Ready for change: Q2’23 M&A trends in ENRC

Deal makers remained cautious during Q2’23 in the face of elevated inflation, high interest rates, and a potential recession later in the year. Deal volume continued to decline Q-o-Q for ENRC companies, although the sector saw an uptick in value, driven mainly by oil and gas companies. 

Corporations are shedding non-core assets as they focus on cash flow and developing their long-term plans for growth and synergies in strategic markets. PE investors that have assets supporting a favorable environment, social, and governance (ESG) posture are on the lookout for buyers, and many PE firms are seeking ways to lock in sales so they can secure returns on their current funds. 

Overall, the outlook for H2’23 is one of measured optimism. M&A transactions will see a moderate uptick in quantity and value, with much of the upswing happening later in the calendar year and continuing into H1’24. The 2024 election cycle may cause some deal making to slow as we approach November. However, we expect a number of large mergers based on current conditions. In short, the next 12 to 18 months will most likely be better for deal makers than the previous 12 to 18 months.

Key considerations for ENRC dealmakers

To help mitigate risk and better prepare for opportunities when they occur, dealmakers should consider the following actions:

• Stay focused on transaction prices.
• Adjust risk levels to accommodate continued uncertainty and caution in markets.
• Develop and refine a strong “core story” about the business and its long-term prospects.