Transdigm's (TDG) business model is a pure private equity model which produces private equity sized profits. TransDigm acquires Aerospace and Defence companies that provide single-source products for which the demand is inelastic, and increases the price of these products. This article focuses on the likelihood of regulatory reform materially impacting TransDigm's business model.
In February, due to a congressional request prompted by whistleblowers, the Department of Defense conducted a Review of Parts Purchased From TransDigm Group Inc. The review found that TransDigm earned excess profits on 46 of 47 parts purchased by