Substantial interest rate hikes, historic inflation levels, and stock market fluctuations are combining to produce headwinds for the overall U.S. economy. It has been smooth sailing, though, for the engineering industry, which has yet to experience a downturn or pullback in spending. ACEC deal-makers remain cautiously optimistic and continue to pursue acquisitions as a growth strategy, as evidenced by the transactions detailed below that involved member firms.
While final numbers for 2022 are still coming in as of this writing, Morrissey Goodale expects transactions involving A/E and environmental firms in the U.S. to reach a record-high figure and exceed 500 deals. That total would surpass the previous high of 427 deals in 2021. With the percentage of mergers and acquisitions made across state lines in 2022 hovering near the prior year’s record of 68 percent, industry firms clearly feel confident in the market fundamentals to pursue geographic expansion.
Here are some highlights of the recent deals by ACEC members:
Despite the broader economic challenges, we anticipate that the record level of industry consolidation will continue, given that most engineering firm deals are smaller in scale (less than $100 million in enterprise value), relative to M&A in the economy at large, and less dependent on heavy amounts of leverage to close.
In addition, the persistently tight labor market for engineering professionals continues to drive the viability of the “acqui-hire” model of talent acquisition, at least among the industry’s biggest players. Since the start of 2021, publicly traded A/E industry acquirers have bought twice as many firms with 25 or fewer employees as they have firms of 100 employees or more.
Morrissey Goodale projects that industry acquisitions will rise to 550 deals in 2023—and eventually peak at 650 in 2026—as the drivers of consolidation remain strong. The Infrastructure Investment and Jobs Act (IIJA), maturation of the engineering industry, and interest from private equity firms will continue to drive demand. On the supply side, a post-pandemic retirement boom among engineering firm leaders and owners, as well as deal valuations remaining at or near record highs, are bringing plenty of sellers into the market.
Which types of firms will be the most likely acquisition targets in the coming year? Morrissey Goodale surveyed 70 of the industry’s most active buyers to get a read on their priorities for 2023 and found that firms that provide transportation services are most in demand, followed by water and wastewater service providers. Ranking third is environmental services, followed in order by MEP, geospatial/surveying, and architecture. It’s clear that buyers will be following the money to those markets expected to receive massive public sector spending infusions from the IIJA—and sellers of firms working in those markets may be the ones to cash in.
Following is a list of recent transactions, with ACEC members highlighted in bold.
Leading Southeast consulting, planning, and engineering design services firm Thomas & Hutton (Savannah, Ga.) acquired Coulter Jewell Thames (Durham, N.C.), a consulting, engineering, land planning, landscape architecture, surveying, and construction administration services firm.
Pioneering AEG and strategic consulting firm Woolpert (Dayton, Ohio) (ENR #51) acquired Sheehan Nagle Hartray Architects (Chicago) (ENR #395), a full-service architecture firm that specializes in mission-critical and technically challenging projects.
Civil engineering, surveying, planning, and environmental firm Sambatek (Minnetonka, Minn.) acquired Commercial Site Design (Raleigh, N.C.), a civil engineering and land surveying firm with a special emphasis on projects for quick-serve restaurants, fast-casual diners, and retail stores.
MOREgroup (Fort Worth, Texas), the new holding company brand for the family of companies formerly known as Huckabee Architects (Fort Worth, Texas) (ENR #212), acquired consulting, planning, and facility design firm E4H Environments for Health Architecture (Boston) (ENR #282).
Horticulture engineering and design firm urban-gro (Lafayette, Colo.) signed a binding letter of intent to acquire Dawson Van Orden (Houston), an MEP and fire protection engineering firm.
GAI Consultants (Homestead, Pa.) (ENR #145) and Comvest Partners (West Palm Beach, Fla.) have entered into an agreement for Comvest to make a strategic private equity investment in GAI. GAI will remain a stand-alone business within Comvest’s portfolio.
