Engineering Inc - May/June 2017 - 66

MERGERSANDACQUISITIONS

Private Equity: Steadily
Transforming the Industry
BY MICK MORRISSEY

t's no surprise we are seeing more and more interest in this
industry from private equity (PE).
At the end of 2016, the PE industry had a record $2.49
trillion in assets, and 319 new firms launched in 2016 alone.
According to The Boston Consulting Group, innovators of the
Growth-Share Matrix, Experience Curve and Advantage Matrix,
PE now has nearly $900 billion in dry powder; and global savings
from pension, mutual and sovereign funds. Additionally, capital
from other financial institutions and insurance firms will likely
continue to flow in. PE firms are outperforming public equities,
fixed income and real estate.
The PE investments that tend to get all of the attention and
turn the most heads are those that involve the brand names in
Engineering News Record's Top 500 such as:
* In March 2017, publicly traded industry leader and ACEC
member TRC Cos. (Lowell, Mass.) entered into a definitive
agreement with New Mountain Capital (New York) to
become a private firm.
* In 2015, employee-owned global engineering and infrastructure player and ACEC member CH2M (Englewood, Colo.)
secured a $300 million investment from Apollo Global
Management, LLC (New York).
* Also in 2015, Bernhard Capital Partners (Baton Rouge,
La.) led the group that acquired 1,350-employee environmental
consulting, industrial hygiene and geotechnical engineering firm
ATC Associates (Lafayette, La.) from Australia's publicly
traded Cardno, an ACEC member. Bernhard Capital Partners
has since gone on to make many more investments in environmental, energy and engineering firms.
* In 2013, DC Capital Partners (Alexandria, Va.) acquired
publicly traded and ACEC member Michael Baker Corp.
(Pittsburgh) through its affiliate Integrated Mission
Solutions and rebranded the firm as Michael Baker
International.
But PE is also busy playing an increased role in recapitalizing
smaller engineering firms, with some recent examples including:
* Earlier this year, Bow River Capital Partners (Denver)
along with co-investors, acquired controlling ownership interests
in the 300-person engineering, project, program and construction management firm RailPros (Irvine, Calif.).
* In January 2016, Keystone Capital (Chicago) announced its
investment in and partnership with a 140-employee, construction management, professional engineering and construction
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MAY / JUNE 2017

inspection firm Target Engineering Group (Coral Gables,
Fla.). Keystone Capital is also active in the architectural space
with its 2015 investment in and partnership with designer
MorrisSwitzer Environments for Health (Williston,
Vt.) and its rebranding of subsequent acquisitions as
Environments for Health Architecture (E4H).
* Also in 2016, Yenni Capital (New York) acquired MEP design
firm Steven Feller P.E., LLC (Fort Lauderdale, Fla.).
We see more and more PE firms looking to either enter our
industry for the first time or grow their current position in the
industry. There are two primary drivers:
* First, PE recognizes that many firms in our industry are
underperforming brands. Their existing employee ownership
capital models and management teams are unable to generate
sustainable high performance. PE is able to step into those
situations and align capitalization, leadership and management to generate greater returns.
* Second, in an industry where employees are increasingly either
unwilling or unable to make the capital investments required
to internally transition ownership from one generation to the
next, PE provides a viable alternative to continuity of the firm.
RECENT ACEC DEAL-MAKERS
MARCH

ACEC member COWI (Lyngby, Denmark) acquired Projektbryan (Stockholm), a company specializing in project management services. The acquisition strengthens COWI's competencies
in management of large, complex urbanization projects and adds
100 employees to COWI's growing presence in Stockholm.
ACEC member EnSafe, Inc. (Memphis, Tenn.), a global provider of environmental, engineering, health and safety and technology services, acquired the Environmental Services Practice
of E2 ManageTech (Long Beach, Calif.). The acquisition allows
EnSafe to provide localized expertise in Southern California and
South Texas.
Structural and civil engineering firm JQ (Dallas) acquired
ACEC member Baldauf Herrin & Associates, Inc. (BHA)
(Dallas), a structural engineering firm. The acquisition of BHA,
whose clients are concentrated in federal and corporate markets,
supports JQ's strategic growth efforts in those markets.
International engineering, architecture, planning and construction firm Pond & Co. (Norcross, Ga.) acquired Landmark
Engineering (Jacksonville, Fla.), a firm specializing in highway

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