Global engineering and construction deals insights: Q1 2017


Executive summary

Global engineering and construction M&A activity slowed in Q1 17 towards more seasonal norms, but well off the pace of Q1 16. Q1 16 activity benefited from five megadeals (including two larger than $4.0 billion) which was significantly higher than levels seen in Q1 15 or in the most recently completed Q1 17. In Q1 17 there were two megadeals both of which had announced values of just over $2.0 billion. Continuing a trend of 2016, quarter-on-quarter total deal value continues to decrease versus 2015 and in Q1 17 versus 2016 as well.

With the exception of civil engineering, the entire sector for both the value of M&A transactions and the overall number of deals declined compared to Q1 16 and versus Q4 16. While some of the slowdown versus Q4 16 is attributed to traditional seasonal influences, a level of uncertainty that has impacted M&A activity the last year continues to be a reality.  

Further impacting M&A is the Asian markets which are heavily driven by China. On a Q1 trailing four-quarter basis, the value of transactions continues to decline ($21 million in most recent Q1 17 trailing four quarters vs. over $30 million for the Q1 16 trailing four-quarter period). Until currency controls are loosened, we expect outbound Chinese investment to be tempered heavily influencing overall M&A activity in Asia.

"Q1 17 M&A activity decreased to $12 billion which is the lowest level in the last three years. While there are some seasonal influences on the first calendar year quarter in any year, the drop in Q1 17 was far more pronounced than in previous years suggesting ongoing levels of heightened market uncertainty as well as tempered demand from Asia, and specifically Chinese investment."

Colin McIntyre, US Engineering and Construction Deals Leader

Key trends/highlights

  • Deal value in the E&C sector decreased from $23.3 billion in Q4 16 to $12 billion in Q1 17. Deal volume also dropped by more than half from the previous quarter.
  • Two megadeals were announced in Q1 17 with a total aggregate disclosed value of $4.8 billion.
  • The civil engineering category had the largest share in terms of both value and volume – 47% and 35%, respectively.
  • In Q1 2017, financial buyers deal value decreased by 43% and 38% as compared to Q4 16 and Q1 16, respectively. Strategic investors had a higher drop in deal value, decreasing by 51% and 53% during the same period.
  • Asia and Oceania continued to lead the region, but only marginally in an otherwise down quarter across the globe. 
  • China M&A activity in Q1 17 continued a trend of declining comps versus the prior year, reflecting continued influence of currency controls in the market making completion of overseas transactions more challenging for Chinese outbound investors.

For our full report and additional information on the top 10 deals announced for the year, our regional and subsector analyses, and the outlook for this sector, please remember to download our:

Global engineering and construction M&A deals insights: Q1 2017 update.

Contact us

Colin McIntyre
US Engineering & Construction Deals Leader
Tel: +1 (213) 356 6029

Michael Sobolewski
US Engineering & Construction Industry Leader
Tel: +1 (313) 394 3299

Jonathan Hook
Global Engineering & Construction leader
Tel: +44 (0) 207-8044753

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