The collapse in oil prices could create a “true buyers’ market” for mergers and acquisitions (M&A).
In an industry outlook, Wood Mackenzie said that oil prices are throttling the M&A market, with deals being shelved and would-be buyers taking a step back.
The report said that M&A will not recover until a new ‘consensus’ emerges – typically at least three to six months from the point that prices stabilise (itself, some way off).
Meanwhile, uncertainty and corporate distress create opportunities for companies with the appetite and capacity to take advantage.
“Weak oil prices through 2015 will ratchet up the pressure on the most financially stretched in the sector,” said Luke Parker, principal analyst for Wood Mackenzie’s M&A analysis.
“Expect to see falling deal valuations and the emergence of a true buyers’ market.”
The business intelligence firm also said that large-scale corporate consolidation “may be closer than it has been at any point since the late 1990s”.
