M&A spotlight: Engineering & Construction

July 28, 2017

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By Colin McIntyre and Mike Sobolewski

2017 has been a year of economic uncertainty across many industries, but things are starting to improve for the Engineering and Construction sector when it comes to M&A. For the second quarter, there were 49 deals, valued at $21.6 billion globally. This represents a 72% increase in dollars and a 9% increase in deals over the first quarter of the year. However, when comparing the first half of 2017 to the same time period in 2016, deal value is down 23% and deal volume has declined 30%, demonstrating that there are still some continued reservations about the overall health of the market.

The majority of deal activity occurred in the Construction Materials Manufacturing and Civil Engineering categories, which can be attributed to an increase in infrastructure and utility construction projects. And if U.S. infrastructure renewal projects start to take substantial shape, this could continue to have a positive impact on deal activity as companies bulk up to meet the increased demand.

Another facet driving Engineering and Construction M&A activity is the increasing rate of urbanization, especially in emerging economies like China and India. With this rapid growth of cities comes the need for more infrastructure, further fueling the demand.

To aid with this increased need for engineering and construction services, there is a growing presence of tech companies and startups in the sector. This could indicate the potential for industry disruption. The sector has seen an increased interest in applications for mobile and cloud technologies, AI and robotics, AR/VR, and CAD software – all in an effort to make process more efficient and streamlined to meet the increasing demands on the industry.

For the second half of 2017 it will likely be a combination of increasing infrastructure investment in emerging economies and advanced technology that will drive deal activity.

For more information, please see PwC’s Global Engineering & Construction M&A Deals Insights.

©2017 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.  This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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