Article
European Construction Monitor
Trends for 2013-2015
We are pleased to present the fourth edition of the European Construction Monitor, which looks at the latest trends and issues in mergers & acquisitions (M&A) in the European construction industry. This publication complements the “European Powers of Construction” (EPoC) of 2013, a Deloitte research paper examining the status of major European-listed construction companies.
Market trends: searching for (international) growth and managing future demand
The first trend to be spotted this year in M&A is intercontinentalisation. While the number of M&A deals in 2013 was slightly higher than in 2012, forecasts suggest the same number of deals in 2014 as in 2013. The number of deals may not changed, but the type of deals certainly has. There has been an increase in cross-border deals, with an even stronger focus on cross-continental deals, especially with the US and Canada. A good example is French company Bouygues Energies & Services, which acquired a majority stake of 85% in Plan Group, a Canadian company specialising in mechanical and electrical engineering.
The second trend to emerge in M&A is pricing pressure on labour and materials. Construction companies in recovering markets are experiencing difficulties in their supply chains. Demand for labour is rising and supply is falling due to the significant amount of defaults over the recent years. As a result, in the UK, the Tender Price Index increased from 0.5% in 2012 to 6.7% for 2013.
The third trend is the rise in private equity and the change in the involvedness and role of private equity firms. The number of private equity deals has increased for the third consecutive year, rising from 10% of all recorded deals in 2012 to 19% in 2013.
This European Construction Monitor analyses the market trends in the European construction industry by looking back but also looking forward. Deloitte has combined these analyses with the in-depth, local knowledge of its European member firms on M&A, real estate, construction and infrastructure to produce this outlook.
Highlights in this publication
- The number of deals was relatively stable in 2013 (139) compared to 2012 (126). A projection of H2 2014 suggests the same number of deals for 2014 (139).
- The number of cross-border deals in 2013 increased by a third to 35% and the amount of cross-continental deals almost doubled.
- The average deal size in 2013 increased by a third compared to 2012.
- The number of private equity deals almost doubled in 2013 (19%) compared to 2012 (10%).
- The amount of insolvencies in the construction industry throughout Europe in 2013 decreased slightly.