Innovative, full-service engineering consulting and CM firm CHA Consulting (Albany, N.Y.) (ENR #61) acquired Frazier Engineering (Charlotte, N.C.), a civil engineering firm focused on sanitary sewer system assessments, design, and rehabilitation.
Transportation consulting firm TranSystems (Kansas City, Mo.) (ENR #77) acquired Overland, Pacific & Cutler (Long Beach, Calif.), a firm that offers right-of-way and related services for vital infrastructure projects.
Architecture, interior design, and planning firm L2P (Philadelphia) is joining ENR’s #12 ranked global design firm, Stantec (Edmonton, Canada). The acquisition will bolster Stantec’s science and technology and commercial workplace offerings in greater Philadelphia and beyond.
Fast-growing design, consulting, and PM/CM firm DCCM (Houston) (ENR #174) acquired Matthews Design Group (St. Augustine, Fla.), a full-service civil engineering, roadway design, land development, landscape architecture, and consulting firm serving public and private clients throughout the Southeast.
TRC Companies (Windsor, Conn.) (ENR #17) expanded its technology solutions with the acquisition of MagikMinds (Warrenville, Ill.), a firm that offers geospatial information systems (GIS) consulting and implementation services to the utilities and telecom industries.
Structural engineering firm Shigemura, Lau, Sakanashi, Higuchi and Associates (Honolulu, Hawaii) executed a letter of intent to join Coffman Engineers (Seattle) (ENR #157).
Engineering, architectural, and planning services firm CT Consultants (Mentor, Ohio) merged with Henry T. Welka and Associates (Erie, Pa.), a land surveying, civil engineering, and land planning services firm.
Employee-owned engineering, environmental, and surveying consulting firm Haley Ward (Bangor, Maine) acquired The MilCor Group (Hobe Sound, Fla.), a civil-site, roadway, stormwater, utilities, agricultural engineering, construction inspection, and PM services firm.
ENR’s #8 ranked global design firm, Arcadis (Amsterdam, the Netherlands), entered into an agreement to acquire ENR’s #103 ranked global design firm, DPS Group (Cork, Ireland).
Multidisciplinary consulting firm Pennoni (Philadelphia) (ENR #95) purchased certain assets of Hygenix (Stamford, Conn.), an environmental consulting, testing, and laboratory services firm.
HG Design Studio (Richmond, Va.), a land planning and landscape architectural consulting business, joined forces with VHB (Watertown, Mass.) (ENR #62).
Pangolin Structural (Phoenix), a structural engineering, design, and consulting firm, joined planning and design consulting firm Kimley-Horn (Raleigh, N.C.) (ENR #10).
Employee-owned engineering and environmental consulting firm POWER Engineers (Hailey, Idaho) (ENR #32) acquired Hardy Engineering (Birmingham, Ala.), a power delivery engineering and design firm.
Johnson, Mirmiran & Thompson (JMT) (Hunt Valley, Md.) (ENR #60) acquired ECM International (El Paso, Texas), a CM and PM services firm specializing in the local government, education, housing, roadways, airports, and utilities sectors.
ENR’s #6 ranked global design firm, WSP (Montreal, Canada), acquired Odeh Engineers (North Providence, R.I.), a structural engineering firm serving the property and buildings sector.
Employee-owned consulting firm Shannon & Wilson (Seattle) (ENR #238) acquired Hultgren-Tillis Engineers (Concord, Calif.), a geotechnical engineering firm with expertise in industrial, municipal, commercial, and civil works projects.
Jensen Hughes (Baltimore) (ENR #80), a global leader in safety, security, and risk-based engineering and consulting ser vices, acquired Crossfire (Auckland, New Zealand), a fire safety engineering and performance-based design engineering firm.
Engineering, architecture, and field services firm The Thrasher Group (Bridgeport, W.V.) (ENR #342), acquired Dunn Engineers (Charleston, W.V.), a specialized design firm focused on potable water treatment and wastewater treatment processes.
