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Stagnating revenues prompt a diversified conglomerate to seek new growth in the solar photovoltaic industry

Despite the current oversupply, the solar PV market could offer attractive opportunities to entrants that move fast.


A global conglomerate with a portfolio spanning manufacturing, construction, and finance had suffered a decade of sluggish revenue growth and slipped back in national business rankings. Aware that it needed to find a new platform for growth, it had identified the solar photovoltaic industry as a promising option.

The company asked McKinsey to help it understand the medium- to long-term outlook for the industry, assess the feasibility and attractiveness of opportunities in the value chain, and develop a strategy for entry and growth.


To understand the prospects for solar PV, we used a scenario-based approach to explore when the current oversupply might end, how the average selling price might evolve over two to three years, and how the industry might develop over the longer term.

Our analysis indicated that although the market was immature and subject to uncertainty, attractive business opportunities did exist. Because incumbents had not been in place for long, new entrants with the right background had a chance to become credible challengers. However, entry barriers were beginning to rise and delay would make it harder to secure a foothold and build a successful business. Our longer-term projections suggested that the market would eventually be dominated by a few global players capable of commanding huge economies of scale.

In the light of these findings, we worked with the client to explore specific opportunities within the solar PV value chain, identifying the capabilities they would require and analyzing any gaps that needed to be filled. By bringing these key requirements for success together with the perspectives on industry evolution, we helped the client develop a strategy for entering the market and pursuing growth. Given the need to move swiftly and access specialist capabilities, M&A emerged as the most effective entry strategy.


Once the client had decided on its entry strategy, we worked with it for three months to identify, screen, and assess potential M&A targets in the solar industry. Two promising candidates were selected and we helped the client with due diligence, negotiation, valuation, and deal structuring.

After a further three months, the client was able to announce its impending purchase of a major stake in a leading global PV manufacturer with a highly competitive cost structure and ambitious expansion plans. To ensure that the complex acquisition deal was successful and captured the expected value, we continued to support the client in planning and executing post-acquisition management. In the months after the deal was announced, the share price of the division responsible for the acquisition rose by 40 percent.