Driven by flush backlogs and robust long-term growth opportunities, A/E industry deal-making started 2023 where it left off in 2022—on a blistering pace. Bucking turbulence in financial markets, rising interest rates, and large-scale bank failures, A/E firm mergers and acquisitions in the United States through the first four months of 2023 have shown the same strong interest and level of activity that has kept the market hot for the past several years. Current data shows industry M&A activity in 2023 may even get within striking distance of the record 474 deals of U.S-based sellers posted in 2022, which broke the record of 442 deals notched in 2021.
While private equity has been the prime catalyst of the engineering industry’s “great recapitalization” over the last several years, data compiled by Morrissey Goodale shows the percentage of U.S. deals backed by private equity has plateaued as recent interest rate spikes have made borrowing more expensive. As shown in the accompanying chart, private equity and private equity-backed firms accounted for approximately 7 percent of U.S. acquisitions a decade ago, but that percentage rose to 20 percent in 2018 and 34 percent in 2021. In 2022, however, that percentage dipped slightly to 33 percent and is now on pace for a slight uptick to 34 percent in 2023.
Although its share of overall deal-making may be leveling, private equity remained a major player in engineering firm transactions in the opening months of 2023. Following up on its earlier acquisition of Engineering News-Record (ENR) 500 firm Borton-Lawson (Wilkes-Barre, Pa.), Verdantas (Dublin, Ohio), which is backed by private equity firm RTC Partners, acquired Leighton Group (Irvine, Calif.). In addition, private equity firm Palm Beach Capital formed a strategic partnership with ENR 500 firm Pape-Dawson Engineers (San Antonio, Texas), Oaktree Capital Management purchased Enercon (Kennesaw, Ga.) from private equity firm AE Industrial Partners, and an affiliate of H.I.G. Capital completed the acquisition of Tower Engineering Professionals (Raleigh, N.C.).
Another emerging trend in 2023 is a decline in acquisitions of U.S. firms by publicly traded buyers, long a cornerstone of the M&A market. Publicly traded A/E firm buyers—both foreign and domestic—at one time accounted for one-fifth to one-quarter of all industry acquisitions. That share, however, fell below 10 percent in 2022 and could shrink even further this year as publicly traded A/E firm buyers are on track to make 31 acquisitions in 2023, compared to 44 such deals in 2022, and 45 transactions in 2021.
There has been no such falloff in activity among privately held A/E firms, however. Some member firms ranked at the top of the ENR 500 made multiple acquisitions in the first months of 2023. NV5 (Hollywood, Fla.) followed its January purchase of Bromley Cook Engineering (Fort Lauderdale, Fla.) with three additional acquisitions: Diversified Consulting Solutions (Denver), Axim Geospatial (Sun Prairie, Wis.), and Gaudet Associates (Jupiter, Fla.). LJA Engineering (Houston) expanded its presence in Florida through its acquisitions of Carter Associates (Vero Beach, Fla.) and R.J. Rhodes Engineering (Sarasota, Fla.). Other buyers of multiple firms included Salas O’Brien (Santa Ana, Calif.), Universal Engineering Sciences (Orlando, Fla.), and RMA Group (Rancho Cucamonga, Calif.).
IMEG Corp. (Rock Island, Ill.) continued its deal-making streak in 2023 with its acquisitions of Lilker Associates (New York City) and Cameron Engineering & Associates (Woodbury, N.Y.). That’s on top of the nine transactions that the firm completed in 2022, which earned it Morrissey Goodale’s Most Prolific and Proficient Acquirer Award, which was presented at the Southeast M&A, Strategy, and Innovation Symposium in Miami this March.
Atwell (Southfield, Mich.) also added to a series of recent deals with its acquisitions of Blueline (Kirkland, Wash.) and DexBender (Fort Myers, Fla.). “We continue to want to add good resources to our 1,500-person firm,” Atwell President Matt Bissett told the 200 A/E industry executives and investors who attended the symposium. “The economy is not changing our opinion on doing deals.” Based on the brisk level of M&A activity that continues in 2023, it’s a viewpoint shared by many others in the A/E industry.
Following is a list of recent transactions, with ACEC members highlighted in bold.
