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  1. Our thinking
  2. Transformational M&A
  3. Traditional players moving outside of their comfort zones
Traditional players moving outside of their comfort zones
10 key trends in transition M&A
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M&A and JVs allow for a much speedier move into markets where one partner or target has access to and knowledge of a particular territory or has finessed a particular business line.

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International energy companies are taking their project development and international logistics and marketing expertise from traditional petrochemicals and applying it to new molecules like low-carbon hydrogen and its vectors.

James Chapman
Freshfields Partner

The energy transition brings novelty: a fundamentally different way of doing business using new tools, assets and ways of thinking.

In some cases, this will involve adapting an existing technical skill set and acumen into new markets, says James Chapman, a Freshfields Partner advising on the energy transition. 'For example, the international energy companies are taking their project development and international logistics and marketing expertise from traditional petrochemicals and applying it to new molecules like low-carbon hydrogen and its vectors.'

M&A and JVs allow for a much speedier move into markets where one partner or target has access to and knowledge of a particular territory or has finessed a particular business line, says Philip Morgan, Freshfields Partner and head of the firm’s energy and natural resources practice in Asia.

'The same logic applies where technology or intellectual property is key to a particular decarbonisation pathway,' Philip explains. 'M&A can enable a company to deploy its business strategy more effectively with a variety of integrated IP in its market offerings.'

Related services
ESG and sustainability
Energy
Energy transition
ESG competition and collaboration
Mergers and acquisitions
Private capital
Sustainable finance and investment
Sustainable transactions
Transformational M&A 10 key trends

Transformational M&A 10 key trends

Transformational M&A
Reports
4 Jun 2024
Increased vertical and horizontal integration

Potential ramifications of government subsidies and incentives granted to a target require detailed investigation.

Reports
4 Jun 2024
Bundling small projects from SME developers into portfolios to create scale

Striking the right balance between development and generating assets in a renewables portfolio is very important.

4 Jun 2024
New technology providers and specialist operators entering projects earlier

Parties should anticipate the path to final investment decision and project commissioning, ensuring appropriate off-ramps.

4 Jun 2024
Geography is critical for many low-carbon technologies

A in new jurisdictions or sub-sectors needs robust diligence, appropriate deal structuring and contractual protections. Allocate more time to scenario planning and contingent downside risk evaluation.

4 Jun 2024
No business is an island: low-carbon investment requires a full value chain

Sellers unable to credibly explain how key business inputs can reliably support the target business may struggle in transactions.

4 Jun 2024
Setting up businesses/projects to facilitate M&A and realise synergies in future is critical

Balancing the need for the right partners at the right time – providing construction expertise, IP, a route to market etc – with the need for shareholders to exit and recycle capital is often critical in a new business area.

4 Jun 2024
Sources of capital driving M&A activity (and their constraints) are changing

A positive ESG score cannot mask a poor credit prospect, but can positively affect deals with marginal economics and/or in a busy M&A deal market with constrained debt liquidity.

4 Jun 2024
Private capital trends are affecting energy transition M&A

Financial investors are discovering the difficulty of assessing and reporting on the (often varied) ESG characteristics and impact of their investments.

4 Jun 2024
Antitrust and FDI controls are influencing energy transition M&A

Getting M&A over the antitrust hurdle primarily requires demonstrating positive externalities (a climate benefit) that offsets harms to competition.

4 Jun 2024
Outlook for transition M&A

M&A is not the only mechanism by which the energy transition will be delivered, but has a far more important role than many appreciate. More conservative and organic change will likely not be enough.

Contacts
London
James ChapmanPartner
Singapore
Philip MorganPartner
London
Jake ReynoldsHead of Client Sustainability and Environment
Hamburg, London
Natascha DollPartner
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