Energy, Resources, & Utilities Industry Report

In a world of increasing urbanization and globalization, there is a crucial need for energy and utilities to keep up with unprecedented levels of demand. The global energy mix is comprised of oil, liquefied natural gas (LNG), coal, renewable energy (wind, solar, and hydropower), and electricity segments.

According to the International Trade Association, the global energy industry market is valued at around $6 trillion. The market is expected to continue to grow as demand expands, different energy options become more widely available, and innovation drives change.

Key Market Trends

Among the various factors influencing the energy, resources, & utilities industry include:

• A record-level increase in electricity demand marks some of the highest levels of power demand growth in decades due to economic expansion, data center demand, artificial intelligence (AI), and the rise of electric vehicles.
• AI will also be used more widely to control costs and improve efficiencies.
• In recent years, fossil fuels accounted for around 80% of global primary energy.
  This number is targeted to decline, with considerable growth in the natural gas and renewable energy sectors, especially wind and solar.
• Renewable energy expansion is on the rise, with solar, wind, and battery storage
  all expected to continue to grow. Renewable energy is expected to become the
  fastest-growing energy source. However, a rising global population and economic growth make it challenging for renewables to keep up with demand.
• A plateau in CO2 emissions is expected to be reached, and these damaging emissions could even decline if hydropower use continues to grow, according to the International Energy Agency (IEA).
• Electricity prices are expected to increase due to more demand and less
  generation supply.
• Grid modernization is an ongoing need to deal with aging infrastructure and curb energy load, so utility companies will continue to invest in upgrades to handle more demand, accommodate more renewable energy sources, and boost reliability.
• There is a growing need for proactive security measures to protect systems from evolving cyber and geopolitical threats.
• Preparation and response for natural disasters will be more significant as major storms have become more common worldwide.
• Oil output is projected to continue rising, with 85% of the production increase coming from the United States. At the same time, oil demand is expected to slow due to better fuel efficiency and more electric vehicles, according to a report by the International Energy Agency (IEA).
• The coal industry continues to experience challenges, including declining demand, bankruptcies, climate concerns, ownership changes, and mine closures. According to the IEA, the market share for coal will fall to 25% in 2040, largely due to a surge in more affordable solar power.
  

M&A

Consolidation through M&A activity continues to be a key strategic path to improving economics and continuing to build size and scale for companies operating within the sector. 

An important focus for dealmakers is the security of supply, and companies can be expected to engage with businesses outside of their traditional sector to strengthen supply chains and secure their energy needs.

Selling Isn't Just a Transaction - It's a Strategy

Government regulations that are designed to increase investment in a mixture of
carbon-cutting infrastructure projects are creating added momentum for M&A activity.

As the number of U.S. oil and gas companies in distress grows amid limited funding options, there is an opportunity for smaller firms to be acquired by bigger firms or for them to merge in order to scale operations and reduce costs. M&A strategies may be more appealing to these companies than the option of restructuring through bankruptcy.

Overall, more M&A deals, strategic alliances, and partnerships can be anticipated as businesses must enter new verticals to support their long- and short-term strategic objectives. This is reinforced by the rapidly growing trend of industrial reconfiguration, prompting companies to make decisions regarding capital allocation.

Our Recent Success Stories in the Sector

Some of Benchmark International’s more recent successful deals in the energy, resources, & utilities space include:

• The sale of Deluxe Plumbing & Heating to Homex Services Group
• The transaction between Wilnat, Inc. (doing business as KGM) and St. Louis-based private equity firm Compass Group Equity Partners
• The deal between Sieveking Inc. and Energy Petroleum Co.
• The acquisition of IEM Energy Consultants, LLC by White Wolf Capital
• The transaction between Neil Dornbusch & Associates and Anderson Process
• The sale of Metro-Tech Electrical Contractors, Inc. to Michael Bowman
• The deal between Storm Guardian Generators, LP, and Liberty Service Partners
• The transaction between Feakle Gas and Plumbing Limited and Water
  Intelligence PLC
• The acquisition of Micro-Precision Technologies, Inc. by Great River Capital Partners
• The transaction between Cardiff Gas Ltd and JGas Ltd
• The sale of Lenhart Electric Company to In Charge Electrical Services
• The transaction between Macro Works Limited and APEM Group Limited
• The deal between Adkins Electric, Inc. and Pacific Power & Systems, Inc.
• The sale of N&L Investment Corporation to Hufsey Mechanical
• The transaction between Absolute Solar and Wind Ltd and RSK Group
• The acquisition of Facit Testing Limited by Phenna Group
  

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