Barton Associates (York, Pa.), an employee-owned engineering firm that offers mechanical, electrical, plumbing, fire protection, and architectural lighting design services, acquired MEP firm Maple Engineering (Raleigh, N.C.).
Employee-owned engineering, procurement, consulting, and construction firm Black & Veatch (Overland Park, Kan.) (ENR #14) expanded its construction solutions with the acquisition of Bird Electric Enterprises and Bird Electric Properties, both part of BASElectric Holdings (Eastland, Texas).
Javan Engineering (Fort Washington, Pa.), an engineering firm serving the growing industrial, chemical, pharmaceutical, biotech, health care, and university markets, joined industry leader and full-service engineering consulting firm CHA (Albany, N.Y.) (ENR #69).
Applied Technical Services (Marietta, Ga.), a critical testing, inspection, certification, and compliance services firm, expanded its metrology lab offerings with the following three acquisitions: Process Instruments (Pittsburgh), Instrumentation Technical Services (West Chester, Pa.), and Accu-Chek (Corydon, Ind.).
Engineering and energy services firm CMTA (Louisville, Ky.) (ENR #165) joined forces with MEP engineering firm Genesis Engineering Group (Zionsville, Ind.).
Lilker Associates (New York City), one of New York’s leading MEP and fire protection engineering design firms, joined IMEG Corp. (Rock Island, Ill.) (ENR #57).
Geotechnical, environmental, ecological, water, and construction management services firm GZA (Norwood, Mass.) (ENR #143) acquired Glorieta Geoscience (Santa Fe, N.M.), a firm specializing in groundwater development, water rights, agricultural science, litigation support, and environmental science.
Employee-owned firm LJA Engineering (Houston) (ENR #64) acquired R.J. Rhodes Engineering (Sarasota, Fla.), a professional surveying and civil engineering firm.
In its second deal of the week, LJA Engineering (Houston) (ENR #64) continued its expansion in Florida by welcoming engineering and land surveying firm Carter Associates (Vero Beach, Fla.) to the company.
Atwell (Southfield, Mich.) (ENR #74), a national consulting, engineering, and construction services firm, acquired Dex-Bender (Fort Myers, Fla.), an environmental and marine consulting firm.
Colliers Engineering & Design (Holmdel, N.J.) (ENR #52) acquired Rogvoy Architects (Southfield, Mich.), a full-service architectural firm focused on commercial retail design.
Civil engineering firm Pape-Dawson Engineers (San Antonio) (ENR #112) formed a strategic partnership with private equity investment firm Palm Beach Capital (West Palm Beach, Fla.).
Quadrant Consulting (Boise, Idaho) and River Structures Consulting (Boise, Idaho) joined forces to become QRS Consulting, a multidiscipline engineering and surveying firm with experience in natural resources engineering, bridge design and inspection, and hydropower design.
Engineering and design firm Olsson (Lincoln, Neb.) (ENR #74) acquired water resources engineering firm Enginuity Engineering Solutions (Littleton, Colo.).
WWC Engineering (Sheridan, Wyo.), a firm specializing in transportation engineering, municipal services, and civil/site engineering, acquired Madison Engineering (Bozeman, Mont.), an engineering, construction inspection, and residential air quality testing firm.
Engineering, planning, and construction management firm Neel-Schaffer (Jackson, Miss.) (ENR #197) acquired CE Group (Pascagoula, Miss.), a civil, structural, environmental, planning, and project management firm.
Crossey Engineering (Toronto), a firm that offers mechanical, electrical, lighting design, and commissioning services, joined facilities planning and design firm Salas O’Brien (Santa Ana, Calif.) (ENR #78).
Fast-growing engineering and consulting firm Universal Engineering Sciences (Orlando, Fla.) (ENR #42) acquired Grubbs, Hoskyn, Barton & Wyatt (Little Rock, Ark.), a geotechnical engineering and materials testing firm.
Employee-owned engineering, environmental, and surveying consulting firm Haley Ward (Bangor, Maine) acquired Betsy Lindsay (Stuart, Fla.), a surveying and mapping firm serving municipality, commercial, and private clients.
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.