Net zero: M&A deals
The UK is considered to be a world leader in the drive to net zero, with emissions being cut by 48% between 1990 and 2021. However, there is still a long way to go if we are to reach the goal of net zero by 2050. In this article, we take an overall look at the M&A deals in the net zero space and showcase several deals in more detail.
What is net zero?
Net zero is the state in which the greenhouse gases going into the atmosphere are balanced by the removal of greenhouse gases out of the atmosphere. In other words, it is the state at which global warming ceases. It plays an important role in keeping global temperatures at a consistent level, with the IPCC (Intergovernmental Panel on Climate Change) setting a goal of net zero carbon dioxide by 2050 so that global temperatures remain consistent with 1.5C.
Acquisition deals in the UK net zero space 2013 to 2024
Using M&A data from calendar year 2013 to May 2024, we have extracted deals where the phrase “net zero” appears in the description for either of the companies involved in the deal, or where they have had an environmental signal identified by Beauhurst via the company’s sector, business model or assigned buzzwords.
The number of acquisitions has seen a relatively positive trend over the past 10 years, however, there have been small decreases since 2021 (6% from 2021 to 2022 and from 2022 to 2023). It will be interesting to see if 2024 will continue this trend once full year data is available.
One year that took a noticeable hit is 2020, seeing an 18% decrease from 2019. This decrease is likely due to the COVID-19 pandemic, with this being an uncertain time for both businesses and the economy. The number of acquisitions quickly rebounded in 2021 though, with a 55% increase. This follows the trend that we have seen in previous research, which is that, simply, 2021 was a very good year for the UK economy.
However, when we compare net zero M&A deals to all M&A deals in the UK, we see that they are following the same trend. This perhaps indicates that there are few unique factors influencing the number of M&A deals in the net zero space.
Recent trends: Net zero M&A
The following analysis will focus on acquisitions that took place between the start of 2023 and May 2024.
Industry breakdown of the companies involved in the acquisitions
For both the acquired and acquiring company, renewable energy is the top industry (at 16% and 22%, respectively), which is not surprising as we are looking at net-zero motivated deals. The only other industries these two groups have in common are civil engineering (at 13% and 18%, respectively) and land, water and air management (at 15% and 12%, respectively).
None of the industries hold an overwhelming majority for either the acquired or acquiring companies. This is perhaps reflective of the range of sectors involved in the journey towards net zero.
Environmental signals of the acquired and acquiring companies
Source: Beauhurst
The headline accolades (awards, claims, etc.) look to be similar suggesting that the ‘badges’ used by parents and targets are evenly distributed. However, the signals that are of substance around infrastructure, processes, transport, energy, and food have material gaps – this suggests that acquirers are buying the next level of detail beyond the headline accolades.
Case studies
Learnd SE
Launched in 2020 and based in Greater Manchester, Learnd are on a mission to create a world where all buildings deliver outcomes for everyone by combining technology with field engineers and market-leading partners. They were founded by John Clifford (CEO), who has an engineering background and a master’s degree in Systems Engineering, and Simon Wood (COO), who holds an MBA in Sustainability and has spent his career with the leading players in building technology.
They are fulfilling their purpose of creating a world where all buildings deliver a range of outcomes for everyone, including making energy savings, reducing carbon emissions, and flexing their customer’s spaces to meet changing needs. They do this by using a combination of technology, engineering capabilities, a comprehensive service offering, and market-leading partners. A breakdown of their services is as follows:
- New builds: they embed building management systems (BMS) from the ground up, meaning that their expertise can be applied at any stage of the project.
- Upgrades: As old management BMS are often expensive to maintain and are frequently unsecured, Learnd offer the service of upgrading the client’s legacy BMS to a new system.
- Multisite: They are experts in design, installation, and roll-out of multi-site and retrofit BMS, allowing the improvement of building control and success in achieving the outcomes wanted.
- Unified BMS: Their unified BMS platform provides clients with continual monitoring and control of their buildings.
Serving clients in sectors including healthcare, the public sector, commercial, retail, and data centres, their approach puts technology first in managing and maintaining real estate:
- Tech agnostic: By working with leading partners and utilising their own technology, they are able to optimise every level of the building stack.
