AEC MERGERS & ACQUISITIONS
2011 consolidations rose as firms anticipated infrastructure projects and public-private partnerships.
No matter the economic situation, merger and acquisition deals seem to be the norm in the AEC industry. In soft economies and challenging market environments smaller firms struggling to hang onto their profits are more willing to sell or merge to avoid a shutdown of operations. In growing economies, buyers and investors confident in their respective markets make moves to diversify and expand service areas.
According to AEC management solutions firm Morrissey Goodale, 2011 saw a 13% increase over 2010 in both U.S. and global AEC mergers and acquisitions — a return to levels not seen since 2007. One reason for the surge was investor/buyer confidence in a stabilizing post-recession industry. “Specifically, they anticipated greater clarity around connecting massive domestic infrastructure development and rehabilitation needs with a public-private financing model,” says Mike Cauley, principal consultant with the firm.
However, with both confidence and first-quarter consolidation activity down this year, it remains to be seen whether 2012 keeps pace with last year's rate of increase.
What does it all mean for public works departments? We asked about your experiences working with AEC firms going through mergers and acquisitions.
Almost half of survey respondents say they had worked with an AEC firm while it had gone through a merger or acquisition; 2% are working with a firm undergoing the process now. The good news: Most departments report their projects were not affected by firms' restructuring activities.
They were able to do a complete job instead of us having to utilize several engineering firms that had the capabilities we were looking for.
Uncertainty in the company by staff led to delays in getting answers and direction any time services were required outside the general consultant or general contractor.
They had growing pains figuring out their internal communications, but the project construction didn't miss a beat.
Depends on the specifics of the deal.
Some firms handle it better than others. If a firm was already having problems, then [the merger or acquisition made it] worse.
Although it did not affect our project, it eventually brought the AEC company down after four years.
Most popular AEC services
Help wanted (water expertise preferred)
The top five services most popular services provided by AEC firms hasn't changed in several years (see 'Technology trend' graphic), and likewise the remaining top 10 answers are no surprise: watersheds/water resources (23%), water treatment (21%), traffic control (21%), maintenance of public buildings (18%), asset management (15%). Readers also added a few of their own categories: transit engineering, sign inventory, environmental permits, and buildings.
Last year, we began asking if departments were using AEC firms for certain services more than they had in the past. While a third of respondents aren't relying more on outside expertise, water-related services topped the list for those who said they were. This year, wastewater/stormwater treatment, watersheds/water resources, water treatment, and pipeline construction/rehabilitation accounted for 57% of responses (56% in 2011).