Expectations for Energy M&A Have Plummeted Over Last Six Months

Short-term expectations for M&A in the energy sector are the lowest we’ve seen in any sector measured by Mergers & Acquisitions’ Mid-Market Pulse (MMP) since we began our monthly surveys in the fall of 2013. (See related graphic).

Dealmakers who participated in our January poll gave the sector a three-month Composite score of 31.6, a dramatic drop from the 68.2 score the sector garnered in July. At 57.2, the 12-month outlook for energy fared better but still represented a significant decline from the score of 71.6 in July. It is not the just energy sector that has been affected, however, overall mid-market M&A has been slowing down. For more, see Mid-Market M&A Come to a Dead Stop, or is This a Momentary Pause.

One respondent summarized the sentiment well: “Valuations in energy will likely continue to decline until bankruptcies start to emerge, and there is a definite floor.” Many dealmakers predicted that later in the year, the sector will be rife with opportunities for investors who back distressed properties and advisers who handle bankruptcy. The MMP is a forward-looking sentiment indicator, derived from monthly surveys of approximately 250 executives and published in partnership with RSM LLP (formerly McGladrey).

Previous sector forecasts include technology, financial services, health care, manufacturing and consumer goods & retail.

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