Engineering Inc. - July/August 2015 - (Page 48)

Mergers and Acquisitions BY N E I L C H U R M A N Private Equity Interest Growing In the Consulting Engineering Industry I n late May, ACEC Member Firm CH2M announced that it agreed to partner with an affiliate of Apollo Global Management, one of the world's largest private equity firms, in a deal that values the global engineering and project delivery firm at roughly $2 billion, according to the Wall Street Journal. Apollo will invest $300 million in a preferred-equity stake in CH2M, intended to add financial strength and spur further growth. Private equity's interest in the engineering industry appears to be heating up. The combination of retiring baby boomers (necessitating ownership and leadership transition among industry firms) with our nation's everincreasing critical infrastructure needs have created an environment where even private equity's largest players have taken an interest in the engineering space. We've seen a number of private equity firms invest in industry firms in recent years, including: * Blue Point Capital Partners, which sold its interest in architectural firm Callison to ACEC Member Firm ARCADIS last year. * CIVC Partners, which invested in energy-focused EN Engineering in 2012. Private equity firms typically raise a pool of capital, often from outside investors such as endowments and public pension funds, and then invest that capital in operating companies. Typically, that capital is invested through a leveraged buyout, a recapitalization or in the form of growth capital. These types of investments can allow industry firms to fuel growth initiatives and cash out firm owners and principals on the path to retirement. Private equity firms typically aim to grow their operating companies, as well as make operational improvements, and realize their investments through an "exit"-a merger or acquisition involving another engineering firm, a sale or recapitalization involving another private equity company, or for the largest deals, an initial public offering. Depending on individual 2015 ACTIVITY 2015 REPORTED REPORTED M&A ACTIVITY 2015M&A REPORTED M&A ACTIVITY Firm 1, 2015 Firm Sales Sales by by State State through June 1,through 2015 June 1, 2015 Firmthrough Sales byJune State 2015 REPORTED M&A ACTIVITY Firm Sales by State through June 1, 2015 33 3 11 WA WA 33 3 OR OR 1 1 MT MT 3 OROR 11 CA CA NV NV 1 9 9 UT UT CA CA ND NV WY 3UT 3 UT CO CO 3 CO 11 1 NE NE 1 NV SD SD WY 11 IA IA NE 3 11 CO KS KS 11 1 AZ NM NM 1 KS MO MO IA 33 1 AR AR AK AK TX MO KS OK AK MS MS LA 10 MI MI 44 4 IL IN IN 1 44 OH OH IN LA HI JULY / AUGUST 2015 1 11 7 NY NH MA 4 FL 33 FL FL © ©Morrissey MorrisseyGoodale GoodaleLLC LLC2015 2015 © Morrissey Goodale LLC 2015 All AllRights RightsReserved Reserved All Rights Reserved 48 MA MA 44 CT CT RI CTRIRI 22 2 1 Project management and training firm Metier Holdings AS (Oslo, Norway) joined ACEC Member RPS Group (Abingdon, UK). ACEC Member Tetra Tech (Pasadena, Calif.) signed a definitive agreement to acquire Cornerstone Environmental Group (Middletown, N.Y.), an environmental engineering and consulting firm focused on U.S. solid waste markets. T o view the most up-todate and "live" versions of the M&A heat maps and to see the buyers and sellers in each state, go to www.morrisseygoodale.com. Watch the M&A Takeaway video that accompanies this article, presented by Mick Morrissey, at www.morrisseygoodale. com/ACECMergers/ JulyAugust2015. 