Through the first six months of 2014, Morrissey Goodale tracked 101 sales of U.S.-based architecture and engineering (AE) firms, roughly the same amount as during the first six months of 2013, and putting 2014 on pace for another strong year for domestic AE M&A activity. This positive momentum has continued into the second half of the year with AECOM’s recently announced agreement to acquire URS.
The deal is one of the most significant in the history of the AE space and creates a global firm with more than 95,000 employees. International deals, on the other hand, lagged through the first six months, with just 43 sales of internationally-based AE firms so far in 2014 compared to 54 during the first six months of 2013. Overall, activity remains strong and hot spots for dealmaking are tracking broader positive economic trends in the U.S. and abroad.
Domestic M&A Activity on Pace for Strong 2014
Domestic M&A activity through the first six months of 2014 was generally on pace with the first six months of 2013 (Graph 1, top). The pace of domestic AE industry consolidation, which accelerated coming out of the great recession in 2011 and carried forward into 2013, has remained relatively steady into 2014.
Industry firms appear to remain cautiously optimistic, with deal activity in 2014 on pace to rise to levels similar to 2012 and 2013 by year end. Firms continue to make bets on the positive economic climate in the U.S. The question will be whether this momentum continues into the back half of the year, as firms work to integrate recent acquisitions and continue to assess the U.S. market. With six months to go in the year, we anticipate domestic M&A activity to be in the 180 to 200 deal range.
Texas and California Lead States in M&A Activity
Regionally, Texas led all states in deal activity with 16 Texas-based AE firm sales through June 30, 2014 (Graph 2). Deals in the Lone Star State continue to be driven by a combination of strong economic growth and oil and gas activity. California, a perennial top state for industry dealmaking, followed with 12 firm sales. Colorado, which was among the top states for firm sales in 2013 with 11, saw seven firms based in the state sell so far in 2014. Notable among the top states was Washington, where we only observed one firm sale in all of 2013, and by comparison has produced 6 firm sales so far in 2014.
The U.K. and Canada Lead International Destinations
The United Kingdom and Canada were the top destinations for international firm sales through the first half of 2014 (Graph 3). Australia, New Zealand, and South Africa were also bright spots. With the Eurozone and BRIC countries continuing to face economic challenges, buyers looked to more stable markets for M&A opportunities.
The Megadeal is Back
On the heels of several large deals in the back half of 2013, megadeals continued into the first half of 2014. AE firms continued to seek transformational opportunities to differentiate their businesses. A few of the notable large deals so far in 2014 included:
-
AECOM’s agreement to acquire 50,000-person URS
-
AMEC’s agreement to acquire 14,000-person Foster Wheeler
-
3,000-person Conestoga-Rovers’ merger with 5,500-person GHD
-
Cardno’s acquisition of 760-person PPI Group
-
WSP Group’s acquisition of 1,700-person Focus Group
-
Parsons’ acquisition of 800-person Delcan
It remains to be seen how large scale consolidation will play out as the industry landscape continues to evolve.
Oil & Gas Driving Activity
Oil and gas has been a major driver of AE dealmaking, particularly in the U.S. Industry firms have sought to capitalize on a boom in domestic production and transportation of fossil fuels in places like Texas, Pennsylvania, Ohio, Colorado, and North Dakota. Just a few of the notable oil and gas related deals through June 30th included: Jacobs’ acquisition of Eagleton Engineering, Halff Associates’ acquisition of TriTex Technologies, Zachry’s acquisition of Commonwealth Engineering and Construction, NV5’s acquisition of AK Environmental, and GZA’s acquisition of Laurel Oil and Gas Corp.
One of the largest deals in the space was defense contractor Huntington Ingalls Industries’ acquisition of Universal Pegasus – a play to further diversify into the red hot oil and gas market.
Related Stories
| Aug 11, 2010
ACSA announces 2008-2009 ACSA/AISC steel design student competition winners
The Association of Collegiate Schools of Architecture (ACSA) is pleased to announce the winners of the ninth annual steel design student competition for the 2008-2009 academic year. Administered by the Association of Collegiate Schools of Architecture (ACSA) and sponsored by the American Institute of Steel Construction (AISC), the program challenged students, working individually or in teams, to explore a variety of design issues related to the use of steel in design and construction.
| Aug 11, 2010
ZweigWhite Announces 2009 Best Firms to Work For
Management consulting and research firm ZweigWhite has identified the best civil engineering, structural engineering, multidiscipline A/E services, environmental services, and architecture firms to work for in its annual ranking of top industry firms. These outstanding employers were selected based on their commitment to provide a positive work environment and challenging and interesting work opportunities for their employees.
| Aug 11, 2010
Autodesk 2010 Certification Now Available for Design Professionals
Autodesk, Inc., (Nasdaq: ADSK), today announced that design and engineering professionals can become Autodesk Certified in AutoCAD 2010, Autodesk Inventor 2010, Autodesk Revit Architecture 2010, and AutoCAD Civil 3D 2010 software. Becoming Autodesk Certified allows professionals, and companies boasting Autodesk Certified employees, to validate their industry skills and knowledge, demonstrate expertise and gain credibility.
| Aug 11, 2010
Jacobs, CH2M Hill, AECOM top BD+C's ranking of the 75 largest federal government design firms
A ranking of the Top 75 Federal Government Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Manhattan's Pier 57 to be transformed into cultural center, small business incubator, and public park as part of $210 million redevelopment plan
LOT-EK, Beyer Blinder Belle, and West 8 have been selected as the design team for Hudson River Park’s Pier 57 at 15th Street and the Hudson River as part of the development group led by New York-based real estate developer YoungWoo & Associates. The 375,000 square foot vacant, former passenger ship terminal will be transformed into a cultural center, small business incubator, and public park, including a rooftop venue for the Tribeca Film Festival.
| Aug 11, 2010
AIA selects three projects for National Healthcare Design Awards
The American Institute of Architects (AIA) Academy of Architecture for Health (AAH) have selected the recipients of the AIA National Healthcare Design Awards program. The AIA Healthcare Awards program showcases the best of healthcare building design and healthcare design-oriented research. Projects exhibit conceptual strengths that solve aesthetic, civic, urban, and social concerns as well as the requisite functional and sustainability concerns of a hospital.
| Aug 11, 2010
AGC: Construction employment declines in 47 states in July
Few states were immune from construction employment declines this July based on an analysis of federal employment data released today by the Associated General Contractors of America. That analysis found that 47 states saw declines in construction employment, while only two states saw increases and one saw no change in construction employment between July 2008 and July 2009.
