Oil and gas capital confidence barometer
Mergers and acquisitions outlook
Desire to make larger deals is now visible — as expectations for deals greater than US$500m has increased sharply in the last six months.
These expectations, along with the increased deal volumes, are clear indicators that a more robust dealing environment is on the horizon. They signal companies have confidence in their capital structures, deal fundamentals and in a real sustainable economic recovery.
The anticipated narrowing of valuation gap can also be seen as a precursor to more deal-making. As companies begin to act on their intentions for deal-making and their imperative to grow, it will trigger deals of varying size across the global oil and gas marketplace.
Other trends we observe include:
- Appetite for M&A increases
- Deal volumes are expected to increase
- Acquisition appetite increases as confidence improves
- Market share objectives driving acquisitions
- Bolt-on acquisitions favored over transformative deals
- Pricing divergence reflects valuation uncertainty
- Valuation gaps expected to widen
- A cautious approach to emerging markets
- Unforeseen liabilities as biggest threat to deal expectations
- Divesting activity shifts down
- Optimization moves to the forefront
- Execution risks and business disruptions were the big deterrents to divestments
Q. Do you expect your company to pursue acquisitions in the next 12 months?