Many Deals Completed, What Have We Learned?
Tom Flaherty is a partner with Strategy& – a part of the PwC network – who has focused on utility growth strategy, mergers and acquisitions (M&A), and business transformation for over forty years. He has been involved with approximately eighty percent of utility M&A stock transactions greater than a billion dollars in the U.S., and supported clients in Great Britain, Italy, Spain, France, Argentina, Venezuela, Australia, and Canada in consolidation or carve-out assignments. He has also provided expert testimony in more than thirty jurisdictions on utility combinations and benefits.
Over the last twenty years, the U.S. utility sector has gradually dwindled. The power sector shrunk by approximately sixty percent, from ninety-five to just under forty companies. The gas sector shrunk by an equivalent percent, from just over fifty companies to right at twenty.
Numerous other companies tried to consolidate, only to find that striking and concluding a deal is hard, notwithstanding the industrial logic that underpins the combination. Yet, this experience gained over the last two decades of consolidation activity has been a wise teacher to the industry.
Both successful and failed deals have been instructive to utility managements on whether and how to position a proposed transaction for pursuit and approval. These lessons from the front - whether related to competitive, value, regulatory or execution experiences - provide valuable insights to those companies considering their first combination. As well as to those companies pursuing further scale-up.
Successfully incorporating these lessons into future deal planning can help merging companies avoid both time delays and adverse outcomes.