Top sectors ready to deal
With oil price stabilization has come a transition to a new normal, which has seen confidence grow over the past six months. There is an expectation of increased activity through the coming year as more activity in both upstream and downstream is seen.
Telecommunications companies continue to show elevated M&A appetite at a time when convergence, consolidation and digital growth opportunities are pronounced across all geographies.
At a time of rapid technological disruption, automotive companies are proactively managing their portfolios to protect their core businesses. Key markets, such as China, Europe and California, where the push for vehicle electrification is highest, are driving the case for change.
Companies are looking at both bolt-ons and transformational deals as they consider how to accelerate their value-creation strategies. However, high prices and scarcity of assets mean many appetites are not being fulfilled, with discipline being shown by consumer products companies in their dealmaking.
Consolidation deals to unlock value through synergies will be fueled by a growing threat of intervention from activist investors and potential acquirers. Divestments remain a significant driver as non-core assets are spun off in favor of leaner, optimized portfolios.
There is a strong interest in regulated businesses, including electric transmission and distribution, gas distribution, contracted power generation, water distribution and treatment businesses, as well as renewable energy assets. A combination of historically low interest rates and scarcity of attractive deal opportunities has led investors to be aggressive in pricing opportunities when they become available.