Power & Energy M&A Update

Executive Summary

M&A activity in the Power & Energy sector continued to cool in early 2026, extending the broader normalization from the post‑pandemic peak. While overall transaction volume remained subdued, the market showed clear signs of capital concentration: buyers leaned into fewer, more strategic platforms and demonstrated a willingness to pay up for assets viewed as essential to generation reliability, grid buildout, and the infrastructure required to serve accelerating AI-driven power demand. Strategic acquirers remained the primary drivers of activity, with sponsors continuing to participate selectively where long-duration, cash‑flowing infrastructure characteristics and embedded growth were most evident.¹

“The Constellation–Calpine close signals what this market has become: a race for generation scale driven by AI power demand and grid reliability,” said Michael Rosendahl, Managing Director at PCE. “Volumes may be lower, but valuations are holding firm because the assets that matter—dispatchable generation, midstream infrastructure, and grid‑enabling platforms—are attracting aggressive bids from buyers who can’t afford to wait.”

Market Dynamics

Deal volume fell to 232 LTM transactions from 307 a year prior, continuing the sector's post-2022 normalization even as headline deal value surged on the back of landmark transactions. Both multiples expanded, with TEV/EBITDA rising to 11.65x and TEV/Revenue strengthening to 4.00x, reflecting intensifying competition for assets positioned at the intersection of dispatchable generation, data center power supply, and midstream infrastructure.¹

Buyer Landscape

Strategic Acquirers: Strategic buyers led the market with 81.5% of transactions, targeting assets tied to generation reliability, grid infrastructure, and long-term contracted revenue to secure critical capabilities.¹

Financial Buyers: Financial buyers represented 17.7% of deal volume, deploying capital across power generation platforms, midstream gathering systems, and grid component businesses. Sponsor activity reflected continued appetite for long-duration, cash-flowing infrastructure assets with embedded growth from energy transition and reliability investment.¹

Industry Comparison

Power and Utilities M&A continued to surge through Q1 2026, driven by structurally higher demand for energy from electrification and AI-related data center expansion, with Constellation Energy's $28.9B acquisition of Calpine closing in January to create a 55 GW fleet supplying approximately 10% of U.S. clean energy. This landmark transaction underscored the concentration of capital into fewer, larger deals tied to generation reliability and grid infrastructure as the sector undergoes a structural reset in how energy assets are valued and transacted.^{3 4}

Geographic Expansion

Top U.S. States: Deal activity was concentrated in Texas (52 deals), followed by California (14) and New York (11), with Texas maintaining its dominant position driven by natural gas infrastructure, midstream activity, and power generation investment.¹

Cross-Border Trends: International capital remained selectively active, with Ireland-headquartered Eaton Corporation's $9.5 billion acquisition of Bord's thermal business and Canada-based Computer Modelling Group's purchase of Rose & Associates highlighting continued foreign interest in U.S. power management and energy technology assets.¹ 

Notable Transactions

Largest Transactions Closed

Other Financial Buyer Transactions Closed

Other Strategic Buyer Transactions Closed

Emerging Trends

Key trends shaping Power and Energy M&A:

1. AI-Driven Power Demand Reshapes Deal Rationale
   The rapid expansion of AI and data center infrastructure is driving a step-change in demand for power that is reshaping investment priorities across the entire energy value chain, with scale, speed, and resilience defining M&A activity as buyers prioritize assets that can deliver near-term capacity and predictable cash flows.³
2. "All of the Above" Generation Strategy
   Policy shifts are recalibrating incentives away from renewables-only approaches, with LNG, nuclear, and local resilience strategies firmly in focus as investors double down on natural gas, nuclear, and battery storage assets that promise stable, dispatchable power to meet near-term demand.³
3. Battery Storage and SMR Positioning
   Battery storage has become a core M&A theme as solar penetration peaks in key markets and standalone batteries are now treated as a primary infrastructure asset, while several leading SMR designs have advanced through NRC review stages with hyperscalers and utilities expected to form anchor partnerships in 2026.²
4. Subsector Spotlight: Battery Storage & Firm Capacity
   As solar penetration peaks in markets like CAISO and ERCOT, storage value is shifting from ancillary services toward firm capacity and load-shifting, with standalone batteries now treated as a primary infrastructure asset driving dedicated M&A activity.²
5. Subsector Spotlight: Natural Gas & LNG Value Chain
   Renewed interest in natural gas and LNG is driving strategic acquisitions and midstream integration as buyers seek scalable, efficient, and reliable energy supply amid shifting geopolitical and market dynamics and surging AI-driven power demand.³

Outlook for Next Quarter

Opportunities: Continued data center expansion, electrification, and the push for an all-of-the-above generation strategy should sustain strategic demand for dispatchable generation, grid infrastructure, and firm power assets throughout 2026.^{2 3}

Risks: Execution constraints around interconnection queues, equipment lead times, and the pace of policy recalibration around generation incentives remain key risks that could pressure project timelines and deal returns.^{2 3}

Predicted Activity: Power and utilities M&A is expected to accelerate through 2026 as dealmakers continue prioritizing assets that deliver near-term capacity and predictable cash flows, with hyperscalers aggressively acquiring operating power-generation assets and funding behind-the-meter resources to meet AI-driven demand.^{2 3}

PCE Transactions

Served as advisor to Zak Incorporated on their acquisition by LAI International and RLJ Equity Partners

Served as advisor to E Energy Adams

Served as advisor to Crane Rental Corporation on their recapitalization by Hammond Kennedy Whitney

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