4 NH MA 4 CT RI 2 1 HI HI HI 7 NY PA PA PA 4 3 OH Steven M. Adkins Land Surveying (Laurel, Del.) joined ACEC Member George, Miles & Buhr (Salisbury, Md.). VT 11 1 NJ NJ NJ PA NJ 1 MD DE111 MD MD4 DE DE DE MD DE DE DE 1 DC DC MD DE DCOH MD MD DC 4 MD IL WV IN44 DC 1 WV 1 WV DC DC 11 4 VA WV DC 1 11 VA VA 1 KY VA MOKY KY 5 KY NC TN 4 55 NC NC 5 NC TN 44 TN 1 TN 4 SC 1 1 4 1 SC SC SC AR AL 4 GA MS 4 4 AL AL GA GA AL GA MS IA 13 1 © Morrissey Goodale LLC 2015 All Rights Reserved ENGINEERING INC. NY NY April 2015 ME ME VT NH NH 3 LA LA TX TX TX WI 1 10 10 10 6 77 2 2 MI MI 1 AR OK OK NM AK 4 Int'l Sellers to US Firms VT VT 22 WI ILIL 1 OK NM AZ 39 US Sellers to Int'l Firms MN WI WI NE 1 AZ AZ 98 Total Int'l Sellers 1 1 MN SD SD ID ID WY WY Total US Sellers ME ME 11 ND MN MN ID ID 99 MT ND ND MT Recent ACEC Deal-Makers May 2015 ACEC Member PRIME AE Group (Owings Mills, Md.) acquired John M. McDonald Engineering (Schenectady, N.Y.). ACEC Member Volkert (Mobile, Ala.) acquired the Construction Engineering Inspection division of ACEC Member Rodriguez Transportation Group (Austin, Texas). ACEC Member Pennoni Associates (Philadelphia, Pa.) acquired Philip Post & Associates (Chapel Hill, N.C.), a civil engineering and land surveying firm providing land planning, site design water/wastewater and conStates States by by Total Total Activity: Activity: US vs USActivity: vs Int'l Int'l Sellers: Sellers:US vs Int'l Sellers: States by Total struction inspection services. Total US Sellers 98 21 Total US Sellers 98 21or ormore moreTransactions Transactions Total US Sellers 98 21 or more Transactions 16 toto20 16States 20Transactions Transactions by Total Activity: Int'l 39 US vsSellers Int'l Sellers:Total Total Int'l Sellers 39 16 to 20Total Transactions Member Collins Int'l SellersACEC 39 11 to 15 Transactions 11 to 15 Transactions Sellers US SellerstotoInt'l Int'lFirms Firms 44 11 to 15US Transactions US Sellers to Int'l Firms 4 66toto10 10Transactions Transactions Int'l Int'lSellers SellerstotoUS USFirms Firms 66 6 to 10 Transactions (Chicago, Ill.) Int'l Sellers Engineers to US Firms 6 11toto55Transactions Transactions 1 to 5 Transactions No NoTransactions Transactions No Transactions acquired Civil Squared Engineering (Las Vegas, Nev.), a provider of site civil, drainage, and traffic and transportation engineering services. ACEC Member TRC Companies (Lowell, Mass.) acquired distribution engineering and design firm X-Line, Inc. (Villa Rica, Ga.). 21 or more Transactions 16 to 20 Transactions 11 to 15 Transactions 6 to 10 Transactions 1 to 5 Transactions No Transactions 3 WA WA goals and objectives, private equity could provide a strong and viable tool for ownership transition among many industry firms. Engineering firm owners who are moving toward retirement may want to consider private equity as one of many options to achieve their personal and firm transition goals. 3 FL Ebersole Structural Engineers (Cleveland, Ohio) joined ACEC Member GPD Group (Akron, Ohio). 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. http://www.morrisseygoodale.com http://www.morrisseygoodale.com/ACECMergers/JulyAugust2015

Table of Contents for the Digital Edition of Engineering Inc. - July/August 2015

Engineering Inc. - July/August 2015
From ACEC to You
Market Watch
Legislative Action
Secrets of the Centenarians
State of the Industry
Reshaping Cities
2015 Professional Liability Insurance Survey of Member Firms
Girl Empower
2015 Fall Conference
Guest Column
Guest Column
Guest Column
Business Insights
Members in the News
Mergers and Acquisitions

Engineering Inc. - July/August 2015