Power and energy companies are operating in one of the most active and dynamic environments for mergers and acquisitions (M&A) I’ve seen in my entire career. Converging structural forces are driving a hunger for strong energy assets like never before, with demand from strategic buyers and private equity firms that feels like it could continue to grow and stay at a high level for some time.
Four major trends are fueling this surge in acquisition activity: the AI-driven data center buildout, aging U.S. electrical grid infrastructure, the reshoring of heavy manufacturing to U.S. locations, and the rapid growth of distributed energy and storage solutions.
The increase in buyer demand is leading many business owners in the power and energy space to think about how to take advantage, including owners who weren’t previously considering a sale. Keep reading as we break down each trend, explore what buyers are specifically looking for, and outline practical steps you can take today to make your business a more compelling acquisition target.
Data center demand
The AI infrastructure buildout is driving huge amounts of electricity consumption, with data centers accounting for 4.4% of U.S. electricity in 2023 and some sources projecting three times that by 2028. Operators are vying to secure reliable, high-capacity energy supplies to power these facilities.
If you own a business that directly supplies or makes equipment for power generation, backup systems, cooling, transmission interconnection, or grid-edge services, then you could generate serious buyer competition. Investors are actively seeking companies with these capabilities, and we’re seeing high valuations in the deals getting done.
What you can do now:
If you have data center exposure, document it carefully (e.g., customers, concentration, project pipeline, contracted backlog, and growth opportunities). If you’re not yet working in data centers, highlight where you’re working in adjacent mission-critical applications such as healthcare, industrial automation, utilities, or telecom. These might translate credibly into data center use cases with a pipeline of opportunities as support.
Aging electrical infrastructure
The U.S. electrical grid has millions of miles of transmission and distribution infrastructure, much of it past its expected design life. This has created replacement and upgrading incentives, with federal and state money helping speed municipal spending.
Contractors, equipment suppliers, and service providers need to fill critical gaps, and lead times for critical components are growing amid supply chain disruptions and a shortage of skilled line worker labor. We’re seeing buyers pay premiums for businesses with utility-qualified product lines and trained workforces.
What you can do now:
Pursue contracts across a diversified base of grid operators, investor-owned utilities, municipal utilities, cooperatives, and regions. If you already serve utilities and co-ops, document the durability of those relationships with pre-qualification status, master service agreements, and framework contracts. A track record of public-sector or regulated-utility work signals stable cash flows and can de-risk the business in a buyer’s eyes.
Onshoring of manufacturing and heavy industry
Economic policies and supply chain concerns have incentivized reshoring certain industries and types of work to the U.S., with manufacturing construction spending reaching an annual peak of over $230 billion in 2024. Facilities making batteries, EVs, solar energy components, semiconductors, and biotechnology are adding power-intensive industrial loads to the grid across the country, with the downstream effect of generating demand for new substations, switchgear, electrical contracting, and specialty power services.
Companies positioned near high-growth industrial corridors or with demonstrated experience serving heavy industrial customers are attracting significant buyer attention.
What you can do now:
Develop and document a pipeline of projects with established or expanding industrial manufacturers in your region. Document work using named accounts, awarded scope, contracted backlog, served plant locations, and the pipeline of follow-on opportunities. These relationships demonstrate to acquirers that your business is capturing the onshoring wave.
Storage and distributed energy
The drive for more electricity has coincided with demand for reliable and economical solutions like storage, microgrids, distributed energy resource management, and behind-the-meter generation from sources like solar. For example, hospitals and data centers favor microgrids for their resilience, and industrial customers want on-site generation due to demand charges and reliability.
Middle market companies that install, service, or integrate distributed generation assets are attractive to buyers ranging from private equity to strategics (such as larger power and energy companies seeking to expand their geographic reach or capabilities).
What you can do now:
Evaluating whether to build or acquire a renewable, storage, or microgrid service line—and executing on that decision well before a process—is one of the highest-leverage moves in this market, but it isn’t right for every business. Bolting a sub-scale renewable line onto a traditional electrical platform can dilute focus rather than build value. Keep in mind that buyers have been paying for optionality and the ability to offer customers a more complete energy solution with a reliable focus, so it’s a conversation worth having.
Understanding what your company is worth, and to whom
In power and energy today, strategic buyers are paying premium multiples for capability and capacity, while financial buyers like private equity remain active in services, specialty distribution, and specialty manufacturing.
Valuation multiples in power and energy M&A are resilient, but they’re sensitive to risks such as customer concentration that also plague other sectors. Even though buyer competition is fierce, the companies achieving the best outcomes are those that have cleaned up their financials, diversified their customer bases, gained exposure to end markets with durable demand drivers, and aligned their growth story with the trends exciting buyers the most.
Engaging an investment bank or other M&A advisor during your preparation period is a great way to get value-building advice that can make a sale even more successful. If you’re considering a transaction on any time horizon, we’d love to help—reach out today to set a time to meet with me or a member of our team.
AUTHORED BY:
Alex Woolford
Director | Class VI Securities, LLC
Alex Woolford is a Director at Class VI Partners. Over the years, he has helped entrepreneurs secure over $500 million in capital in the Power & Energy vertical, closing deals in such subcategories as electrical equipment manufacturers, power generation and grid infrastructure, data center-focused distributors, and specialty electrical contractors.