Beyond G&A : Maximizing Synergy from Oil and Gas Mergers 2023
BEYOND G&A: MAXIMIZING SYNERGY FROM OIL AND GAS MERGERS 2023 OUTLOOK PIVOTING FOR CHANGE IN FIVE STRATEGIC MOVES
INTRODUCTION
?From a historic height of 10% in 2014, yearly oil and gas mergers and acquisitions (M&A) now comprise only 3% of the industry’s market capitalization. Is M&A activity continuing to fall given economic and geopolitical pressures, and what will change in store for 2023 overall? In the coming consolidation wave, exploration and production companies can raise the aspiration on deal synergy and move beyond G&A. M&A?is a key tool in a company’s value creation toolbox. Despite a highly turbulent macroeconomic environment over the past decade, M&A activity in the oil and gas sector has continued, albeit at lower levels than in prior years. Now,?a new M&A wave?is expected, driven by record cash flow in the exploration and production (E&P) sector, among other factors.
?In this next wave, differentiated value creation will likely underpin M&A success, and set M&A winners apart. Many upstream firms view acquisitions as a “bread and butter” activity that they do well. However, more than 50 percent of deals in the E&P sector don’t create value for shareholders.3?Many deals are limited to a focus on reducing general and administrative (G&A) expenses and ignore any operational synergies that may exist. There is a lost opportunity here for firms to raise their synergy aspirations and look beyond G&A, as M&A deals pursued operational synergies typically outperform those based on G&A savings. In addition, the choice to publicly announce synergy targets can impact the total return to shareholders (TRS). By making clever decisions, companies can reap the most from their deals. Our annual oil and gas M&A outlook reveals five trends that could reshape the dealmaking landscape and provide inroads to profitable propositions in the year ahead—and beyond.
?Exploring the shifting oil and gas M&A landscape
?Geopolitical events and economic uncertainty contributed to volatile energy prices across the globe in 2022. Despite record energy prices and low valuations, M&A activity in the oil and gas (O&G) sector fell to its lowest level since 2008. This contradiction is explained in part by the end of the long-standing correlation between M&A activity and oil prices as O&G companies remain committed to capital discipline. Instead, free cash flows have been directed toward paying?dividends and doing buybacks. The old drivers of M&A activity such as investing and acquiring for growth and increasing market share, seem to have been replaced by new drivers which you can read more about below.
Over the last two years, the O&G industry has moved from engaging in M&A to build resilience amid COVID-related uncertainty to building a new core—whether that be low-carbon O&G development or expansion into cleaner energy solutions. In the coming year, these drivers are expected to continue to have an impact on M&A decisions—although the total volume of activity will continue to depend in part on external factors such as the economy, interest rates, geopolitics, and new policies and regulations. But strong and efficient O&G companies have an opportunity to develop strategies to change the game in 2023 and beyond.
2023 oil and gas M&A outlook: Pivoting for change
Key highlights: What’s the M&A news for 2023
Debt-funded deals
Only 7% of O&G deals are funded by debt, suggesting a reluctance to undertake debt thereby minimizing the impact of interest rate hikes.
Oil price and M&A decoupled
O&G M&A is decoupling from oil prices, implying that the M&A ?playbook is changing.
Hydrocarbon
Hydrocarbon M&A fell by 35% in 2022, across all major sectors and regions.
Clean energy
Clean energy M&A by O&G reached a record high of $32B in 2022, constituting 15% of the total deal value by O&G firms.
Natural gas
82% of upstream and midstream deals were for natural gas-based assets in 2022.
Shale
With a 28% M&A share, the Permian continues to dominate shale plays. Marcellus is emerging as the new hot spot.
Market cap
From a peak of 10% in 2014, yearly O&G M&A now constitutes only 3% of the industry’s market capitalization.
Supply chain
Since 2021, more than $50B worth of supply chain assets, primarily LNG, exchanged hands.
Low-carbon joint ventures
1/3 of JV’s by O&G companies are now in the clean energy space, with the highest number in hydrogen.
Improved ESG
70% of hydrocarbon deals had a buyer buying
an asset/seller that had a relatively better ESG score.
?Five new drivers of Strategic M&A
?Typical objectives of O&G M&A transactions aren’t delivering the desired results. Refresh your organization’s oil and gas M&A playbook by exploring the five drivers creating opportunities.