- Cloud platform: They connect buildings securely in a cost-effective method to the internet, giving their clients the visibility they require.
- Best tested reliability: They make real-time changes to clients’ buildings when needed.
- Tech at the right time: Learnd help their clients to keep ahead of industry shifts, at the right time for their business.
During February of this year, Learnd, who went public on the Frankfurt Stock Exchange through a business combination in January 2023, acquired two businesses; Dinnington-based BGES Group, who are a provider of BMS and energy management services to thousands of clients across the UK, and Ireland-based Ashdown Controls, a leading BEMS provider who deliver large scale projects starting at the design stage all the way through to installation and maintenance. From these deals, an expected outcome is the expansion of the number of buildings available to implement Learnd’s technology, assisting in reducing energy and carbon emissions. Price Bailey provided financial and tax due diligence for the deals alongside buy-side advisory services.
Utility Line Ltd
Founded in 2021, Utility Line provide full turnkey services to clients in the EV (electric vehicle), commercial, and residential sectors. Their founder is Nicholas Ravden, who has over thirteen years of experience within the utilities industry. He began as an apprentice and quickly climbed the ranks from Project Manager to Director. Presently, he is the Manager Director of his own company.
As a NERS (National Electricity Registration Scheme) accredited Independent Connections Provider, they have installed a significant number of EV charging points since their creation at various locations including shopping centres, multi-storey car parks, and bus stations. In addition to EV charging points, they also specialise in residential developments, industrial and commercial schemes, grid connections, and maintenance and support services. Their project timeline can be broken down into three parts:
- Design: Their technical teams engage with customers at the earliest possible stage so that they can start the design work and exclude any constraints or risks, where possible. While they understand that no two projects are alike, they will reference their previous work experience to guarantee that each project’s design is optimised.
- Build: With their extensive knowledge and understanding of health and safety practices, with an in-house health and safety team on hand to support, each project is delivered to program within budget and in the safest manner possible. Their experienced civils and electrical teams have all the appropriate installation and build skills need to deliver industry leading projects to the highest standards.
- Maintain: They offer a 24/7 year-round response support nationwide. They assist in keeping sites operational and safe by working with leading Charge Point Operators and Independent Network Operators and utilising their own direct teams. Their maintenance programs are designed to ensure that sites are kept safe and continue to perform in-line with company expectations and KPI’s (Key Performance Indicators), helping their clients to save money in reduced downtime and loss of revenue. Also on offer is maintenance support that keeps site appearances to a high standard.
In March of this year, Utility Line was acquired by Adler and Allan, who are known as the UK’s most trusted environmental services partner helping organisations to reduce risk posed to the environment and their operations though the compliant management of the assets alongside achieving commercial, ESG and net zero goals. The ideal platform for Utility Line to integrate their capabilities and to support additional companies on their renewable energy journey is created through a combination of Adler and Allan’s established position in the utilities and transport and logistics markets, and their mission and service offerings. For Adler and Allan, this strategic acquisition not only aligns with their commitment to sustainable solutions, but also places them as a key player in the EV sector. By acquiring Utility Line, they will strengthen their specialist EV and high-voltage capability and expand the range of services on offer regardless of sector. During the process of the deal, Price Bailey provided sell side advice and tax services for Utility Line.
Undisclosed renewable energy provider
Chand Chudasama, one of our Partners, assisting an international renewables energy and battery storage producer raise €250m in debt and equity drawdown funding to support a major expansion of asset development for the producer.
Scaling, exiting, and acquiring your net zero business
Price Bailey operate across the market of organisations look to build and acquire companies with strong commercial prospects that can be part of the transformative change to the environment. We have extensive experience valuing these organisations:
- Raising finance
- Finding acquisition targets
- Negotiating deals
- Structuring the group around the IP
- Preparing for transactions
- Auditing
- Composing management accounts that buyers or investors will value
This is a sector we are passionate about. If you would like our assistance in understanding how we can help you scale, then get in touch below and we would be delighted to help.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.