KPMG Corp. Finance recently advised on the sale of a precision engineering specialist in the oil and gas industry. KPMG advised Vine Street Capital and the management of Lymington Precision Engineers on its sale to Senior, an international manufacturing group.
Dane Houlahan, KPMG partner and head of oil and gas mergers and acquisitions, said that while uncertainty over the price of oil created challenges in relation to valuations, investors with experience of the sector could see opportunities in the current market.
“There will still be strategic deals happening as the industry reorganizes, although the nature of the transactions and [merger and acquisition] processes will be very different to the wider, aggressive bull market auctions we were used to seeing in 2013 and early 2014,” said Houlahan. “Trade buyers and specialist investors who understand the cyclical nature of oil and gas will see this as a great time in the market to be acquiring.”
Houlahan, who was part of the multinational KPMG team attending OTC in Houston last month, said that 2015 represented a much more challenging environment for merger and acquisition activity.
“Forecasting and agreeing transaction pricing at the moment is particularly difficult and is the big stumbling block on many deals, although we would expect this to improve as the market stabilises,” said Houlahan. “Finding an absolute consensus view at the moment is difficult. Clearly a lot will depend on the oil price but the key message from the North American market seemed to be some expectation that by 1Q next year we might see sufficient stability back in the market to drive some additional [merger and acquisition] activity. Assuming that’s the case, we would expect that to translate into increased European and rest of world deal flow in due course.”
According to professional services firm KPMG, specialist investors with an understanding of the cyclical nature of the oil and gas industry see opportunities in the current oilfield services market.
Image: Dane Houlahan/KPMG
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