Global engineering and construction deals insights: Q3 2017

Executive summary

The global engineering and construction sector ended the third quarter of 2017 with a total investment interest of $54 billion, 24% lower than this time last year. While sovereign acquisition becomes more challenging due to regulatory policy and industrial consolidation, a global swing towards nationalism may be limiting cross-border investments.

The Construction Materials Manufacturing category has contributed to lower deal volume this year due to delayed infrastructure spending and rising material costs. Nevertheless, the category continues to drive overall deal value, indicating larger transactions in this area. Sector participants are looking to reinforce strategic capabilities and improve their competitive advantage in anticipation of higher spending in the public sector.

Despite above-average GDP growth in the Asia and Oceania region, the relative volume of transactions appears to be decreasing. Geopolitical and security concerns related to North Korea, Syria, and the Ukraine may be suppressing construction interest in bordering nations. Furthermore, a weakening US dollar has recently attracted foreign investment into the US.

Going forward, we predict ongoing discretion in the engineering and construction sector, as economic volatility and security concerns continue to rise tempering investment despite the global need in and around key segments and in particular infrastructure.

Key trends/highlights

  • Deal value for the first nine months of 2017 was $54 billion, 24% lower than the first nine months of last year.
  • There were 146 deals in the first nine months of 2017, a 29% decrease from last year.
  • The average deal size in Q3 2017 was 9% higher than the quarterly average of $365 million, indicating a preference towards larger transactions.
  • There were three deals greater than $1 billion in Q3 2017 with an aggregate transaction value of $8.8 billion.
  • Asia and Oceania remains the most active region, accounting for 52% of M&A volume this quarter.
  • Construction Materials Manufacturing remains the most active category, accounting for 39% of M&A value this quarter.
  • Acquisition value continues to be driven by sector participants while volume is more evenly split between sector and financial participants. This indicates that strategic investors pay a higher premium for transactions.

“M&A was largely flat in Q3 2017 compared to Q2 on both value and volume as long-term fundamentals supportive of segment growth (e.g., infrastructure repairs) are weighed down by a variety of factors, from regulatory to geopolitical.”

Colin McIntyre, US Engineering and Construction Deals leader

Contact us

Colin McIntyre
US Engineering and Construction Deals leader
Tel: +1 (213) 356 6029

Michael Sobolewski
US Engineering and Construction leader
Tel: +1 (313) 394 3299

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

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