- 58% of utilities plan to pursue an acquisition in the next year
- Lower and middle-market deals in developed markets expected
- Utilities look to expand capabilities through cross-sector opportunities
LONDON, Nov. 19, 2015 /PRNewswire/ -- Global power and utilities deal value reached a five-year high of US$75.5b in the third quarter of 2015 and a growing appetite for transactions points to an active market ahead, according to EY's Power & Utilities Capital Confidence Barometer.
Survey results show 81% of executives see the global economy as improving — up from 51% a year ago — and this is translating into more M&A activity. Additionally, 58% of companies now plan to pursue an acquisition in the next 12 months and 39% already have three deals in the pipeline.
Geographically, the developed markets of the US, UK, Germany and Australia were identified as preferred investment destinations for utilities. EY's Power transactions and trends Q3 2015 shows how this trend is already underway with the US accounting for US$57b of total deal value in Q3.
Matt Rennie, EY Global Power & Utilities Transactions Leader, says:
"Utilities are concentrating on growth opportunities that enable them to keep pace with changing customer demands and provide them with advanced capabilities. And we're finding that cross-sector collaborations are becoming commonplace — particularly with technology providers. In fact, 55% of survey respondents are currently planning an acquisition outside the sector."
While the appetite for deal-making continues to grow, 78% of respondents canceled or failed to complete a planned acquisition in the last year. These utilities cited regulatory or anti-trust reviews and competition from other buyers as the top challenges to completing deals.
Rennie says: "Traditional utility companies face a league of disruptive forces in today's market. Companies are waiting for the right deal and are more willing to walk away when it's not the right fit. Undertaking strategic M&A is more important than ever as companies manage widespread sector transformation."
Notes to Editors
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.
About EY Global Power & Utilities
In a world of uncertainty, changing regulatory frameworks and environmental challenges, utility companies need to maintain a secure and reliable supply, while anticipating change and reacting to it quickly. EY's Global Power & Utilities Sector brings together a worldwide team of professionals to help you succeed — a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Sector team works to anticipate market trends, identify their implications and develop points of view on relevant sector issues. Ultimately, this team enables us to help you meet your goals and compete more effectively.
For more information, please visit ey.com/powerandutilities.
About the report
The EY Global Capital Confidence Barometer is a biannual survey of more than 1,600 senior executives from large companies around the world and across industry sectors. This is the 13th semiannual Barometer in the series, which began in November 2009; respondents for the 13th edition were surveyed August and September. In this survey, we had 113 respondents from P&U companies; more than 52% were CEOs, CFOs and other C-level executives. The objective of the Barometer is to gauge corporate confidence in the global and domestic economic outlook, to understand boardroom priorities in the next 12 months, and to identify emerging capital practices that will distinguish those companies building competitive advantage as the global economy continues to evolve.
EY Global Media Relations
+44 20 7951 6563