In Europe, infrastructure — including electric power grids and offshore and on-shore pipelines for oil and gas transmission — are increasingly attractive to investors seeking relatively stable and predictable returns such as pension, sovereign wealth and infrastructure funds. At the same time, substantial investment into enhancing and replacing infrastructure is required, but many of Europe’s largest utility companies are balance-sheet constrained. This combination of factors has precipitated a significant number of M&A transactions in recent years, as sellers seek to de-leverage and recycle capital, while buyers seek to access the safe, stable and predictable returns their own investors seek. Key to valuation of investment opportunities across the energy sector is an understanding of the regulatory and commercial environments these businesses operate in, and might operate in in future.
Our Service Offerings
Regulatory Due Diligence
It is critical for companies seeking to buy assets, particularly regulated network assets that they have a full understanding of the regulatory environment within which the target assets function. FTI Consulting and its subsidiary, Compass Lexecon have professionals to conduct the necessary regulatory due diligence for clients, including what the regulations are, how they are likely to evolve, what are the inherent and anticipated risks to the assets and how these are likely to impact on the overall value of the assets.
Commercial Due Diligence
Commercial due diligence analyses network assets on the basis of markets served, competitors, market shares, regulations, pricing policies, revenue, profitability and how they all are likely to change in the future. FTI Consulting and its subsidiary, Compass Lexecon are well versed in conducting commercial due diligence. If you are buying or selling transmission or distribution network assets, for example, our energy professionals can offer informed advice on potential rates of return under the existing regulatory regime and how changes to the regime in future might impact those returns and offer opportunity or risk to future profits.
For public and private companies in the energy industry, FTI Consulting and its subsidiary, Compass Lexecon have professionals that have performed asset valuations for numerous purposes, including fair market value, fairness opinions, purchase price allocations, impairment testing, dispute resolution, transaction analysis and pricing, and restructuring. A range of techniques exist for valuing assets and our professionals are adept at selecting and applying the most appropriate method in a given set of circumstances.