Insight

ENRC M&A downturn continues for Q2’22

ENRC companies are doing deals to increase market share, divest non-core assets, improve ESG posture, and acquire innovative technology.

Michael J. Harling

Michael J. Harling

Partner, Energy and Natural Resources Practice, KPMG LLP

713-319-2318

The Q1’22 downturn in ENRC M&As has continued into the second quarter, driven by the Russia-Ukraine conflict, energy market uncertainties, steep inflation, rising interest rates, and the chance of a global recession. Quarter over quarter (QoQ) deal volume was down 35.3 percent while deal value dropped 68.7 percent. This decline was pervasive, affecting all sub-sectors for both strategic and PE deals.

Despite these challenges, many investors in the ENRC sector remain optimistic. In the May 2022 KPMG Mid-Year CEO Survey of six major industries, respondents from the ENRC sector had the highest expectations that their M&A activity will increase over the next 12 months.

For the second half of 2022, KPMG deal professionals cite ESG factors such as the acquisition of green technology, the divestment of non-core assets, and digital transformation as key drivers for dealmaking this year. ENRC companies should keep a close watch on the continuing effects of tax law changes and proposals related to the Biden administration’s Build Back Better framework. Deal makers should also take a long-term, strategic approach to M&As involving rapidly changing energy companies and uncertain energy markets.

U.S. ENRC activity by sector

Within your industry, how strong is the appetite for M&A in Q2'22 as compared to 2021?


*Source: KPMG M&A Market Survey

Contributing authors

Keats Aiken

Keats Aiken

Advisory, Financial Due Diligence, KPMG US

+1 212-954-7933
Bruce DeMyer

Bruce DeMyer

Partner, M&A Tax, KPMG US

+1 713-319-2737
George Ward

George Ward

Principal, Advisory, Infrastructure & Projects Adv, KPMG US

+1 713-319-2000
Michael J. Harling

Michael J. Harling

Partner, Energy and Natural Resources Practice, KPMG LLP

713-319-2318
Gillian Morris

Gillian Morris

Principal, Strategy, KPMG LLP

+1 612-305-5070