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, according to the fifth installment of Mergers & Acquisitions' Mid-Market Pulse (MMP), a forward-looking sentiment indicator derived from monthly surveys of approximately 250 executives and published in partnership with McGladrey LLP. (See related graphic.)
The 3-month outlook for energy delivered a composite score of 68.5, which was lower than the 3-month overall composite score of 75.1. The 12-month energy composite score of 67.7 was also lower than the 70.8 overall score. The index component that showed the least growth in the energy sector was deal multiples, which scored a 57.4 in the 3-month outlook and an even lower 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.
The energy sector has seen a lot of M&A activity over the last few years, but the results on the MMP suggest the peak may have passed. The MMP scores for the energy sector were lower than other sectors measured by the MMP in 2014, including: health care; manufacturing; TMT and financial services.