Energy security: Secure value chains and trade
82% of global midstream deals were for natural gas-based assets in 2022, in sync with the growing energy security concerns related to fuel. Additionally, the buying for integrated assets and/or multiple fuels has narrowed and shifted toward specific assets/fuels. Over the past two to three years, buyers have been showing a higher interest in liquid natural gas (LNG) assets to monetize rising exports from the US, higher prices in Europe and Asia, and control the supply chain. Additionally, buyers are acquiring natural gas processing and takeaway capacity out of the Permian and Haynesville in order to export volumes from the Gulf of Mexico.
Partnerships and strategic alliances: Build new capabilities and skill sets
The Permian (The Permian is a geologic period and stratigraphic system which spans 47 million years from the end of the Carboniferous Period 298.9 million years ago) ?accounted for 28% of shale M&A activity as players aimed to improve operational efficiencies. US shale dominates upstream M&A, with the Permian still accounting for the largest share, but M&A activity increased in the Marcellus, Eagle Ford, and Bakken basins. Despite the price per BOE rising to its highest level since 2014 owing to high oil prices (averaging over $90/bbl34), Permian shale valuations fell in 2022 on a $/acre basis, as premium acreage was consolidated in prior years. In contrast, several large deals occurred in premium acreage in the Marcellus and Eagle Ford, which pushed $/acre prices up in those basins.
Operational excellence: Drive productivity and cost efficiency
Five hundred deals, worth nearly $171 billion, were made by the O&G industry for clean energy assets between 2010 and 2022, with acquisitions outpacing divestitures by $43 billion as the industry increased its clean energy presence. The rising focus on an accelerated energy transition helped spur the M&A activity for clean energy assets, with an average deal count of 26 deals between 2020 and 2022, which exceeded the average deal count of 23 recorded between 2010 and 2019. The combination of solar and wind assets remained favored, accounting for 44% of all clean energy M&A since 2010, but more recently biofuel-related assets are gaining investor interest, with $26 billion worth of deals since 2020.
Governance and compliance: Secure a license to survive and thrive
About one-third of joint ventures (JVs) and strategic alliances by O&G companies are now in the clean energy space, with the highest number of clean energy JVs in hydrogen and related fuels (ammonia, nitrogen, sustainable aviation fuel). Additionally, the spread of clean energy JVs by O&G companies has broadened from a few energy sources (wind or solar) to a growing mix of sources, fuels, and carbon-capture programs.
Energy transition: Scale and commercialize low-carbon businesses
Buyers of O&G assets and companies are increasingly looking for sellers with a relatively higher ESG profile. Over the past five years, in more than 70% of deals, the ESG score of the seller was higher than that of the buyer. Mapping ESG scores by the buyer and deal size reveals that micro to medium-sized companies are buying relatively lower-ESG-profiled assets, while large-sized companies (especially large independents and supermajors) seem to be buying ESG-friendly assets.
?ENERGY SECTOR MERGERS AND ACQUISITIONS BY SEGMENT
UPSTREAM
Upstream M&A in 2022 stood at $97 billion and 207 deals, the lowest since 2005, excluding the pandemic year. In fact, upstream deals declined by 29% and 18% in terms of value and count, respectively, between 2021 and 2022 despite average oil prices rising by 43% during the same period. This fall in deal-making reflects the shifting priorities toward rewarding shareholders and investing in clean energy M&A, particularly when oil and natural gas prices have become highly volatile and uncertain.
Russia’s invasion of Ukraine has cut into Russian natural gas supplies to Europe, leading to a rush for natural gas assets. Unsurprisingly, the largest upstream deal in 2022—PKN Orlen’s acquisition of PGNiG for $7.6 billion—also featured gas-based assets. Meanwhile, O&G assets producing both oil and natural gas continue to garner major investor interest, accounting for nearly 40% of deal value in 2022, but were near decade-low levels. Building resilience and creating a new core for the path Ahead Investment discipline and a defensive oil and gas M&A strategy have helped companies to build resilience in a few ways: preserving value, delivering cash flows, optimizing portfolios, and strengthening positioning. O&G companies, lately, are seen to be embracing change by finding and creating their new core: reflected in their growing acquisitions and partnerships in the clean energy space. If you’d like to talk about elevating your oil and gas M&A strategy and how your organization can pivot toward clean energy, let’s set up a conversation. We explore two steps that upstream companies could take to maximize value from their deals and build resiliency ahead of the next cycle.
