By Jim Parsons, Engineering News-Record - An industry-wide sellers’ market helped fuel record-setting merger-and-acquisition activity among engineering and construction firms in 2018, enabling buyers to better adapt to multiple trends reshaping the industry.
According to a recently released trends survey by FMI Capital Advisors Inc., the 534 industry transactions announced last year surpassed the previous record, set in 2015, by nearly 22%. The timing was right for such torrid activity, explains FMI Managing Director Alex Miller, particularly given the large “demographic backlog” of willing sellers.
“Many baby boomer owners who put off retirement because of the recession saw the current strong market as a good time to exit,” Miller explains.
Buyers were likewise plentiful, with heightened demand for technical expertise joining growth and service expansion as primary acquisition drivers, the survey found. “If you’re not growing, you struggle to create opportunities for people and retain talent,” says Dan Pleasant, COO of Fairfax, Va.-based Dewberry, which has made multiple acquisitions of regional engineering firms in recent years, including last year’s purchase of J3 Engineering Consultants Inc., Greenwood Village, Colo.
Pleasant says that while a primarily organic strategy tends to be easier for smaller companies, there comes a point where sustaining that pace requires a firm to look outward. Dewberry applies both approaches, he says, with approximately 40% of its recent growth coming via “strategic” acquisitions aimed at a particular region, market sector or service line