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Opinion: Mergers and acquisitions ready for a rebound

By Xavier Staggs, director of Fuel Counter Holdings Corp.

Deals are afoot, and West Virginia is poised to take advantage.

Buoyed by a late upswing last year, mergers and acquisitions are expected to surge this year following their 16% slide in activity from a record-shattering $3.1 trillion in 2022 amid the post-pandemic recovery. 

Fueled by companies in the chase for advances in technology and artificial intelligence, stocks on the Standard & Poor’s 500 rocketed up 24% last year. The contrast combined with regulatory uncertainty and macroeconomic and geopolitical shifts prompted analysts at McKinsey & Company to repeat a question uttered at a recent conference: “Is M&A dead?” 

Their response to the rhetorical query resounded: “Our answer is: certainly not.” Writing in a Feb. 20 report for the New York-based consulting giant, the analysts reported that many industry leaders had projected that “opportunities would open up precipitously” this year.

In West Virginia, expect an intriguing mix of strategic consolidations and expansions across various sectors, reflecting broader national trends while also showcasing unique regional dynamics.

Already, the energy and utilities sector has been crackling with activity. In December, Hope Gas notched its third acquisition of 2023, landing Southern Public Service Co. after adding 1,300 miles of pipelines from Equitrans and Peoples Gas WV earlier in the year. Following the Southern deal, Hope owned more than 7,000 miles of natural gas lines. In addition, West Virginia American Water has proposed acquisitions of wastewater plants from the City of Nitro and the Union and Sissonville public service districts.

These moves underscore ongoing consolidation in the utilities sector driven by the need for operational efficiencies and expansion of service territories. Further, the renewable and clean energy sector is expected to see significant activity as companies transition to more sustainable practices.

The healthcare sector in West Virginia, meanwhile, is witnessing transformative consolidation. Last summer, WVU Medicine Camden Clark finalized a deal to acquire Ohio Valley Health Care. That followed South Charleston-based Thomas Health joining West Virginia University Health System in late 2022. 

Last spring, Marshall Health, Marshall University and Mountain Health Network announced plans to form an integrated health system, later resulting in the formation of the Marshall Health Network. This new academic health system aims to improve access to healthcare and expand research, setting a precedent for similar consolidations in the healthcare and academic sectors.

Other sectors in the state offer fertile ground for opportunity. Technology is bound to continue its dynamic run, bolstered by companies offering innovative solutions or operating in high-growth areas such as e-commerce, cybersecurity and cloud services.

Financial services in the Mid-Atlantic saw a sag in transactions last year compared to the year before, but Federal Reserve Chairman Jerome Powell’s recent talk of interest rate cuts sometime in 2024 is helping ease inflation concerns and could open the way to more merger and acquisition activity.

Across a wide number of fronts, the outlook is brightening. West Virginia is likely to follow global trends toward consolidation, technological advancement and strategic growth, especially in energy, utilities and health care. Climb aboard, buckle up and enjoy the ride.

Xavier Staggs co-founded and is the director of Fuel Counter Holdings Corp. He is a consultant to numerous businesses and is engaged in charitable work throughout West Virginia and the Tri-State region.

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