?MOST DEALS DON’T CREATE VALUE
Over the past 12 years, there have been roughly 750 upstream deals with a transaction value of at least $100 million.?Although most deals were less than $1 billion in size, deals greater than $1 billion have contributed the largest portion of transaction value since 2016. Taking a closer look, most deals greater than $1 billion in size haven’t created value—but the best deals have created outsized returns for their shareholders. What could be the make-or-break factor determining deal success? Multiple components are at play, such as pre-deal diligence, asset-performance uncertainties, outlooks for oil and gas prices, and transaction management.?But in all cases, the ability to accrue differentiated value creation is a key factor determining merger success and may determine the winners in the next cycle.
ONE PLUS ONE EQUALS THREE: MAXIMIZE VALUE BY MOVING BEYOND G&A
All too often, upstream deals have limited their synergy goals to the low-hanging fruit of G&A reductions. Our experience shows, however, that operational synergies are almost always larger than G&A savings—often by a factor of three or more. The most successful mergers are usually those that adopt a transformative approach to value capture, systematically pursuing synergies across financial categories and functions, including operations. Upstream companies can open the aperture across revenue and production, operating costs, and capital efficiency in addition to G&A, using the merger as a “moment in time” to catalyze performance improvement across both entities. Pursuing operational and production synergies with rigor equal to (or greater than) G&A cost synergies also have an important change-management dynamic. While reducing headcount and other expenses is usually viewed as a necessary evil that often generates negative emotion, developing additional revenue through operational excellence can drive energy and excitement and offer teams a point of pride to rally around. Operational synergies have the added benefit of being a buffer in case G&A synergies are harder to obtain than expected. Our work has highlighted that successful mergers approach operational synergies from three main angles.??????
Leading companies often ask the following questions when considering M&A: What are the direct operational synergies to be extracted, either from an overlap (or adjacency in footprint) or from an expanded size and scale? How can we leverage the best-of-the-best capabilities from each organization, using both data and capabilities to scale opportunities across portfolios? How can new opportunities be catalyzed in this unique moment to realize step changes in performance? Firms that strive to become world-class serial dealmakers may engineer answers to these questions into a repeatable “deal machine,” which they continually improve while proactively strengthening the muscle memory of how to run it.
?Success in the M&A rebound: Riding the coming wave of upstream deals
To announce, or not to announce, that is the question. Once synergies have been planned and targeted, they can be announced—internally or externally. At a minimum, targets, or goals, can be clearly communicated internally, with discreet goals set for each part of the combined business. This mobilizes the entire organization to drive performance while offering a clear rationale for decision-makers to anchor the many tough calls that will likely be required during the integration process. But announcing targets externally can increase the chance that deals create value. While there is a negligible link between communicating additional information about the deal and the initial market reaction, announcing cost-synergy expectations may be tied to significant long-term outperformance over peers. Our analysis of 776 deals across sectors showed that companies that announced synergy targets outperformed those that did not by an incremental 7 percent TRS over a median of two years.
Publicly announcing targets can contribute to putting healthy pressure on the executives and support teams who will have their compensation linked to meeting targets. As the onus is on the company to deliver, this can encourage executive teams to tackle the difficult decisions included in initial synergy estimates instead of opting for an easier route. To ensure delivery, publicly announced targets are typically supported by internal targets that are up to 200 percent higher, even in the case of value leakage.?Public announcements also allow investors to understand where the synergies are coming from, instead of the deal being a black box. After the deal, some organizations may be tempted to adjust the synergy goals used in approval to better match the actual delivery. To counter this behavior, top CEOs may require their teams to place a record of synergy objectives in a figurative time-locked safe with the initial opening set for the first executive look back on deal success. There will likely be both positive and negative variances against the goal, but only by knowing where gaps exist can teams fine-tune estimation and delivery methods to continually improve. In the next wave of upstream M&A, differentiated value creation may be a key factor underpinning merger success. By pursuing operational synergies beyond G&A and publicly announcing synergy targets, companies can maximize the value of their mergers—and accelerate their growth and performance.
