European M&A Construction Monitor 2013

Trends for 2012-2014

We are pleased to present the third edition of the European M&A Construction Monitor. This monitor looks at the latest trends and issues in mergers & acquisitions (M&A) in the construction industry in Europe. This 2013 publication complements the “European Powers of Construction” (EPoC) of 2012: a Deloitte research paper examining the status of major European listed construction companies.

Highlights in the publication:

  • The number of deals was higher in 2012 than in 2011. M&A activity in 2013 is expected to be in line with 2012.
  • The average deal size remains limited in 2012 and 2013.
  • Sector diversification is still on the agenda of larger construction companies that are in a position to anticipate developments in the construction markets.
  • Sector diversification seems more profitable than cross-border M&A strategies.
  • It seems that companies with a strong focus on internationalisation have lower profit margins: cross-border strategies involve high entry and start-up costs which affect profitability of non-domestic acquisitions.
  • Alongside diversifying strategies, we see a new item on the agenda: refocusing on core business and divestment of assets that do not fit into the new strategy.
  • DBFM(O) contracts are becoming more interesting to construction companies, despite slightly narrowing profit margins due to tougher competition.
  • Although the number of insolvencies in the European construction sector seems to have stabilised (>1% of the construction companies per year), both smaller and larger construction companies are still filing for insolvency.
  • Lenders seem to take, to a certain extent, a more lenient stance when debtors are defaulting on their obligations.
  • More private equity involvement, both in financing business and acquiring assets of construction companies
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