By Greentech Lead Team: The value of Smart Grid M&A
deals grew from $134 million in 2007 to $10.6 billion in 2011.
Both the growth and scale indicate that the supply side
is gearing up to meet the requirements for new technology and the forecast
demand for pure Smart Grid products and systems, according to a report called
The Smart Grid Business 2011 to 2016.
In the last 2 years both the volume and value of Smart
Grid M&A grew rapidly, reaching 68 deals in 2010 having an average value of
$155 million, whilst in 2011 some 49 deals had an average value of $225
million.
Cash financed up to 90 percent of the purchase price in
2011 which is much higher than normal, rising from 65 percent in 2010. We
expect this figure to be around 75 percent by 2015, according to Memoori
Business Intelligence.
Whilst the factors driving the massive growth in this
fledgling business require restructuring and consolidation, confidence in the
future has taken a hit. The current negative economic outlook is likely to
counteract some otherwise strong drivers for deal making in the Smart Grid
business.
The value of deals will fall over the next 3 years and
will not return to 2011 levels until 2015. Value of Smart Grid M&A deals
should reach $12 billion by 2016. The volume of deals will increase in the
short term whilst the average value will fall to take in much smaller companies
with annual revenues around $50 to $75 million.