Momentum for industry mergers and acquisitions continues to grow
May 16, 2018
The Trump administration may have tabled its $1.5-trillion infrastructure improvement plan until after November’s midterm elections, but the delay hasn’t diminished the urgency of upgrading U.S. bridges, highways, ports, mass transit and wastewater treatment systems. Nor has it necessarily dampened the appetite of design and construction firms for mergers and acquisitions (M&As) that will better position them for infrastructure-related projects, according to a new study by Raleigh, N.C.-based FMI Capital Advisors.
“We saw numerous transactions in 2017 involving companies looking to expand their capabilities in traditional infrastructure markets, such as water and transportation,” says Alex Miller, managing director of FMI and author of the report, “2018 M&A Trends for Engineering and Construction.”
The report was based on a survey of prominent design and construction executives, the majority of them U.S.-based, in addition to FMI evaluations of industry transactions.
“While a federal plan would have a positive impact on infrastructure acquisition activity, it isn’t the only driver, and buyers remain acquisitive in this sector for other reasons, including seeking to expand their capabilities in alternative delivery methods and positioning themselves in attractive geographic markets,” Miller says.
All told, 2017 proved robust for industry M&As, as FMI anticipated, and momentum should accelerate in 2018, according to the report. Among its key findings: Nearly 70% of respondents indicated that acquisitions are “a part of [their] current strategy, as compared to 60% last year,” Miller says.
By comparison, 2017 M&A activity was similar to that of 2016, when FMI logged nearly 400 engineering and construction transactions in the U.S. and Canada. However, the 2017 deals were larger, including several notable $1-billion-plus transactions. That’s due, in part, to continued consolidation within the AEC industry that has allowed firms to strategically acquire talent, broaden their geographic presence and service offerings, and keep pace with acquisitive competitors, the report notes.
~ ~ ~
Those circumstances figured into the 2017 acquisition by Mead & Hunt of EMR in Fenton, Mo., an engineering and construction management firm specializing in food and beverage plants.
The deal was driven by the need for additional resources to design and deliver large, ammonia-cooled refrigeration systems, says Greg Marconnet, Vice President, food and beverage, with Mead & Hunt.
EMR’s staff of 30 not only designs the systems in Fenton but also travels to sites to oversee their installation. The two firms currently are “in an integration phase,” says Marconnet. Mead & Hunt has 70 to 90 food and beverage projects in the works nationwide.
READ MORE in ENR magazine
about 9 hours ago
Banish profit centers in small to midsize firms. Focus on your people by letting each do what each is best qualifie… https://t.co/aFVl5HkupH
about 9 hours ago
When creating your strategic plan, don’t forget that transformative ideas might be buried deep within your organiza… https://t.co/Nf0qeqDkiv
Benham Mead & Hunt JV awarded $50 million military contract
October 11, 2018
New Dam Safety Program audit requirements
October 9, 2018