?ow oil and gas companies can secure supply-chain resilience
?Operators can execute controls and drift their mindsets to shield against inflationary pressures and uncertainties around labor and material supply. Supply-chain uncertainty is?a major headache for many sectors across the world. For oil and gas companies, volatile costs and labor and material-supply uncertainties threaten everything from field operations to project delivery. Minimizing these supply-chain risks could help oil and gas firms better secure their labor and materials while cutting costs by up to 15 percent. It sets out a three-step plan that oil and gas companies could use to assess their supply-chain risk and explores risk-mitigating levers and management-mindset changes that could build resilience in the face of a supply-chain crunch.
Double trouble for oil and gas supply chains
Oil and gas companies are grappling with the business fallout of sustained global inflation, geopolitical developments in Europe and Asia, and increasing economic headwinds. Industry leaders say that of all the urgent challenges they face, supply-chain uncertainty is the most pressing. Supply-chain risks are affecting field operations and project delivery, and traditional mitigation strategies are proving inadequate. As a result, production efficiency is dropping while operating expenditure is rising, project budgets and schedule milestones are being missed, and key suppliers are struggling to provide labor and materials on time. These catapults supply-chain security to the top of the CEO agenda as organizations must swiftly implement a nimble, comprehensive strategy to navigate this turbulent period. The two major supply-chain security risks now are volatile costs and uncertainties around labor and material supply.
Riding a costs roller-coaster
Costs in the oil and gas industry increased by 7 to 15 percent in 2022. In 2023, a further 6 to 10 percent increase is expected, mainly due to labor uncertainties and raw-materials inflation. However, if the predicted global recession hits, some input cost factors could swing downward. In addition, primary operation tasks, such as regular maintenance and inspections, are becoming more expensive as labor rates grow at more than 9 percent per annum.?Costs for standard-use materials, such as casings and tubing steel parts, are also rising at 5 percent per annum.
Marine and aviation logistics have been particularly affected by spiraling prices: fuel now costs 20 percent more on an annual basis, and prices are set to continue rising. At the same time, rates for vessels and emergency work have soared. Inflation has also hit non-technical areas: food prices at offshore installations have risen by around 10 percent and underlying labor costs for catering are expected to experience similar growth, indicating that offshore premiums may return. Operators that remember the 2010–14 oil-price boom are acutely aware of inflation’s sharp bite as they struggle to control their current operating expenditure costs. Managing cost volatility can ensure resilience in the oil and gas industry.
Vicious supply cycles
The oil and gas industry has faced major supply risks in labor and materials. Planned work has been delayed by strikes over pay hikes, stretched agency staffing pools, and absences as staff seek work that offers improved working conditions and pay. This has created a vicious cycle: more work is carried out under emergency conditions, which is increasingly expensive. In many areas, the situation has been exacerbated by a heavy reliance on a small number of suppliers with few alternatives. A high staff-absence rate of 6 to 8 percent has been observed and anecdotal evidence shows an estimated 5 to 10 percent no-show rate for flights to offshore sites. Lead times for both long-lead (12 to 18 months) and short-lead (two to six weeks) equipment has stretched, significantly impacting project-delivery schedules. Vessel and spare-parts inventories are continually dropping, causing availability challenges. In addition, the rig market has been tight, making securing a rig more difficult and unpredictable than before.
Managing supply-chain risks can cut costs by 15 percent
Robust safeguards against cost inflation and supply risks could allow oil and gas companies to operate in a secure environment with predictable lead times, maintain operational and capital planning to support production and ensure a stable cost base. Organizations that are taking measures to secure their supply chain and avoid market volatility are seeing significantly less inflationary pressure, saving about 15 percent on costs. At the same time, securing the supply chain reduces risks in operations and project delivery while maintaining a license to operate and deliver growth. To secure the supply chain, oil and gas companies can conduct a comprehensive risk assessment to understand exposure to inflationary pressures and estimate the impact of inflation and supplier availability on future profits. Operators can then understand, manage, and mitigate supply-chain risks from external vendors by focusing on availability, inflation, and supplier risk on a category level.
?Triple jump: Three steps for a solid risk-assessment plan
A good risk-assessment strategy has three fundamental steps: understand the current pain points and the risks at the supplier level; assess the level of exposure to market inflation; and generate risk-mitigation levers to calculate the expected impact. Understanding pain points and supplier-level risks?involve holding workshops and engagements with function teams to establish why suppliers are not meeting expectations. Once pain points and root causes have been established, organizations can then create a category-level picture of where certain risks exist and identify whether mitigation is required. A supplier-level risk analysis will help highlight specific risks within certain suppliers and categories. Once a clear picture emerges, a company can then analyze tier-two and three suppliers to identify connectivity and reliance throughout the supply chain. Finally, a holistic risk profile can be created by applying the above steps to different moving parts—consider commercial, operational, and execution risks to construct a complete picture.
