E&C firms have historically used M&A as an instrument to meet specialization and regional expansion needs, and recent data suggest it has become increasingly relevant in the past few years. As in other sectors, market share consolidation and cost-synergy benefits have been major drivers of M&A, but E&C companies have also used M&A to expand their service-offering portfolios and to enter adjacent markets with acquisitions that offer in-house expertise or strong positioning in desired segments. Others have embraced M&A to enter new geographies—both locally and internationally—with acquisition targets that have local operating capabilities, deep customer relationships, attractive assets, know-how, and brand recognition.
This trend will continue over the next decade. M&A will be a critical enabler for E&C firms to transform their business models and capture growth opportunities in regions and end markets where they are concentrated. As the sector benefits from a series of major tailwinds, industry players will leverage M&A to capitalize on them through a variety of investment theses—from entering high-growth markets to gaining new capabilities, technology, expertise, and service offerings that would otherwise be hard to build in-house from scratch.
Although M&A is an attractive path to capture growth opportunities, companies need to be aware of risks and use best practices throughout the process to maximize their chances of being successful. When asked about challenges throughout their M&A journey, industry executives identified integration risks—such as cultural alignment, talent management, and sales integration—as the primary difficulties, followed by high valuation expectations and the complexity of estimating revenue and cost synergies
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