Booming backlogs, soaring valuations, a generational retirement wave, and fierce demand for talent fueled a record-breaking year for A/E industry deal-making in 2022. Robust demand for deals among buyers and sellers of all shapes and sizes propelled mergers and acquisitions to an all-time high of 466 U.S. transactions last calendar year, a 7 percent increase over 2021’s then-record volume. More than 100 deals were announced in every quarter of 2022.
A degree of economic uncertainty caused by emerging geopolitical concerns, supply chain instability, persistent inflation, and rising interest rates delivered a slight cool-off in overall A/E industry mergers and acquisitions (M&A) activity in the closing months of 2022, but it’s important to note that it’s a relative slowdown in deal-making. The pace of transactions in the latter months of 2022 still eclipsed the tallies during the same time period just a few years ago.
The market for engineering firms continues to favor sellers, although buyers are becoming more cautious in pursuing companies located in cooling geographic regions that derive a large portion of their revenue from markets, such as land development, that are heavily reliant on private funding and lower interest rates. As recent transactions involving ACEC members can attest, however, there continues to be intense competition among wellpositioned buyers for engineering firms serving infrastructure markets such as transportation, water/wastewater, environmental, and broadband power. A succession of acquisitions of infrastructure engineering firms kept the pace of announced deals involving ACEC members humming as the calendar turned to 2023.
Member firms ranked on the Engineering News-Record (ENR) 500 have been particularly busy. A record 45.6 percent of industry transactions involved ENR 500-ranked companies in 2022. In late 2022 and early 2023, Pennoni (Philadelphia), IMEG (Rock Island, Ill.), Bowman Consulting Group (Reston, Va.), NV5(Hollywood, Fla.), Salas O’Brien (Santa Ana, Calif.), and Atwell (Southfield, Mich.) were the most active ACEC member deal-makers.
The industry’s biggest firms, though, weren’t solely sellers. Twenty-one organizations on the ENR 500 were acquired in 2022, including the December purchase of Greeley and Hansen (Chicago) by TYLin (San Francisco) (ENR #31). In addition, Verdantas (Dublin, Ohio) announced its acquisition of Borton-Lawson(Wilkes-Barre, Pa.) (ENR #466) and its subsidiary, Precise Visual Technologies, just after the new year.
Buyers continue to be drawn to the Sun Belt by the growing populations and infrastructure budgets. The Southeast alone accounted for 27 percent of all domestic transactions in 2022. The market in Florida was particularly hot, with 10 deals in the Sunshine State that involved ACEC members announced in the last several months, followed by nine in California and six in Texas.
Private equity-backed companies accounted for one-third of all industry deals in 2022, and they continued to be active players in the marketplace for ACEC firms as the calendar turned to 2023. In January, private equity firm OceanSound Partners made a strategic investment in Gannett Fleming (Camp Hill, Pa.). Weeks later, one of the most prolific buyers in the A/E/C industry was itself acquired when private investment firm Littlejohn & Co. partnered with the management and employees of Ardurra Group (Tampa, Fla.) to purchase the firm.
A repeat of the unprecedented M&A activity seen in 2022 seems unlikely, as the current macroeconomic and financing environments continue to create uncertainty and constraint for deal-makers. Still, with the need to expand and improve U.S. infrastructure only projected to grow and industry backlog levels standing at unprecedented levels, expect deal volumes to remain well above pre-pandemic levels for the foreseeable future.
Deal-making in 2023 is on track to match the historically elevated volume of 2021, which was the second-best year on record and a step-function higher than the years preceding it. The record-setting M&A activity of the last two years has created scarcity and super-heated competition for the sellers that remain. And once money from the Infrastructure Investment and Jobs Act finally arrives in earnest, demand for engineering firms working in infrastructure markets will only escalate.
Following is a list of recent transactions, with ACEC members highlighted in bold.
Engineering, planning, and construction firm KCI (Sparks, Md.) (ENR #48) acquired National Telecom Design (Fredericksburg, Va.), a firm focused on the telecom industry with experience in the design and installation of aerial and underground fiber.
Architecture, engineering, environmental, and planning firm ISG (Mankato, Minn.) (ENR #250) acquired architecture and interior design firm ETHOS Design Group (Ankeny, Iowa).
Geotechnical, environmental, ecological, water, and CM services firm GZA GeoEnvironmental (Norwood, Mass.) (ENR #130) acquired Equity Environmental Engineering (Mount Olive, N.J.), a planning and environmental consulting firm.
