Engineering Inc. - January/February 2015 - (Page 44)

Mergers and Acquisitions By N E i l C h u r m A N 2014 Recap: Mega Deals, Mega Big-Firm Growth L lion. The industry has grown as a whole, particularly as the U.S. economy climbed out of the recession, but the largest firms continue to gain market share through deal-making. A number of factors appear to be driving mega-consolidation. With a bull market prevailing and share prices rising, many of the publicly traded firms saw 2014 as an ideal time to make plays for future growth. CEOs pursued ambitious growth plans, launching into new markets and betting on growth for the years ahead. Access to capital at attractive borrowing rates has helped facilitate large deals, with credit markets more closely resembling the boom years leading up to the financial crisis than the recession that followed. The large-scale deal-making is a reflection of broader optimism for the industry as a whole, with firms eyeing opportunities to capitalize on continued positive economic growth. It remains to be seen how 2014's major consolidation will impact the competitive environment, but firms will need to be nimble to navigate the evolving ast year was a remarkable year for industry mergers and acquisitions. The number of deals and the scale of deal-making among some of the industry's largest players was astounding. WSP Global acquired 13,500-person Parsons Brinckerhoff. Conestoga-Rovers & Associations merged with GHD Group to create a nearly 9,000-person firm. ARCADIS struck several large deals, including the acquisitions of 1,000-person Callison and 4,600-person Hyder Consulting. AMEC agreed to acquire 14,000-person Foster Wheeler. The list goes on and on. Perhaps the biggest shift to the industry landscape was driven by AECOM. The global engineering design firm acquired URS, creating a firm with more than 95,000 employees in 150 countries worldwide. Growth among the industry's largest firms has been staggering. In 2004 the combined design revenues of the Top 20 ENR design firms was $22 billion. In 2013 those same combined revenues reached nearly $53 bil- 2014 REPORTED M&A ACTIVITY ACTIVITY 2014 REPORTED M&A ACTIVITY 2014 REPORTED M&A 2014 REPORTED M&A ACTIVITY Firm Sales by State through December 1, 2014 Firm Sales Firm Sales by State December 1, 2014 1, 2014 by State through December 1, 2014 Firm Sales by State through through December 9 9 9 WA MT MT MT 1 1 1 OR OR OR OR ID ID ID 1 NV NV NV 21 CA CA CA 3 3 3 AK AK 2 AK CO AK HI HI HI ENGINEERING INC. 2 24 TX 1 1 1 LA 3 2 2 2 WI MIMI 33 3 NY NY NY MS MS MS LALA AR 3 3 3 AL ALAL 2 2 2 GA GA GA MS SC SC SC jaNuaRy / fEbRuaRy 2015 SC 3 2 AL GA 8 8 8 FL FLFL © Morrissey Goodale LLC 2014 © © Morrissey Goodale LLC 2014 Morrissey Goodale LLC 2014 All Rights Reserved © All All Rights Reserved Rights Reserved Morrissey Goodale LLC 2014 All Rights Reserved HI Mirmiran & Thompson (JMT) (Sparks, Md.). JMT also announced that the engineering design and bridge inspection divisions of ACEC Member Barr & Prevost (Columbus, Ohio) joined the firm. ACEC Members Jacobs Associates (San Francisco) and McMillen (Boise, Idaho). ACEC Member Huff & Huff (Oak Brook, Ill.) joined ACEC Member GZA GeoEnvironmental (Norwood, Mass.). Kane and Johnson Architects (Rochester, Minn.) merged with ACEC Member Widseth Smith Nolting (Crookston, Minn.). T o view the most up-to-date and "live" versions of the M&A heat maps accompanying this article and see who are the buyers and sellers in each state, go to Watch the M&A Takeaway video that accompanies this article, presented by Mick Morrissey, at www.morrisseygoodale. com/ACECMergers/ JanFeb2015. 