Assessing the level of exposure to market inflation?requires reviewing contracts to determine the level of exposure to market inflation, reviewing contractual mechanisms to mitigate the impact of inflation (such as risk-reward ratio, managed service options, and supplier consolidation), and comparing against a view of market inflation across key industry indices, each tailored to different categories. Generating risk-mitigation levers and calculating the expected impact?involves mitigating actions across operations and the project portfolio, and assessing their expected impact on future costs. A mechanism to appropriately share risk with suppliers, linked to performance, could be established. Thereafter, contract-performance management and supplier relationship-management processes could be refined to ensure long-term sustainability.
The assessment can be carried out jointly with procurement leads and business representatives in a cross-functional task force to ensure effectiveness. The scope can be clearly defined while linking it to a timebound delivery plan and prioritizing levers based on impact and feasibility.
Shifting gears to create risk-busting levers
To mitigate supply-chain reliability risks, organizations could pivot away from the typical cost-reduction mindset to a robust bottom-up strategy with concrete levers informed by market intelligence, expert input, and risk analysis. To increase the probability of success, the levers would likely need to be embedded in the organization’s strategy and accompanied by accountability measures. These levers could include the quantification of potential impact for the first year and full run-rate implementation, and the use of KPIs to track performance, where relevant. The syndication and alignment of each lever, with clear accountability lines and actionable steps on how each one should be progressed, could also help ensure success. Execution of the levers could go hand-in-hand with the targeted optimization of contract-performance management and supplier-relationship management across people, processes, and practices. This may help to ensure that the transformation is sustained over time.
Typical high-impact levers include early procurement in strategic projects to accelerate long purchase times by adjusting the sanctioning period, revising the approval gating process or enabling earlier budget approvals. Improving the risk-reward ratio in major contracts to incentivize performance and consolidate contract volumes could also add impact. When it comes to staffing, enhancing offshore execution efficiency and digitizing inspection data could make the workplace more appealing. Incorporating personnel retention schemes into contracts could also help retain talent.
Six mindset shifts could help safeguard supply chains
Supply-chain management needs to evolve from its traditional role to improve its resilience to external shocks. Six mindset shifts could help to achieve this. These mindset shifts could be accompanied by new working methods focused on agility and speed that can react quickly to external changes.
As the supply chain environment grows increasingly volatile, oil and gas companies may need to better manage the associated risks to secure their resilience. Performing a three-step risk assessment of the supply chain and applying six management mindset shifts could help mitigate risks and ensure long-term financial sustainability.
?Success in the M&A rebound: Riding the coming wave of upstream deals
?Historically high cash generation across the North American upstream industry could create the perfect market conditions for accelerated M&A activity for market leaders. The oil and gas industry has a long and storied history of M&A transactions and strategic deal-making. Inorganic investment decisions have shaped the portfolios of industry players and determined the ultimate success and long-term growth trajectories of these companies. With the industry on the precipice of historically high cash flows, we expect another wave of M&A to dominate near-term actions. We explore the cash-flow landscape and major cash-flow deployment levers and show how the stage has been set for an upstream M&A wave. We introduce the M&A strategies driving consolidation and what it takes to succeed in the coming M&A wave.
Cash flow is king
Long gone are the days of “growth at all costs” with expanding capital budgets, acreage acquisition campaigns, and associated negative cash-flow realizations funded by inexpensive debt.?Over the past few years, investor sentiment has driven the oil and gas industry to practice?capital discipline?and prioritize financial resiliency and cash-flow generation above growth.?When prices surged in 2022, upstream companies maintained their strategy of “no-to-low” capital growth. This focus on capital discipline and cash generation has resulted in record cash flows. We viewed historical cash flows and projected operational and financial performance for 25 leading North American exploration and production companies (E&Ps), and the results are impressive: operating free cash flows (FCF) reached approximately $85 billion in 2022, with a year-end cash balance of $70 billion to $100 billion.3?This industry turnaround is dramatic, given the negative cash generation in the previous three years. Free cash flows are projected to remain high, with levels of between $70 billion and $90 billion in 2023 and between $50 billion and $70 billion for the following four years—even if oil prices drop to around $65 to $70 per barrel over the coming years. Even after these uses of cash have been exhausted, the industry is likely to remain cash-flow positive in 2023 and beyond, with a “war chest” of hundreds of billions of dollars in 2023 alone for the 25 North American E&Ps analyzed, including estimated current cash balances. The primary tool left in the corporate finance toolkit is the deployment of cash through M&A.
