Engineering Inc. - Spring 2020 - 54

MERGERSANDACQUISITIONS

Deal-Makers of a Feather Flock Together
BY NICK BELITZ

fter notching the highest-ever total of
industry transactions in a year in 2019,
ACEC deal-makers wasted no time getting
2020 off to a strong start. As of this writing,
Morrissey Goodale tracked 320 deals over the
prior 12 months, topping the 311 deals consummated during full-year 2019. While the
impact of COVID-19 on deal-making and the larger engineering
and business community is still unknown, the most recent data
indicates industry executives continued an aggressive push in dealmaking over the winter of 2019-2020.
The latest spate of transactions with ACEC members also shows
a continuation of a trend previously reviewed in this column.
Specifically, there are a high number of intrastate transactions-
or deals done with buyers and sellers headquartered in the same
state-as a component of all M&As.
Typically, M&As are used as an offensive growth initiative by
firm leaders to jump to new markets and/or capture new services.
By virtue of that strategy, most of these deals cross state lines. But
as shown in the accompanying chart (U.S. Interstate vs. Intrastate
Deals), intrastate transactions have accounted for approximately
one-third to one-half of all deals completed annually for the last
several years. Echoing that pattern, ACEC deal-makers did their
part to bolster the trend last winter, with buyers and sellers from
the New England area, Florida, Illinois, North Dakota, Colorado,
and California all closing transactions with partners close to home.
Morrissey Goodale offers the following points explaining the
popularity of same-state deals:
1. Ease of connectivity. Even in the 21st century with all the
communication technology available, engineering is still a
relationship-driven business based on people. Intrastate dealmaking not only offers the opportunity to partner permanently
with that great firm down the road, but it presents a relatively
straightforward means of connecting with (and checking on)
each firm's work, people, and clients.
Deals

U.S. Interstate vs. Intrastate Deals

350
300
250

103

194

200

2018

2019

200
150

100
50

138

0
2016

2017
U.S. Interstate Deals

ENGINEERING INC. SPRING 2020

U.S. Intrastate Deals

2. Competition for deals. For years, the engineering industry's

M&A market has enjoyed high participation from both buyers and sellers. The most attractive sellers entertain a greater
number of suitors. When deciding between candidates in a
hiring situation, people tend to pick the person who is better known versus the stranger, and the same goes for M&A
deal-makers.
3. Mitigation of risk. While the business of engineering is much
the same across the country (hint: Serve each client as if they
are your only client), variations among state and local agencies, laws, and regulations affect each firm's day-to-day work.
Picking an M&A partner familiar with the nuances of a state's
quirks and jurisdictions can lessen the risk-perceived or
actual-in an M&A deal. In other words, it is the bridge not
too far.
As an additional note drawn from the latest deals among
ACEC members, a special shoutout goes to North Dakota. We
would be remiss if we didn't mention recent activity in the Peace
Garden State. During and immediately after the Great Recession,
North Dakota's economy was the envy of the country, driven by
the height of the oil and gas fracking boom. But despite the soaring demand for engineering services of all types, few firms based
in North Dakota transacted. Even in more recent years and prior
to 2019, only one North Dakota firm sold in a deal in 2017.
But since December of last year and through the first quarter
of 2020, three North Dakota firm transactions were tracked, setting a blistering pace compared to the prior decade.
Finally, while it is anticipated COVID-19 will affect the entire
industry before the pandemic subsides, it is expected the longterm drivers of industry consolidation will remain in force, both
within states and across state lines, throughout 2020.
ACEC DEAL-MAKERS
FEBRUARY 2020

ACEC member Thomas & Hutton (Savannah, Ga.), a southeast
professional consulting and engineering firm, acquired municipal
engineering specialist Dempsey, Dilling & Associates (Smyrna,
Tenn.).
ACEC member KCI Technologies (Sparks, Md.) acquired the
civil engineering and construction engineering and inspection
practices of Landtech (Houston).
ACEC member Richland Engineering Ltd. (Mansfield, Ohio)
joined multidiscipline civil engineering and environmental consulting firm WallacePancher Group (Hermitage, Pa.).
Burgess & Niple (Columbus, Ohio) announced its pending acquisition of transportation planning and design firm
ICON Consultant Group (Tampa, Fla.). Both firms are ACEC
members.
Parrish Hansen Structural Engineers (Clovis, Calif.) joined
Provost & Pritchard Consulting Group (Fresno, Calif.), an
ACEC member firm that offers civil and agricultural engineering,

Engineering Inc. - Spring 2020

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