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Because Saudi Arabia is a resource-based economy, this sector is distinguished by a thriving M&A market, stringent government regulations, and technical advancements that lead to modifications in manufacturing techniques. The two sectors of this industry are utilities, which include electric power transmission, natural gas distribution, renewable power, and thermal power, and wholesale, trade, and manufacturing, which includes petroleum refining, coal mining, sand and gravel mining, metals mining, and oil and gas field services and extraction.
Because businesses in the energy, environment, and natural resources sectors frequently need large sums of money and assets to operate, they also have a high barrier to entry. Although this successfully lessens the danger of competition, there is sometimes very little product distinction for already-existing businesses in the industry.
businesses in this sector frequently supply other businesses with fuel and natural resources that are necessary for their operations. Because of this, the industry is vital to the economy. It should be mentioned that this sector is particularly vulnerable to macroeconomic variables like inflation and political unrest.
Because of their sustainability and falling costs, renewable energy sources are gaining popularity. Renewables have grown increasingly competitive in the market as natural gas instability persists and as renewable energy and technologies become more affordable.
Businesses in this sector must abide by a number of laws pertaining to safety measures, environmental concerns, and extraction techniques, among other things.
To increase productivity and lessen their effects on the environment, businesses are revamping their material processing methods. This enables them to obtain a competitive edge in a sector that has minimal diversification. Higher R&D expenses will result from this, though.
Due to some particular qualities, companies in the Energy, Environment, and Natural Resources sector require special consideration when it comes to M&A chances. BB Capital, the top private market M&A advisory firm in Saudi Arabia, is aware that selling a company is a significant choice. A committed business owner aims to sell their company to a qualified buyer who can carry on the company’s legacy in addition to maximizing the amount of money they can get from the sale. With a wealth of deal-negotiating experience, BB Capital has worked on valuation and M&A consulting mandates in the energy, environment, and natural resources sectors. Our knowledgeable advisory staff will help your company through the whole sell-side M&A process.
Understanding certain crucial elements unique to the energy sector that could affect the possibility of a possible sale is crucial for business owners considering a possible sale. These elements influence how appealing a company is to possible investors and buyers.
Capital Intensity: For a variety of reasons, such as resource extraction, production, transportation, storage, etc., this business is typically capital intensive.
Low to moderate competition and a high barrier to entry: The amount of competition that businesses in this sector encounter has been significantly diminished by a number of entrance barriers, such as capital needs, economies of scale, access to natural resource reserves, government restrictions and licensing, and the industry’s mature status.
Government laws: Due to safety and environmental concerns, all businesses in the chemical industry must abide by government laws.
Whether it’s a sale or a valuation, our team can offer resources and experience that are only available at larger companies, together with the individualized attention of our M&A Advisory team. Reach out to one of our advisors by contacting us right now.
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Khalid.Alsuhaim@bluebeachcapital.com
+966 50 580 5050
