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Chess, Checkers and Stratego, games of consolidation

When you look at the industry there is a very interesting game being played. Is it chess or is it checkers, I think it is more like Stratego. It has been a few weeks since my last blog, not sure why but I am back and my mind has been busy at the game, the game of consolidation. In just the past week the amount of mergers and acquisitions as well as closures has been numerous in the energy industry as a whole. From the Duke deals and the firings to the small majority purchase of Premier Power in California the activity is creating a lot of chatter, good, bad, better, who owns who, crisis, great markets, more stock, less and then you add in the China markets now saying we are dumping on them and the European markets getting into the China fight. This is going to be fun to watch.

So the main question I want to promote here is this; consolidation god or bad? Here comes my opinion, good. In every industry there will be consolidation over time, the good survive the not so good get eaten and the bad fall by the way side, where ever that is. When an industry has a active merger and acquisition market I think I tends to make the marginal organizations look to become better for two reasons, one to get acquired and two to not get acquired. Case in point: a very recent organization got acquired although tier stock and purported valuation was down considerably over the last quarter.

Not that the afore mentioned acquisition was bad, far from it. I am somewhat familiar with the organization and I think over the past several years they have been a good solar developer and have made some good moves in the market place. The market has not been that great to mid-sized developers due to “China wars” and fiscal conservatives in the capital markets, I am being kind here if did not notice. So the good was that a company got some much needed cash and some stock holder help due the international company, Italy, can now bring insight and leadership to continue the struggle. The organization gets cash, people stay employed, international recognition increases and more projects can get done, good job for all.

Another one: company buy an Italian EPC for development projects they have underway, they also last year were purchased themselves by an Asian company and the game continues. So the company was a US based company then they went to china then they tried to come back then they were bought by a Chinese company while they were buying an Italian company, very interesting. So now when they do projects they will use former US panels, now made in China, for a US based company while utilizing and Italian based construction management and procurement organization. I am sure they will be doing projects in Greece just o make it interesting, we shall see.

Then there are the ones that went away, for now. When they go away where do all the players go? Maybe to a large room where they all stare at one another in disbelief as to their current predicament. Maybe not. Let’s see, GE is out, Abound is out, Schott is out, I am sure there are some Chinese companies out, and a few in other past of the world. Now these organizations had talent, technology intellectual property, tools, equipment and resources. All of these now get to flow to new or older organizations at modified investment levels, or cash, or valuations and this can be good for the market. When new “blood” enters from and organization that was at one time a mover and shaker they can bring new ideas and new excitement, mostly because they want a job and they want to succeed. And with this we can see new growth and better organizations, maybe.

So I guess what I am trying to convey is that this is a good place for us to be, as an industry. If we look at the long term, here in the country long term is one quarter, in most other places it is based on several years or decades, we can begin to see a settling of the good from the bad or not so good. We can see technology being produced and applied that help the consumer while growing the industry in the right direction. We will still see regulation and other fiscal tragedies along the way as well as organizations that create nothing but bad “vibes” in the industry as a whole, but the light at the end of the tunnel was created with energy and will continue as such, so let’s embrace the energy and the excitement as a good thing and then we can build an industry that is respected and vibrant for everyone benefit.

Go forth and discover new technology, new organizations, new team mates, new cash resources, new projects and new adventures. Then merger and acquire until your heart is content, we be here, on the porch watching the parade go by as we sip lemonade and nibble on cookies. Have fun, smile (they will not know what your up to) and enjoy the energy.