Engineering Inc. - September/October 2016 - 46

Mergers and Acquisitions BY N E I L C H U R M A N First Half M&A Review: Political Uncertainty Slows Deal-Making M erger and acquisition (M&A) activity among engineering industry firms slowed during the first six months of 2016 compared with the same period last year. Through the first six months of 2016, there were 106 sales of U.S.-based A/E industry firms-a 15 percent decline-compared with 125 deals in the first half of 2015. Deal-making overseas increased slightly with 63 sales of international firms through June 30 compared with 61 over the same period last year. Overall, industry M&A was down about 9 percent, with political and economic uncertainty being a major factor. The upcoming election has led some buyers to hold off on investing in growth until the U.S. chooses its next president and fills seats in Congress. Firms with significant exposure to public sector projects, which include transportation, water and defense, are particularly anxious about the upcoming election results. Overseas, the impact of "Brexit" and other global events on M&A remains unclear, but it has left firms based in the U.K. and Europe with a heightened sense of unpredictability. Many firms appear to be waiting for the dust to settle before embarking on major acquisition efforts. This is partially evidenced by a slowdown of the large-scale deal-making we saw in 2014 and 2015. While overall M&A is down, 2016 is still on track for 200-plus domestic transactions-a level of activity on par with 2014 and still above the average of 183 deals made annually from 2007 to 2015. We anticipate firms confident in their growth prospects will continue to pursue M&A opportunities despite the political and economic climate. Regardless of the election 2016 REPORTED M&A ACTIVITY Total US Sellers ND 7 6 4 SD WI WY NE 4 IA PA IL 3 2 OH IN 1 5 WV 2 5 AZ TN OK 1 AR NM MS 17 TX AK SC 2 3 AL GA LA 13 FL © Morrissey Goodale LLC 2016 All Rights Reserved 2 46 ENGINEERING INC. SEPTEMBER / OCTOBER 2016 HI MD DE DC MD 2 KY 2 1 1 NJ VA MO KS MA 5 CT RI MI 4 CO VT 1 NH NY 2 3 UT 9 Intʼl Sellers to US Firms 10 ME 1 CA 67 US Sellers to Intʼl Firms MN NV 123 Total Intʼl Sellers 1 ID 11 US vs. Int'l Sellers: 1 1 MT OR Antonio) acquired ACEC 21 or more Transactions 16 to 20 Transactions 11 to 15 Transactions 6 to 10 Transactions 1 to 5 Transactions No Transactions 7 1 Recent ACEC Deal-Makers JULY 2016 ACEC member Civil Engineering Consultants (San States by Total Activity: Firm Sales by State through August 1, 2016 WA results, infrastructure development remains a glaring need in the U.S. and overseas. We expect industry firms with a long-term view to continue to pursue M&A as a means of capturing growth opportunities. To see an infographic highlighting A/E/C M&A activity through the first half of 2016, please visit: http://www. morrisseygoodale.com/2016Mid-Year-Review.html. NC http://www.morrisseygoodale.com/2016-mid-year-review.html http://www.morrisseygoodale.com/2016-mid-year-review.html http://www.morrisseygoodale.com/2016-mid-year-review.html

Table of Contents for the Digital Edition of Engineering Inc. - September/October 2016