Engineering Inc - July/August 2019 - 46

MERGERSANDACQUISITIONS

Torrid Pace of Deal Activity Continues in 2019
BY NICK BELITZ

lobal M&A activity in the A/E industry
reached record levels in 2018, outpacing the
previous high set in 2015. The frenetic pace
of 2018, in which 396 transactions closed
globally, has continued in 2019. Deal-makers announced almost 200 transactions globally through early June, putting global M&A
activity in 2019 on track for yet another record year. Meanwhile, domestic M&A activity also reached a new high in 2018
with 292 transactions, a blistering 22 percent increase from the
previous high set in 2015. Again, U.S. domestic deal-making
has experienced robust activity through early June, with 151
deals announced, and the year is on track to outpace 2018.
Consistently strong deal activity in the industry is driven
by a robust economy, sustained interest in M&A among
sellers as a means of transitioning ownership and leadership,
and the preference of buyers to quickly add capabilities and
geographies to their portfolios. Interestingly, the latest data
indicates a noted preference among buyers for deals in the
Western U.S. Within the region, California leads the way with
20 deals to date in 2019. Dating back to 2015, Morrissey
Goodale has tracked 138 deals in California, which outpaces
even red-hot Texas and its 122 deals. But the Golden State is
not the only place shining on the West Coast. So far in 2019,
Washington and Oregon have already reached or surpassed
their full-year 2018 deal totals. The two states complement
California's deal activity and confirm the West Coast as one
of the hottest spots in the country for domestic deal-making,
U.S. Q1 Deals
Deals
350
300
250

292
223

240

219

217

200

151

150
100
50
0

2014

2015

2017

2018

YTD 2019

Global Q1 Deals

Deals
450
400
350
300
250
200
150
100
50
0

2016

351

352

396
316
215

196

rivaled only by the states of Texas and Florida. Additionally,
deal-making remains active with Colorado, Washington and
Oregon recording 46, 31 and 18 deals, respectively, since
2015.
So why all the interest out West? We offer the following
reasons:

1. Western demographic and economic growth expectations bode well for everything the engineering industry
offers. Because of the Western states' strong population

growth trends and need to invest in critical transportation
and water infrastructure, numerous firms have sought to
build and expand a Western presence. For example, publicly
traded NV5 (Hollywood, Fla.) closed two deals in the West
so far this year-the acquisition of Alta Environmental
(Long Beach, Calif.) and the acquisition of J.V. Surveying
(Phoenix), the latter of which grows the firm's footprint
in the very active Arizona and California markets. Also,
private-equity-backed CONSOR Engineers' (Houston)
recent acquisition of Structural Grace, Inc. (Tucson, Ariz.),
not only builds the firm's expertise in bridge and transit
projects but also is intended to provide a foundation for
future expansion in the region. Also in April, Gannett Fleming (Camp Hill, Pa.) acquired SAGE Engineers (Roseville,
Calif.) to expand the firm's geoscience, geostructural, power
and dam services in California. This deal closely follows
Gannett Fleming's 2018 acquisition of KEH & Associates
(San Marcos, Calif.), a water and wastewater engineering
firm. And in March, SmithGroup (Detroit) entered the
Rocky Mountain region via a merger with specialized planning firm Paulien & Associates (Denver).
2. Big Midwestern names want to be bigger out West. The
key economic drivers mentioned earlier have encouraged
larger ENR-ranked firms not based in the Western states to
push west, with some of the most well-recognized industry
names from the nation's heartland making deals. Notable
recent acquirers based in the Midwest: IMEG Corp. (Rock
Island, Ill.), SEH (St. Paul, Minn.), Woolpert (Dayton,
Ohio), HDR (Omaha, Neb.), Barr Engineering (Minneapolis), Sargent & Lundy (Chicago), Perkins+Will (Chicago)
and Wunderlich-Malec Engineering, Inc. (Eden Prairie,
Minn.), have closed transactions in the Western states.
Given the trends at the macro level and competitive pressures within the engineering industry, we expect a sustained
level of deal-making for the remainder of 2019, with expansion
in the West to remain a top priority for industry leaders and
decision-makers.
ACEC DEAL-MAKERS
MAY 2019

2014

ENGINEERING INC.

2015

2016

JULY / AUGUST 2019

2017

2018

YTD 2019

Growing A/E and geospatial firm Woolpert (Dayton, Ohio)
acquired Geomatics Data Solutions, Inc. (Hillsboro, Ore.),

Engineering Inc - July/August 2019

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