Multidisciplinary consulting firm Pennoni (Philadelphia) (ENR #95) acquired certain assets of Andersen Engineering Associates (Sellersville, Pa.), a firm that provides engineering and surveying services to municipal, institutional, commercial, and private sector clients.
Merrick & Company (Greenwood Village, Colo.) (ENR #113), a leading employee-owned engineering, architecture, surveying, and geospatial solutions firm, acquired Mountain Waterworks (Boise, Idaho), a firm that specializes in water/wastewater engineering.
Bennett Surveying (Chouteau, Okla.) joined civil engineering, structural engineering, and landscape architecture firm Wallace Design Collective (Tulsa, Okla.) (ENR #393).
Private investment firm Littlejohn & Co. (Greenwich, Conn.) partnered with management and the firm’s employees to acquire one of the most prolific acquirers in the A/E industry, Ardurra Group (Tampa, Fla.) (ENR #114).
Atlas Technical Consultants (Austin, Texas), entered into a definitive agreement to be acquired by private investment firm GI Partners (San Francisco).
NV5 (Hollywood, Fla.) (ENR #24) acquired Bromley Cook Engineering (Fort Lauderdale, Fla.), a firm that provides forensics, specialty structural engineering, and waterproofing services to support facilities and infrastructure projects.
HUNT Engineers, Architects, Land Surveyors & Landscape Architect, DPC (Horseheads, N.Y.) acquired Shumaker Consulting Engineering and Land Surveying (Binghamton, N.Y.), a civil and environmental engineering and geomatics firm.
Rossi Transportation Group (Hunt Valley, Md.), a consulting firm providing civil and transportation engineering and planning services, acquired Rybinski Engineering (Kennett Square, Pa.), a firm specializing in traffic engineering services for U.S. DOT-funded projects in the mid-Atlantic.
Multidisciplined professional consulting and design firm H2M architects + engineers (Melville, N.Y.) (ENR #209) acquired water, wastewater, environmental, and civil engineering firm Crew Engineers (Butler, N.J.).
SWCA Environmental Consultants (Phoenix) (ENR #126) acquired Terra Verde Environmental Consulting (San Luis Obispo, Calif.), an environmental consulting firm that serves the energy, utility, and government sectors.
HMB Professional Engineers (Frankfort, Ky.), a civil engineering and environmental planning firm, acquired Municipal Engineering Company (Frankfort, Ky.), a civil engineering firm.
Trilon Group (Denver), a family of infrastructure consulting businesses, announced a strategic partnership with Wilson Engineers (Tempe, Ariz.), an engineering firm focused on water, municipal, and disaster recovery services.
RINA (Genoa, Italy), an inspection, certification, and engineering consulting firm, entered the U.S. infrastructure market with the acquisition of Patrick Engineering (Lisle, Ill.) (ENR #214), an engineering firm focused on infrastructure, transport, and renewable energy sectors.
Engineering and design firm Olsson (Lincoln, Neb.) (ENR #74) acquired Nielsen-Baumert Engineering (Omaha, Neb.), a firm that specializes in structural engineering analysis and design of commercial, educational, institutional, and industrial facilities, in addition to civil and restoration projects.
Legence (San Jose, Calif.), a firm that provides advisory and implementation services, acquired three firms in the Western United States: MEP engineering firm Shadpour Consulting Engineers (San Diego), design-build mechanical contracting firm Trinity Process Solutions (Anaheim, Calif.), and MEP engineering firm KLOK Group (Golden, Colo.).
Urban planning, design, and architecture firm Waggonner & Ball (New Orleans, La.) joined infrastructure advisory firm Moffatt & Nichol (Long Beach, Calif.) (ENR #82). The combination advances Moffatt & Nichol’s capability to offer integrated resilience solutions.
Multidisciplinary consulting firm Pennoni (Philadelphia) (ENR #95) announced the purchase of assets of Van Note-Harvey Associates (Princeton, N.J.), an engineering, environmental, planning, and land surveying firm.
Dufoe Consulting Engineers (San Diego), a mechanical engineering firm that offers HVAC, control systems, plumbing, and fire protection services, joined fast-growing facilities planning and design firm Salas O’Brien (Santa Ana, Calif.) (ENR #78).
Provider of technology-enabled laboratory testing, inspection, and quality management services RMA Group (Rancho Cucamonga, Calif.) (ENR #182) acquired C Below (Chino, Calif.), a firm focused on technology-enabled underground utility locating services.