INTRODUCTION Contributed by: Nicolas Wehrli, Loyens & Loeff
Supply chain and inflation pressures Persistent supply chain disruptions and inflationary pressures continue to impact project costs and deal valuations. Higher interest rates have moderated deal sizes and increased selectivity, but recent rate cuts are supporting renewed activity. Companies are adapting by seeking resilient supply chains, localising procure- ment, and exploring strategic partnerships with sup- pliers. Construction delays, rising material costs, and labour shortages remain significant hurdles for both acquir- ers and targets. In response, dealmakers are increas- ingly using innovative financing structures, such as earn-outs or contingent payments, to bridge valuation gaps and manage risk. Sustainability and ESG considerations ESG considerations remain central to M&A strategy. Investors prioritise assets with strong ESG creden- tials, and regulatory scrutiny of sustainability claims increased in the last year. ESG due diligence now rou- tinely covers not only environmental but also social and governance risks, with buyers seeking greater transparency and accountability. Concerns about “greenwashing” are prompting more rigorous verifi- cation and disclosure requirements. Some investors are recalibrating ambitions, with a renewed focus on core infrastructure and profitability. The increasing importance of social and governance factors is also shaping deal criteria and post-transaction integration. The challenge of balancing ESG goals with financial returns is growing, especially as regulatory require- ments for disclosure and reporting become more stringent. Outlook for 2026 As we look ahead to 2026, the global energy and infrastructure M&A landscape is expected to remain dynamic and resilient. Electrification, energy security, and digital infrastructure will continue to drive strate- gic M&A, while regional policy divergence and ongo- ing geopolitical tensions will create both challenges and opportunities. Investment in renewables, storage, and grid moderni- sation will remain strong, supported by AI-driven elec-
networks, and edge computing are accelerating, with both strategic and financial investors seeking to capi- talise on the digital transformation of economies. Regional highlights Regional dynamics continue to shape the energy and infrastructure M&A landscape in distinct ways. In the United States, recent policy shifts are expected to favour traditional energy sources; however, bipar- tisan support for renewables, particularly solar and storage, remains strong, ensuring continued invest- ment in clean energy. Across Europe, the focus is on energy security, the expansion of renewables, and grid upgrades. Nevertheless, high costs and regulatory complexity may temper the pace and volume of deal activity in the region. Meanwhile, Asia and emerging markets are experiencing robust growth in renewa- bles, critical minerals, and infrastructure, with China, India, and Latin America standing out as key areas of expansion. These regions are also seeing an increase in cross-border transactions and public–private part- nerships, further accelerating infrastructure develop- ment and investment opportunities. These regional dynamics are reflected in both the volume and nature of M&A transactions across markets. Key Challenges Facing Energy and Infrastructure M&A Regulatory and policy uncertainty Policy shifts, such as updates to the EU Green Deal, the US Inflation Reduction Act, and new Asian reg- ulations, continue to create both opportunities and risks for dealmakers. Geopolitical tensions, resource nationalism, and protectionist measures add further complexity to cross-border transactions. For exam- ple, recent tightening of foreign direct investment (FDI) screening in Europe and expanded Committee on Foreign Investment in the US (CFIUS) reviews have led to longer deal timelines and, in some cases, deal abandonment. Diverging regional policies and increased scrutiny of foreign investments, especially in critical infrastruc- ture, require careful navigation and robust due dili- gence.
7 CHAMBERS.COM
Powered by FlippingBook