Sevee & Maher Engineers (Cumberland, Maine), an engineering firm that serves the commercial, industrial, residential, and municipal sectors, acquired Bono Consulting (Park Ridge, Ill.), a civil engineering firm focused on stormwater, surveying, and construction oversight services.
IMEG Corp. (Rock Island, Ill.) (ENR #71) acquired the engineering division of Veregy, formerly Dynamix Engineering (Columbus, Ohio), which specializes in offering engineering services for building and infrastructure systems in the health care, education, government, transportation, and commercial markets.
TRC Companies (Windsor, Conn.) (ENR #17) expanded its climate solutions offerings and ESG capabilities with the addition of Enzo Advisors (New York, N.Y.), a sustainability consulting firm that helps companies build sustainable business models within an ESG construct.
Employee-owned engineering, environmental, and surveying consulting firm Haley Ward (Bangor, Maine) acquired Lenard Engineering (Glastonbury, Conn.), a multidiscipline engineering and environmental firm.
Transportation consulting firm TranSystems (Kansas City, Mo.) (ENR #77) acquired engineering, land planning, land development, environmental, construction inspection, and asset management firm SEPI (Raleigh, N.C.) (ENR #408).
Tetra Tech (Pasadena, Calif.) (ENR #4) reached an agreement with ENR’s #66 ranked environmental firm, RPS Group (Abingdon, UK), on the terms of an all-cash acquisition of RPS Group.
NV5 (Hollywood, Fla.) (ENR #24) acquired technology design and consulting services firm KMK Technologies (Monroeville, N.J.). KMK serves public and private sector clients that require advanced audiovisual, lighting, security, and IT systems for their facilities.
T-O Engineers (Meridian, Idaho), a 200-person, full-service consulting, planning, and engineering firm, joined fast-growing Ardurra Group (Tampa, Fla.) (ENR #114). T-O Engineers will serve as a platform for Ardurra’s expansion in the aviation market and geographically in the Northwest.
ENR’s #11 ranked global design firm, Arcadis (Amsterdam, the Netherlands), agreed to acquire Giftge Consult GmbH (Hildesheim, Germany), a consulting and engineering company offering energy transition solutions.
Verdantas (Dublin, Ohio) (ENR #195), an environmental, engineering, and technical consulting company, acquired JM Sorge (Somerville, N.J.), an Environmental Assessment and Remediation (EAR) and Environmental, Health, and Safety (EHS) consulting services firm. Verdantas also acquired Environmental Strategies & Management (Norton, Mass.), a firm that offers EHS consulting and engineering services.
Engineering, architecture, and planning services firm MRB Group (Rochester, N.Y.) merged with HBT Architects (Rochester, N.Y.), an architecture firm serving the adaptive reuse, civic, health care, higher education, and hospitality markets.
Fast-growing Bowman (Reston, Va.) (ENR #118) acquired Anchor Consultants (Chadds Ford, Pa.), a planning, inspection, design, environmental permitting, dredging engineering, and CM services firm.
Modjeski and Masters (Mechanicsburg, Pa.) (ENR #343), a national leader in the design, inspection, and rehabilitation of bridges, acquired structural engineering firm Flanders Engineering Group (Middleburg, Fla.).
One of the A/E industry’s most prolific buyers, J.S. Held (Jericho, N.Y.), entered into an agreement with ENR’s #8 ranked global design firm, Arcadis (Amsterdam, the Netherlands), to acquire its UK Contract Solutions Practice (London).
Architectural, engineering, and planning services firm Huckabee (Fort Worth, Texas) (ENR #212) acquired MEP engineering firm Image Engineering Group (Westlake, Texas).
Arora Engineers (Chadds Ford, Pa.) (ENR #487), an engineering, PM/CM, information technology, and facilities management services firm, announced a strategic partnership with minority-owned, private investment firm Jacmel Growth Partners (Brooklyn, N.Y.).
To view the most up-to-date and “live” versions of the M&A heat maps, and to see who are the buyers and sellers in each state, go to www.morrisseygoodale.com.