Engineering Inc. - May/June 2013 - (Page 48)

Mergers and Acquisitions BY M I C K M O R R I SS EY A N D N I C K B E L I TZ Canadian Firms Become Enticing M&A Targets P rior to 2007, more than three-quarters of all deals annually in Canada involved a Canadian buyer. That percentage dropped to just 61 percent in 2012 as nonCanadian firms scrambled to enter hot Canadian energy and natural resources markets. As of mid-April, international interest in Canadian engineering firms was trending higher, with four deals with Canadian sellers split between domestic and international acquirers. If your firm is interested in entering the Canadian market through acquisition, here are two things to keep in mind: 1) Energy and independence go together, just not the way you think. In our experience, many engineering firms that support the energy sector rely on contract or part-time staff. These individuals are often treated legally as separate businesses. Such arrangements give employers flexibility to staff up or down based on project needs. Contract workers meanwhile are 2013 REPORTED M&A ACTIVITY Firm Sales by State through May 1, 2013 WA MT an oil and gas company. Howand its subsidiaries from Firstever, the relative experience of a Group. First Support Services consulting engineering firm and provides facility operations its ability to generate revenue and and maintenance services, manage liability under an EPC logistics support, transportacontract must be thoroughly vettion support and telecommuted. Buyers seeking consulting nications operations services to engineering firms should carethe U.S. government, includfully consider the extent to which ing the U.S Air Force and the procure/construct phases of a U.S. Navy. project are a strategic necessity or • On March 25, ACEC memeven possible in the event of an ber MWH Global (Broomfield, acquisition. Colo.) announced its intent to With its ample natural purchase Outback Ecology resources and specialized engi(Perth, Australia), a 75-person neering practices, Canada will environmental consultancy continue to be a target for buyers associated with the natural inside and outside the country resources and mining industry looking to expand and complefor more than 20 years. ■ ment their engineering needs through 2013. o view the most up-to-date and “live” versions of the 2) Consulting engineers ACEC Deal Makers M&A heat maps accompanying who want to be an EPC. The ACEC Member Firms are this article, as well as the buyers engineer-procure-construct increasingly enhancing their and sellers in each state, go to (EPC) business model is attracbusinesses through mergers tive to many Canadian engineer- and acquisitions to better serve Mick Morrissey is managing prining firms supporting mineral clients, access new markets and cipal of Morrissey Goodale LLC, a extraction because an EPC plat- improve performance. Here are strategy, M&A and human capital form allows a firm to capture a just a few of the recent ACEC solutions firm serving the A/E/C greater portion of the value chain deal makers: industry. He can be reached at of a large capital investment by • On April 1, ACEC member and 850-person consultStates by Total Activity: US vs Int’l Sellers: Nick Belitz is principal consultant ing firm GAI Consultants Total US Sellers 65 21 or more Transactions of Morrissey Goodale’s Denver office 16 to 20 Transactions Transactions Int’l SellersTotal Int’l30 Total 16 to 20 Sellers 30 (Homestead, Pa.) finalized 11 to 15 Transactions Transactions 11 to 15 US Sellers to Int’l Firms US Sellers 6 Int’l Firms to 6 and can be reached at nbelitz@ 6 to 10 Transactions Transactions Sellers to US Firms 6 to 10 Int’l 6 US Firms its acquisition of 50-person Int’l Sellers to 6 1 to 5 Transactions Transactions 1 to 5 No Transactions Transactions No Crispell-Snyder, Inc. (Lake Geneva, Wis.), also an ACEC member. The acqui- Watch the M&A Takeaway video that accompanies sition will enhance GAI’s local government, transpor- this article, presented by Mick Morrissey, at tation, real estate and energy www.morrisseygoodale. market capabilities in the com/ACECMergers/ Midwest, while expanding the firm’s geographic presence and MayJune2013 resources in Wisconsin. • On March 8, ACEC member and industry leader Parsons (Pasadena, Calif.) announced its acquisition of First Support Services, Inc. (Dallas) T ME ND 1 able to hedge the risk associated with a single employer or project while better managing annual income taxes. This scenario often presents challenges for an acquirer, as a long-time contractor likely maintains extensive client relationships and the buyer has little certainty the contractors will remain post-transaction. Owners of a selling organization heavily dependent on contract staff may have effectively inflated their profitability by being spared the expenses of payroll and other costs associated with regular employees. Acquisitions of contractor-dependent firms are possible but require greater due diligence and acceptance of additional risk by the buyer. 4 VT MN OR 3 WY 2 WI SD ID NY MI 1 5 NV 1 IL IN OH 3 1 CO CA WV KY 2 OK 2 6 TN 1 SC AR NM 1 MS 5 TX AK 3 AL GA 3 LA 5 FL © Morrissey Goodale LLC 2013 All Rights Reserved 1 48 ENGINEERING INC. NJ 1 MD DE 1 DE DC MD 1 VA MO KS AZ PA 2 3 5 UT HI MAY / JUNE 2013 MA 4 IA NE 1 NH CT RI NC 1

Table of Contents for the Digital Edition of Engineering Inc. - May/June 2013

Engineering Inc. - May/June 2013
From ACEC to You
Market Watch
Legislative Action
2013 Engineering Excellence Awards
Annual Convention Wrap-Up
Mobile Power
Guest Column
Business Insights
Members in the News
Mergers & Acquisitions

Engineering Inc. - May/June 2013