8 MI 1 LA (Towson, Md.) merged with ACEC Member Johnson, ME VT 1 NH October OK AR AR AR NM TX TXTX 2 1 OK OK OK 1 24 24 24 2 2 MOMO MO KS 1 11 13 1 1 NM NM AZ NM 2 44 4 4 4 KS KSKS VTVT 1 VT 11 NH NH NH 8 8 3 8 MA MA MA MA CT RI CT RI CT RI NY CT RI 111 66 1 6 6 555 PAPA PA 5 NJ NJ NJ PA IA 44 NJ 4 MD 4 MD 5 5 1 1 MD 5 1 MD 5 OH 1 DE DE DE OH DC OH DE 11 DC MD OH DC MD 1 IL IL IL DC IN IN IN 1 MD MD IL IN 77 444 7 WV WV 4 7 4 WV WV 11 1 VA VA 1 VA VA MO KY KYKY KY 8 8 NC 8 NC NC 1 TN 8 1 1 TN NC TN 1 TN WI WI WI IA IA IA NE 7 CO CO CO AZAZ AZ 3 3 MN 3 SD NE NE NE 7 7 7 UT UTUT UT NV American Engineering (Charlotte, N.C.) acquired ACEC Member Engineering Services, Inc. (Virginia Beach). ACEC Member GEI Consultants (Woburn, Mass.) acquired H2A Environmental (Keller, Texas). ACEC Member Neel-Schaffer (Jackson, Miss.) joined forces with ACEC Member Almon Associates (Tuscaloosa, Ala.). ACEC Member WSP (Montreal, Canada) acquired ccrd States by Total Activity: Total Activity: Int'l Sellers: US vsvs States by Total Activity: US Int'l Sellers:vs States by US States by Total Activity: US vs Int'l Sellers: Int'l Sellers: (Houston). ACEC Member Pennoni Associates (Philadelphia) acquired ACEC Member Envisors, (Winter Haven, Fla.). ACEC Member EnSafe (Memphis, Tenn.) acquired EnviroSense (Londonderry, N.H.). 6 WY 4 CA 2 2 SDSD SD ID WY WY WY November ACEC Member Alfred Benesch & Company (Chicago) merged with Site Solutions, Inc. (Charlotte, N.C.). ME ME ME 6 66 ND MNMN MN 4 4 4 21 21 21 MT ND ND ND Recent ACEC Deal-Makers Total US Sellers 21 or or more Transactions Total US 184 21 more Transactions more Transactions Sellers Total 184 US Sellers 184 21 or Total US Sellers 184 21 or more Transactions 16 to to 20 Transactions Total Int'l Sellers 103 16 20 Transactions to 20 TransactionsInt'l Sellers Total 103 16 16 to 20 Transactions 103 Total Int'l Sellers Total Int'l Sellers 103 11 to to 15 Transactions Transactions 11 1515 Transactions 15 Transactions to to Int'l Firms 24 US Sellers Int'l Firms US Sellers 24 11 to 11 to US Sellers US Sellers to Int'l Firms 24 to Int'l Firms 24 6 to to 10 Transactions Transactions 6 1010 Transactions 10 TransactionsSellers to US Firms 16 Int'l Sellers to US Firms 6 to 6 to Int'l 16 Int'l Sellers Int'l Sellers to US Firms 16 to US Firms 16 1 to to Transactions 1 5 5 Transactions 5 Transactions 1 to 5 Transactionsto 1 No Transactions No Transactions No Transactions No Transactions 9 WA WAWA marketplace. As clients look for more integrated project solutions, they'll need to adapt. As profit margins continue to be squeezed in the design industry, many firms will aim to get bigger and add volume, while others may look to get more specialized. Regardless of the shifting dynamics of the industry, the rapid pace of deal-making is likely to continue, as long as the broader economy continues to improve. 8 FL The Burns Group (Philadel- phia) acquired ACEC Member Orth-Rodgers & Associates, Inc. (ORA) (Newtown Square, Pa.). Rubeling & Associates Neil Churman is principal consultant of Morrissey Goodale LLC - a strategy, M&A and human capital solutions firm serving the A/E/C industry. Churman, who is based in the firm's Houston, Texas, office, can be reached at nchurman@morrisseygoodale. com.

Table of Contents for the Digital Edition of Engineering Inc. - January/February 2015

Engineering Inc. - January/February 2015
From Acec to You
Legislative Action
Market Watch
The Business Case for Diversity
Closing the Gender Gap
Market Stability Keeping Pli Prices Low
2015 Legislative Scorecard
Made to Market
2014 Fall Conference Highlights
2015 Annual Convention Preview
Risk Management
Business Insights
Members in the News
Mergers and Acquisitions

Engineering Inc. - January/February 2015