Solar Energy M&A Transactions Down 24% in 2015

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There were 116 completed solar energy M&A transactions in 2015, approximately 24% less than the 152 recorded in 2014. 2015 is the third year in a row exhibiting a decline in transaction volume. However, the overall level of transactions in the solar industry is still quite robust given the continued consolidation in the industry. Within the solar M&A transactions, consolidation represented 65% of the volume, or 75 deals in 2015. The next largest category was investment in the solar energy industry by private equity or private investors with 28% of transactions, or 32 deals this year. Vertical integration accounted for 7% of the total, or 8 transactions, and diversification into the solar energy industry accounted for one transaction.

This year, 39% of the solar energy M&A transactions occurred within the U.S./Canada, surpassing Europe as the most active geography for M&A transactions in the sector. This represents a 7% share increase for the U.S./Canada geography as compared to the prior year. The number of transactions in Europe in 2015 was 37, or 32% of the total. Cross-Continental transactions accounted for 18 transactions, or 16% of the total for 2015, while deals within Asia represented 16 transactions, or approximately 14% of the total for 2015.

There were 83 acquisitions of companies categorized as producers of solar energy, representing the most common category of targets at 72% of the 2015 total. This category primarily represents the acquisition of solar projects. EPC integrators/developers were the next most frequent acquisition targets, accounting for 24 transactions, or 21% of the total. Companies categorized as balance of system providers recorded 8 transactions, or 7% of the total, while companies categorized as service providers for the solar industry accounted for one transaction in 2015. Vertically integrated companies did not account for any transactions in 2015.

Echoing the trend in 2014, transaction activity was strongest among targets categorized as producers of solar energy. Consolidation amongst producers as well as private equity and private investment in solar largely drove demand for solar deals. Geographically, the North American market showed an increase in transaction activity potentially given the recent regulatory and tax incentive dynamics of the U.S. solar industry. While the total number of transactions decreased in 2015, the market dynamics in solar remain supportive for continued interest in M&A.