Your comprehensive assessment of dealmaking sentiment across Europe’s M&A market is live

What a year for GDPR en­force­ment: 2021/2022 saw vari­ous land­mark cases in­clud­ing: a new re­cord fine of EUR 743 mil­lion; the total amount of all fines since May 2018 ex­ceed­ing the EUR 1 bil­lion mark in sum­mer 2021; and the total num­ber of cases passing 1,000 in early 2022. Land­mark cases were widely re­por­ted, ob­vi­ously draw­ing a lot of pub­lic at­ten­tion and in­creas­ing over­all aware­ness for data pro­tec­tion law. However, there is a GDPR en­force­ment real­ity bey­ond re­cord fines and it may be worth tak­ing a closer look: fo­cus­sing solely on severe fines could lead to fear and even re­luct­ance or ig­nor­ance on com­pli­ance is­sues.We still be­lieve that facts are bet­ter than fear.Our con­tinu­ously up­dated list of pub­licly known GDPR fines in the GDPR En­force­ment Track­er is our 24/7 rem­edy against fear: in con­trast, the an­nu­al GDPR En­force­ment Track­er Re­port (“ET Re­port”) is our deep dive ap­proach and per­mits great­er in­sight in­to the world of GDPR fines.

The CMS Cor­por­ate/M&A Group is pleased to launch the four­teenth edi­tion of the European M&A Study

While world lead­ers have been gath­er­ing for COP meet­ings for dec­ades, what made COP26 per­haps par­tic­u­larly not­able is that the private sec­tor also gathered in force, and with a com­mit­ment and de­term­in­a­tion to be a key driver in the de­car­bon­isa­tion of the world’s eco­nom­ies.  In pre­vi­ous years, there have been mur­mur­ings from vari­ous cor­por­ates that to make so­cial or en­vir­on­ment­ally driv­en in­vest­ment de­cisions may not align with their fi­du­ciary duty to act in the in­terests of share­hold­ers. As share­hold­er act­iv­ism has driv­en the de­bate in­to board­rooms from above, this at­ti­tude is rap­idly re­vers­ing dir­ec­tion. While re­turns are gen­er­ally seen as lower in the clean sec­tor com­pared to, say, the oil & gas sec­tor, be­ing in­ves­ted in the green trans­ition is in­creas­ingly seen as a key route to pre­serving and pro­tect­ing share­hold­er value. At the same time, vol­un­tary and man­dat­ory cli­mate re­lated dis­clos­ures are align­ing the drivers for in­vestors across the board so that cap­it­al is in­creas­ingly driv­en by the met­rics they pro­duce.  This is be­ing re­flec­ted in, among oth­er things, the plum­met­ing cost of cap­it­al for green in­vest­ments. At the same time high car­bon in­tens­ive in­vest­ments, such as coal based pro­jects and busi­nesses, are strug­gling to se­cure fund­ing, with many fa­cing in­solv­ency. In­vest­ments in the en­ergy trans­ition, a key part of the green trans­ition, will prin­cip­ally take the form of M&A. The out­come of COP26 and the mo­mentum it has gen­er­ated means that European deal­makers in the en­ergy sec­tor will be even busier in 2022. Europe leads the world in the en­ergy trans­ition and the race to net zero is driv­ing near-re­cord levels of deal­mak­ing – not­ably in wind and sol­ar photo­vol­ta­ic gen­er­a­tion.At the same time, the en­ergy trans­ition is both ex­pand­ing and frag­ment­ing the en­ergy sec­tor. For many, it has tra­di­tion­ally been fo­cused on en­ergy gen­er­a­tion. The trans­ition is bring­ing to the fore less vis­ible tech­no­lo­gies. Everything from tra­di­tion­al hy­dro­power to grid-scale bat­ter­ies, elec­tri­fic­a­tion of trans­port and hy­dro­gen. It is also bring­ing in­to the mix sec­tors that have not tra­di­tion­ally been fo­cused on en­ergy, such as in­dus­tri­al de­car­bon­isa­tion, ship­ping and min­ing for the nat­ur­al re­sources needed for the en­ergy trans­ition. In par­al­lel with this, there is a huge and grow­ing story around en­ergy trans­mis­sion and dis­tri­bu­tion. Elec­tri­city net­works will need to ex­pand massively to fa­cil­it­ate elec­tri­fic­a­tion and new tech­no­lo­gies. They are also be­com­ing smarter with the use of di­git­al tech­no­logy to op­tim­ise the way power is dis­trib­uted, traded and con­sumed. Fur­ther, new types of net­works may provide in­vest­ment op­por­tun­it­ies for those look­ing for stable long term as­sets, such as hy­dro­gen and car­bon net­works.Against this back­ground, tra­di­tion­al fossil fuel-based play­ers are de­car­bon­ising their op­er­a­tions. For the oil and gas ma­jors, this means ac­quir­ing or sig­ni­fic­antly en­han­cing their cap­ab­il­it­ies in re­new­ables, in­clud­ing wind, sol­ar and hy­dro­gen, while sim­ul­tan­eously di­vest­ing se­lec­ted car­bon-in­tens­ive as­sets in re­sponse to mount­ing ESG pres­sures. This may be one of the reas­ons why 50% of re­spond­ents in our study point to dis­tress-driv­en deals as a top sell-side driver.Change is en­dem­ic in the en­ergy sec­tor, but the cur­rent trans­ition makes the years since lib­er­al­isa­tion of en­ergy mar­kets in the late 1980s seem al­most steady-state in com­par­is­on. Des­pite the mo­mentum and push for cap­it­al to be in­ves­ted in the en­ergy trans­ition, there re­main obstacles, not least the lim­ited pipeline of good qual­ity in­vest­ment op­por­tun­it­ies, con­tinu­ing con­cerns over lock­downs and COV­ID-19 vari­ants, fin­an­cing dif­fi­culties arising from po­ten­tially un­stable long term rev­en­ue streams and di­min­ish­ing rates of re­turn. Not­with­stand­ing these chal­lenges, our study finds that en­ergy sec­tor M&A will in­creas­ingly be an en­gine driv­ing cap­it­al in­to pro­pos­i­tions that match so­cial and polit­ic­al am­bi­tions for the green trans­ition. Key find­ings  En­ergy re­mains a premi­um as­set class for most in­sti­tu­tion­al in­vestors, with its per­form­ance dur­ing the pan­dem­ic and im­petus from COP26 fur­ther en­han­cing its at­tract­ive­ness75% of en­ergy com­pan­ies are con­sid­er­ing an ac­quis­i­tion and/or di­vest­ment in 2022Along­side premi­um as­sets, in some sub­sect­ors there are un­der­val­ued tar­gets driv­ing buy-side activ­ity, with sellers shed­ding dis­tressed as­sets as the sec­tor shifts in re­sponse to the en­ergy trans­ition45% think COV­ID-19 will be a ma­jor M&A obstacle in 2022, but this re­mains a flu­id situ­ation that can change rap­idly