Blog | Middle Market Investment Banking Insights

WS360: Mid-Market Energy Sector Mergers and Acquisitions (Mar 2011)

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Broader middle market merger and acquisition activity remains strong – higher than its 10-year average. Valuations continue to improve and are quite healthy.

For the energy and related industrial and infrastructure sector, macro fundamentals are very positive.  Deal timing is important and now is a healthy time for deal making. Based on our analysis, here are some important investable themes for 2011.

• Multiple key basins are driving substantial activity (not all plays are created equal)
• Sellers of oily/liquids rich properties will achieve high prices
• Owners of significant acreage may not have the capital to develop asset base, so will need to find outside capital/partners
• Some producers are making contrarian bets on properties impacted by low natural gas prices and existing production – must buy at “right” price and mitigate risk
• Many of the large oilfield service M&As are complete; these companies have raised capital, are cash flush and are executing “tuck-in” acquisition strategies; very opportune time for sellers of unique, mid-sized service/equipment companies.

For our monthly report (March 2011) on middle market merger and acquisition trends, click on WS360 - Full Circle Thinking for the Energy, Industrial and Infrastructure Sector.