Making all the right moves . . . until there’s only one option left
Operators are taking advantage of their high cash flows by pulling all the traditional levers of capital management, shoring up their balance sheets, and returning value to shareholders. However, there is so much cash coming in that many of these levers are hitting a natural cap or are already exhausted. We analyzed how these companies are using operating cash flow across key levers, including:
Now North American natural gas could alleviate the global energy crisis
Even after these uses of cash have been exhausted, the industry is likely to remain cash-flow positive in 2023 and beyond, with a “war chest” of hundreds of billions of dollars in 2023 alone for the 25 North American E&Ps analyzed, including estimated current cash balances. The primary tool left in the corporate finance toolkit is the deployment of cash through M&A. The oil and gas industry is, in many ways, the epitome of competition and free-market capitalism. ?This is a harsh reality, but companies with strong M&A capabilities and bold strategies often exit the cycle fully fed and healthy. Dealmaking in the North American upstream sector in 2022 generated relatively low upstream transaction value compared to previous years, due to a range of factors in the upstream sector, such as high oil prices and macroeconomic factors impacting all sectors, including geopolitical instability, inflation, and the possibility of recession. However, our analysis of the fundamentals indicates that a new M&A wave is coming. Industry trends suggest that multiple M&A strategies are driving this next wave of consolidation activity. Basin consolidators (such as Colgate and Centennial) will likely look to add scale and leverage operational advantages to achieve outsized returns. Integrators (like EQT with the acquisition of Tug Hill) may seek to add assets in adjacent portions of the value chain to expand margins and increase resiliency. The bold (for instance, BP and the acquisition of Archaea) will probably use a portion of their cash stockpiles to seed businesses to reshape their portfolios and position for the energy transition. Overall, consolidators (eaters at the table) will likely be those that have pulled the operational levers to have better cash flows than their geographically proximate competitors.
?CONCLUSION
As in the past, successful industry players will work tirelessly to define and deliver a strategy rooted in sound M&A investments—honing their evaluation skills and integration capabilities—to accelerate their future growth and performance. The oil and gas industry is entering a period of unprecedented uncertainty characterized by the energy transition, evolving investor sentiment, and mounting concerns around energy security. While our industry should be proud of its recent performance, now is not the time to bask in the glow of success. As in the past, successful industry players will work tirelessly to define and deliver a strategy rooted in sound M&A investments—honing their evaluation skills and integration capabilities—to accelerate their future growth and performance.
?A new McKinsey report finds that more than 50% of upstream oil and gas M&A deals don’t create shareholder value and firms eyeing takeovers and acquisitions should focus on synergies rather than cost-cutting. Research by global management consultants claims that of the hundreds of major E&P deals analyzed since 2010, less than half were successful in delivering value for shareholders as firms focus too narrowly on slashing spending to deliver results. The warning comes as a?wave of mergers, acquisitions (M&A),?and market consolidation is expected, as oil and gas producers consider what to do with record piles of cash amassed over the past 18 months. It is found that there have been around 750 upstream deals with a transaction value of at least $100 million since 2010. Although most deals amounted to less than $1 billion in size, deals greater than $1 billion have contributed the largest portion of transaction value since 2016.
? Supplied by McKinsey
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Any proposed upstream mergers should be used as a jumping off point for a wider “transformative approach” that could include wider synergies in revenue, production, operating costs and capital efficiency. They put this forth as an alternative to the oft-taken route of simply reducing headcount and slashing company expenditure. While there is a negligible link between communicating additional information about the deal and the initial market reaction, announcing cost-synergy expectations may be tied to significant long-term outperformance over peers. While the next wave of mergers and acquisitions may differ from previous waves due to evolving macroeconomic conditions, the importance of value delivery remains critical. Many upstream firms view acquisitions as a ‘bread and butter’ activity that they do well. However, the reality is that many deals don’t create value for shareholders. Clever decisions need to be made by companies to maximize the value from their deals and build resiliency for the future.”
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