Executive summary
M&A activity in the energy industry is rebounding from its slowdown in 2025, and targets continue to evolve. What’s holding value and how can you prepare?
Buyers have moved from renewables to assets that deliver predictable cash flows and faster returns in traditional energy sectors. Interest is particularly focused on midstream infrastructure, storage and power for the digital demands tied to AI. At the same time, buyers need to navigate regulatory uncertainty and the competition for high-quality assets. Success will depend on innovative targeting, thoughtful diversification, and strong post-deal integration to build resilience amid ongoing market shifts.
More deals
Mergers and acquisitions are going to start flowing again in the energy industry. However, some of the factors fueling the deals have changed.
“M&A activity in energy was really high in 2024. It slowed in 2025, but I think M&A will pick up in 2026 — we’re already seeing that,” said Grant Thornton Head of the Energy Industry Tyler Jones.
As the deal flow returns, it’s finding new targets. “In the post‑COVID-19 era of 2022 to 2023, there was a huge focus on renewables, decarbonization and ESG,” said Grant Thornton Transaction Advisory Services Partner Philip Christy. “That shifted once we realized that the path to net zero wasn’t going to be as fast as expected. Traditional sources are going to continue to fund the energy balance — not that renewables are off the table, but the near-term role is smaller than in recent years.”
With the slower push for renewables, M&A buyers have focused on acquisitions with more immediate value. “Renewables are more capital‑intensive and take much longer to deliver returns,” Christy said. “Traditional energy investments — midstream, upstream and services — have quicker and more predictable ROI.” He noted that big companies used their capital to snap up these targets. “We saw multi‑billion‑dollar deals in late 2024 and early 2025 from the traditional players.”
Jones added, “There was a wave of acquisitions, and people expected asset sell‑offs in 2025 — but that didn’t happen, because buyers didn’t take on heavy debt. So, there was no pressure to sell assets to pay down debt.”
Now, many of the best assets have already been acquired. “The crux of the issue is that, for production companies, there’s limited inventory — it’s a finite resource, so there’s competition for that resource.”
More diversification
With close competition among buyers, companies need to prioritize their targets. What’s most important?
“Midstream assets, like pipelines and gathering systems, continue to provide long‑term, predictable cash flows, and will remain a top priority,” Christy said. Jones added, “Stable, predictable cash flows are still the primary litmus test for a good acquisition target, along with the assumed balance sheet health.”
“Companies are looking for stability and reduced volatility,” Christy said. “There’s renewed focus on consolidation and de‑risking across basins, with past practices being revisited more frequently. Companies want to make sure their asset mix is of the right proportions to perform in most cycles, so they’re really diversifying their assets to weather storms.”
One potential diversification is in storage beyond production. “Energy storage is at the top of everyone’s mind,” Christy said. “Advancements in battery storage will go a long way toward protecting against price volatility.”
Jones added, “Storage has been a priority for the last 10 to 15 years as renewable energy ramped up. The challenge with renewables is that we don’t have a reliable storage mechanism, so battery storage has been top of mind. We’re finally starting to see real scale in battery storage.” Even with the decreased emphasis on renewables, both storage and infrastructure assets can help companies build value that endures market shifts.
“The deal fundamentals haven’t changed, but the emphasis has shifted,” Jones said, noting that the energy infrastructure to support data centers is another emerging priority. “There’s a first‑mover advantage in digital infrastructure.”
Digital infrastructure
“AI demand is becoming a larger portion of electricity consumption needs,” Christy said.
This is a stacked area chart showing sources of global electricity generation for data centers from 2020 to 2035 in a base case scenario. Total electricity demand rises steadily across the period. Natural gas and coal contribute a large share early on, while nuclear remains relatively stable. Solar PV and wind grow over time to become a larger portion of the total by 2035 and other renewables also increase, showing a shift toward cleaner electricity sources alongside continued use of fossil fuels.
“With increased demand from AI data centers, there’s now more focus on dispatchable energy sources: power plants that can turn on and off quickly to meet those near‑term demands,” Christy said.
“You have modular reactors — small but capable electricity‑producing assets that are seeing a resurgence and getting a lot of support from the Department of Energy,” Jones said. “Battery storage is another area,” he added, noting that the battery development originally fueled by the renewable energy push is now seeing demand from data centers.
Buyers may find it easier to secure funding for M&A tied to digital infrastructure.
While tariffs slowed M&A for some industries in 2025, analysts expect a return this year. “You’re seeing significant investment from private equity, in digital infrastructure and everything that supports data center development,” Jones said. “That’s definitely a theme I've seen over the last six to nine months, and I think that will continue through 2026.”
“It’s about finding the resources that can sustain that demand from data centers,” Christy said. As companies seek to support these evolving energy demands, they also need to watch evolving regulations.
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More change
“Regulatory uncertainty is a challenge that energy companies are struggling to navigate,” Jones said.
“We’re a year into a new administration with a very different energy policy, and companies are trying to manage the risk created by policy shifts,” Christy said. “I think that is giving companies some pause about what the next 12 to 24 months will bring in terms of commodity pricing,” Jones said. For instance, if there is increased investment in Venezuelan oil reserves, “that increased production could put downward pressure on prices.
Companies are reluctant to make big deals when valuation is uncertain,” Jones said. He added that deal terms can include earn-outs that are less performance-driven, instead tied to market pricing data points to help compensate for some of this uncertainty.
Buyers that want to build stability can diversify their targets, but they must stick to key rules for success before and after the deal.
“When you undertake a significant acquisition, whether it’s $500 million or $5 billion, it’s important that you know how to make the integration successful,” Jones said. “It’s important to capitalize on the synergies that you were hoping to achieve, and all of that falls under resilience.”
Contacts:
Managing Director,
Transaction Advisory Services
Grant Thornton Advisors LLC
Philip is a Managing Director in our Transaction Advisory practice.
Houston, Texas
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