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Energy Sector M&A Activity Has Peaked

August 27, 2014, 05:57 AM
Filed Under: Energy
Related: Energy

According to the fifth report in SourceMedia’s Mid-Market Pulse (MMP), dealmakers expect M&A in the energy section to fall behind the overall market and other high-growth sectors such as healthcare and financial services over the next 12 months. The MMP, published by Mergers & Acquisitions in partnership with McGladrey LLP, is a forward-looking sentiment indicator that monitors near-and intermediate-term outlook for merger and acquisition activity within the middle market.
“Dealmakers expect M&A in the energy sector to grow over the next year but at a slower pace than the overall market and other high-growth sectors,” said Mary Kathleen Flynn, editor-in-chief of Mergers & Acquisitions. “The energy sector has seen a lot of M&A activity over the last few years, but the results of the MMP suggest the peak may have passed.”
The 3-month composite score for energy was 68.5, considerably lower than the index’s overall 3-month composite score of 75.1. The 12-month outlook was similar with energy delivering a composite score of 67.7 compared to the overall composite reading of 70.8.
Each month, the MMP index spotlights an individual industry and presents respondents’ expectations for deal activity within that specific sector. This month’s index focuses on the energy sector.
Deal multiples showed the least growth of components in the energy sector, according to Flynn. Deal multiples scored a 57.4 in the 3-month outlook and 51.3 in the 12-month forecast. “The relatively low scores for deal multiples suggest that deal prices in the energy sector are flattening out after having risen over the last couple of years,” Flynn said.

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