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By Published On: January 7, 2025

From Fiction to Reality

How The Terminator’s AI Dystopia Mirrors Today’s Defense and M&A Trends

In 1984, Arnold Schwarzenegger came back from the future as a Cyborg, attempting to kill Sarah Connor and eliminate her son John before he can lead the fight by humans against machines.  The year he came back from:  2029.  In that future time, machines had developed the ability to learn and act independently of humans.  They advanced beyond human programming and technology and started an apocalyptical war against humans.  The machines were winning.

So we know that the future described in the movie has not occurred…yet.  But when you look at the weapons and technology being developed and evolved by the U.S. military, you can see the possibility of machines acting independently of humans.  A Department of State commissioned report from earlier this year identified that artificial intelligence could lead to “catastrophic risks unlike any the United States has ever faced.”  The most advanced AI systems “pose an extinction-level threat to the human species.”  AGI (Artificial General Intelligence), which is a hypothetical form of AI with human-like or even superhuman-like ability to learn, could spawn “weaponized robotic applications such as drone swam attacks; weaponized biological and material sciences; and power-seeking AI systems that are impossible to control and are adversarial to humans.”  Result:  the Terminator future becomes a reality.

Not coincidentally, from an M&A standpoint, these technologies and the companies behind them are the hottest, most valuable assets in the Government and Defense space.  AI, Machine Learning, and Neural Networks, coupled with Space and Intelligence customers and applications, are trading for double digit multiples.  Remotely operated and autonomous weapon systems are garnering huge demand from acquirers.  With companies developing drones and fighting vehicles outfitted with the capability to operate in GPS-Denied environments, weapon systems that can act and react independently in a conflict are years and not decades into the future.  Semiconductor chip development is providing the engine to enable these systems.  Acquirers are pouring significant capital into all of these areas as differentiation and customization of weapon systems will determine the winners in future armed conflict.

While the future predicted by The Terminator has not occurred, the race to develop and harness the enabling technologies underpinning a world where machines can operate independently of humans is being fiercely competed.  The fact that M&A activity in these areas is so intense demonstrates that investors recognize how critical these technologies are and owning them is critical.  Investors may be faced with hard decisions involving ethical uses of technology versus maximizing economic returns.  It’s a strange paradigm that the technologies most valued today may become the most dangerous as well.  “I’ll Be Back” – well Arnold, we’ll have to wait and see what the next five years bring.

Barry Calogero, a FOCUS Managing Director, brings more than 30 years of executive management and consulting experience, with an emphasis on driving operational excellence and improving the enterprise value of companies around the world. His expertise includes Aerospace and Defense, Information Technology, Manufacturing, Healthcare, Life Sciences, Automotive, Business Services, and Food Manufacturing & Distribution. Mr. Calogero has deep experience in Supply Chain and Manufacturing Industries. Prior to FOCUS, he was the Vice President of Operations for McElroy Manufacturing, Inc., an OEM with revenues of $100M and 250 people. Under his leadership, he leveraged Lean Manufacturing and Advanced Manufacturing technologies to transform the operations of the company. He drove an increase of Gross Margin by 700 basis points, while improving On-Time Performance from 62% to 92%, reduced turnover by 60%, with world-class safety and quality. As the COO of Coastal Sunbelt Produce, he was responsible for operations, supply chain management, street sales, and asset velocity for this Private Equity backed $300M, 500-person Food Manufacturing and Distribution firm, delivering a 100-basis point increase to EBITDA in the first year. He has also worked in the Aerospace sector, launching his career at Lockheed Martin and Boeing in Finance and oversaw $3B in helicopter and weapons systems contracts. He also led a consulting business in Michigan that transformed product development for Ford, General Motors, and several Tier 1 & 2 Automotive suppliers. He also worked extensively in Management Consulting and Government Information Technology. He helped transform over 200 companies in Manufacturing, Distribution, Hospitality, Technology, Semiconductor, Life Sciences, and Hospitals/Healthcare. He founded a management consultancy, XSell Solutions, improving performance in Sales, Supply Chain, and Production. He also served as the President of Tefen USA. For this 100 person Global Management Strategy and Operations Consulting firm, he directed all activities within North America and the Far East. Customers included Schneider Electric, Massachusetts General Hospital, Baxter Healthcare, Abbott Laboratories, Applied Materials, Amgen, and Pfizer. His career in Government IT included Senior VP of Sales and Strategy at Robbins-Gioia, a 600-person program management and business process outsourcing firm, with clients across the DOD and Federal Civilian Agencies. He also served as the Business Manager for Computer Sciences Corporation, leading systems integration programs for the Department of Interior and Department of Commerce. With an MBA from The George Washington University and a BA from Loyola University Maryland, he is an accomplished presenter, including keynote presentations in Healthcare and National Manufacturing Week conferences, to name a few. Mr. Calogero is a Member of the Young Presidents’ Organization Gold Washington DC/Baltimore Chapter and past Chairman of the YPO DC/Baltimore Chapter. Mr. Calogero holds FINRA Series 63 and Series 82 licenses.
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