Oil price crash: can M&A save the day? Part one.
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
Table of contents
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Executive Summary
- Circumstances have changed; companies are in survival mode
- Deal flow may be stagnant for some time
- Deal valuations will fall, buyers have the upper hand
- Corporate-scale M&A will eventually facilitate companies' moves down the cost curve
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How has the oil price collapse changed the M&A environment?
- Appetite and capacity to do deals has fundamentally changed
- The bid-ask spread has been blown wide open
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What will happen in the next few months?
- Precedents suggest there will be few deals in the near term
- Precedents may understate the extent of this M&A slowdown
- Coronavirus fallout and OPEC+ create exceptional conditions with many uncertainties
- Deals which have already been agreed may not complete and ongoing discussions will reset or end
- Where are we now? Dozens of deals have yet to close
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Beyond the next few months
- Deal flow could be stimulated if prices bounce
- Continued low oil prices will eventually boost deal flow
- Deal prices will fall
- Lower long-term price assumptions will reduce valuations and deal prices
- Lower ILTOPs does not mean targets are "cheap"
- Buyers have the upper hand over sellers
- Bad news for divestment programmes
- Companies will sell what they can
- 4 more item(s)...
- How does the energy transition / ESG play into this?
Tables and charts
This report includes the following images and tables:
- Precedent crashes - 2008
- Precedent crashes - 2014 to 2016
- Precedent crashes - Q4 2018
- Deal count versus Brent
- Selected deals yet to close
- Brent versus Implied Long-term Oil Price (ILTOP)
- Average ILTOP 2016-2019, selected regions
What's included
This report contains: