suggesting the mix shift will structurally improve VSE's cash generation profile. 2

The synergy target is conservative. "The bigger opportunities out there is as we get our teams together and start sharing more data... We have a few target large OEMs that we believe our combined capability set can bring more offerings to the table," Cuomo said. Revenue synergies from expanded OEM partnerships and customer cross-selling are not included in the $15 million figure. 3

Preliminary Q4 and Full-Year 2025 Results

Alongside the acquisition announcement, VSE provided preliminary fourth quarter and full year 2025 results: 4

The company also expects positive free cash flow for FY 2025, with sequential quarterly improvement in Q4—a meaningful inflection after negative levered FCF in prior years as the company invested in inventory and acquisitions. 5

The Stock: A Two-Year Rocket Ride

VSEC shares have been one of the strongest performers in the aerospace & defense sector:

The stock touched an all-time high of $218.25 on January 22, 2026, before pulling back modestly on today's deal announcement. The modest decline (-2.6%) reflects investor caution about the $1.75 billion in new debt rather than concerns about strategic fit.

VSE's Six-Year Transformation

The PAG acquisition caps a remarkable corporate overhaul. Since 2019, VSE has: 1

1. Divested non-core segments to focus exclusively on aviation aftermarket
2. Completed 8 aviation acquisitions, deploying approximately $1 billion
3. Grown aviation revenue at a ~30% CAGR—from $225 million in 2019 to ~$1.1 billion in 2025
4. Expanded margins by 400+ basis points to ~16.3% adjusted EBITDA

"We have a proven and repeatable integration playbook," Cuomo stated, highlighting that synergy targets have been met or exceeded on schedule across prior deals. 2

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Industry Tailwinds: Aviation Aftermarket Boom

The timing is strategic. The global aircraft MRO market was valued at approximately $91 billion in 2024 and is projected to grow to $121 billion by 2030 at a 4.75% CAGR, according to Grand View Research.

Key demand drivers align with VSE's positioning:

• Aging fleets: Airlines extending aircraft life cycles, driving MRO demand
• Labor shortages: Industry needs 716,000 new maintenance technicians by 2043
• OEM capacity constraints: Manufacturers prioritize production, creating overflow for independent MROs
• Outsourcing trend: Airlines increasingly outsourcing non-core maintenance

North America's MRO market alone is expected to grow from $28 billion to $34 billion by 2035, according to Oliver Wyman's 2025 forecast.

Integration Timeline and What to Watch

Key investor watch items:

• Bridge financing takeout: Permanent financing terms and interest rate impact
• Earnout achievement: Strong PAG 2026 EBITDA would add $125M to consideration
• Synergy realization timing: Management's track record suggests upside
• Cross-selling traction: New OEM partnerships from combined capabilities

"Don't expect the integration really to begin until 2027. They have a really strong operating plan this year, and that's why we supported an earnout," Cuomo explained. 4

Advisors

• VSE: Perella Weinberg Partners (financial & debt capital markets); Jones Day (legal)
• GenNx360/PAG: JP Morgan and Jefferies (sell-side); Winston & Strawn (legal)

The Bottom Line

VSE's $2 billion bet on Precision Aviation Group represents the culmination of a disciplined, multi-year transformation strategy. The deal checks every strategic box—scale, margin accretion, capability expansion, and geographic reach—while positioning the combined company as a best-in-class independent aviation aftermarket pure-play.

At 13.5x EBITDA (inclusive of synergies), the valuation is full but defensible given PAG's 20%+ margin profile and proprietary content. The key execution risks center on integration complexity and leverage management, though VSE's track record across eight prior deals provides some comfort.

For investors, the stock's pullback on elevated deal leverage creates a potential entry point for those who believe management can deliver on its "20%+ EBITDA margin" vision over the next few years.

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