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Business Insights From Conway MacKenzie
March 25, 2015

As Energy Prices Drop, Consumer Goods and Retail M&A May Skyrocket

Mergers & Acquisitions’ February Mid-Market Pulse (MMP), a forward-looking sentiment indicator compiled from monthly surveys of approximately 250 executives, indicates that expectations for M&A in the consumer goods and retail sector have risen significantly over the last few months as energy prices have fallen.

According to the MMP, dealmakers gave the consumer goods and retail sector a high three-month score of 86.1, significantly higher than the 48.5 score from October. The current 3-month sector score also outpaced the overall M&A score of 77.7 for the same timeframe.

The 12-month composite score for the sector also rose, but not as dramatically. The current 12-month the industry.

Survey participants attributed their surging optimism to lower prices for gasoline and heating oil, which will ultimately give families more discretionary income to spend.

It’s a classic example of the dependencies and synergies that exist across industries. In addition to having an impact on the consumer goods and retail space, volatility in the energy industry also impacts – directly and indirectly – nearly every industry we serve, from automotive to manufacturing to hospitality and real estate.

When an industry like the energy sector faces challenges, there is an opportunity for both related and dependent industries – and the challenged industry itself – to adapt, improve and even grow.

For clients whose businesses rely upon the energy sector, the trickle-down impact of lower energy prices, and corresponding increase in consumer purchasing power, is a critical trend to monitor. As with the consumer goods and retail space, we expect energy prices – should they stabilize at lower levels – to fuel M&A activity in several industries over the next year and will closely track those developments to enable our clients to make smart, proactive decisions.

Our integrated team of advisors with cross-industry experience can help your company leverage the shifts in a related industry to your advantage. Whether your business is a player in the energy sector or one whose consumers will benefit from falling energy prices or whose operations are impacted by the lower costs of oil, we want to discuss your game plan for thriving.

Please contact an expert from Conway MacKenzie’s Energy Advisory Services Team or Retail, Consumer Products & Direct Marketing Team to begin (or continue) that conversation and visit us regularly on Twitter, LinkedIn and Facebook for more insights into how broad industry trends cross over to your unique business.