2019 Global M&A Construction Monitor
Latest trends and developments in the construction industry
Is the construction industry focusing on cross-border deals or on local markets? And, how are they dealing with the supply chain pressure anno 2019? Read it in our Global M&A Construction Monitor 2018-2019. This monitor explores the trends and developments in the Global and regional construction industry based on M&A activity and opinions from our local construction experts.
Global construction industry: significant trends
We are pleased to present the first Global M&A Construction Monitor (GCM) in which we discuss the most noticeable trends and developments in the Global and regional construction industries. This report is based on publicly available data regarding M&A and market outlooks and opinions from our local construction experts.
The M&A developments and shaping trends are analyzed per global region – North America, Latin America, Europe, Africa & the Middle East and Asia & the Pacific. Despite the regional differences in market characteristics, we observed two major global trends:
- Growing focus on local markets
For the second year in a row the share of cross-border deals showed a decline. Spurred by widespread positive economic conditions we observe a trend in growing focus on local markets opportunities.
- Boosting margins by diversification
Supply chain pressure, mainly due to strongly increased construction costs, is a major challenge for construction companies in multiple global regions. In search for better margins the construction industry focuses on diversification strategies. This trend is reflected in the increased number of diversification deals.
Curious to know what trends dominate in the different countries? Per region you will find a more detailed outlook on the local construction industry in the report. Get your free copy of the Global Construction Monitor by clicking on the button on the right or via this link.
Part of the Global Construction Monitor is the European Outlook. The key findings in this outlook are:
- M&A activity stabilized at 197 deals in 2018, after consecutive years of growth
- The share of cross-border deals dropped for the third year in a row, indicating an increasing focus on local markets
- 2018 showed a significantly increase in PE activity in the construction sector, resulting in 58 PE driven deals, covering 29% of the total number of deals
- Margins continue to be under pressure throughout Europe, driven by high costs for material and labor, the lack of skilled personnel and high levels of competition
- Aiming to boost margins, European construction companies are increasingly focusing on diversification strategies, resulting in a continuing rise of total recorded diversification deals
Zooming in on the Czech Republic
- The construction output in the Czech Republic grew by approximately 12% in 2018. The total output is still 15% below 2007 results and does not reflect the economic cycle. This is mainly due to poorly preparing for big infrastructure projects and very lengthy permit processes, which sometimes take 10 years or more. Construction prices went up sharply during 2018. This was due to an increase in wages but also a rapid price increase in construction parts and materials. Margins, though, showed only minor growth. They continue to be 4-5% on average.
- Human capital, resources and subcontractors are the key challenges the construction sector faces these days. Wages are growing and there is a lack of quality workforce. The price of construction materials is increasing as well. Especially in Prague it is very difficult to find a land plot suitable for development with permits. The main effect of these consequences is a rapid increase of property prices.
- Digitization and robotization will have a significant role – not only in structure planning, an area in which this technology has already been used -, but particularly in the construction process as such.
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