Microsoft PowerPoint - E&C Quarterly Reader Q12020 v11Engineering & Construction Q U A R T E R L Y S E C T O R R E V I E W | Q 1 2 0 2 0
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
Harris Williams “HW” Overview
Drew Spitzer Managing Director
aspitzer@harriswilliams.com Office: (804) 915-0174
Matt White Managing Director
• 175+ closed transactions in the last 24 months
• 10 industry groups
• #1 source of deal flor for middle market M&A
• 15+ closed transactions in the last 24 months
• Expertise across 8 distinct Vertical Focus Areas
Engineering & Construction
Vertical Focus Areas
• Engineering and Construction
Harris Williams Engineering and Construction Contacts
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
Should Designers and Contractors Become Technology Companies?
“As technology disruption continues to accelerate in our industry, this is likely being discussed in boardrooms around the world. Design firms and construction companies absolutely should become technology companies, but becoming a tech company is much different than becoming a software company. Technology has always disrupted engineering. Consider the shift to computer-aided design (CAD), and from CAD to building information modeling (BIM) and geospatial information systems (GIS). The difference today is that the changes are happening faster, at a pace that upskilling and behavioral adaptation can’t maintain. This rate of change has many seeing today’s technology disruption as something different, instilling fear of commoditization or even obsolescence.”
ENR
Collaborative Contracting: Moving from Pilot to Scale-Up
“When it comes to the transition away from transactional contracting practices, project owners do not have the luxury of time. Major North American E&C companies have already reconsidered whether they should bid competitively on lump-sum contracts at all. As more project stakeholders take the same path, project owners that stick to traditional contracts may soon be left with fewer options and rising prices. Additionally, those that wait to act risk missing out on the potential benefits of collaborative contracts for the entire industry—benefits that are exciting to contemplate. A 2017 McKinsey Global Institute (MGI) report on construction productivity identified collaborative contracting as one of the largest opportunities to improve the productivity of the industry. Based on our research, we also believe that collaborative contracts and practices serve to enable three of the other levers to improve productivity: technology adoption, design and engineering, and on-site execution.”
McKinsey
2020 Vision: Biggest Construction Stories of the Last Decade
“As construction enters its third decade of the 21st century, the events and changes of the last 10 years within the industry and in the world it serves have been hugely dramatic—generating challenges yet to confront or understand, but also new opportunities for next-generation professionals to provide critically needed innovation in design and construction practice, technology and business.
The growing impacts and implications of climate change over the past 10 years have been a big story for ENR and its global audience, as new studies show that the window to take action to cut harmful emissions and address high-risk areas now is only a decade away.”
ENR
From Utah to Florida, States Boost Spending on New Roads
“Buoyed by a recovering economy and increases in their revenue, states from Utah to Florida are pumping more money into transportation projects to speed up traffic- clogged highways and modernize aging infrastructure. The 50 states collectively spent $113.2 billion on transportation in fiscal year 2019, a 9% jump from the previous year, according to the National Association of State Budget Officers. It was the biggest jump since 2015, and transportation industry trackers said they expect spending boosts to continue in 2020. State transportation departments and local governments are projected to spend $77.5 billion on highway and street construction investments alone in 2020, a 6% increase over 2019, according to the American Road & Transportation Builders Association.”
Wall Street Journal
E&C QUARTERLY SECTOR REVIEW | Q1 2020
Infrastructure Services
Engineering & Construction
TRANSACTION SIZE RANGE
$300+mm
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
HW Deal Spotlight | Atlas Technical Consultants
Atlas by the Numbers
Strategic footprint and critical mass in markets with significant projected infrastructure spend
Atlas Locations
Key Markets
Atlas HQ
Company Overview
Specialized provider of testing, inspection, and engineering services to support and maintain critical infrastructure.
Purpose-built platform assembled through the combination of proven market leaders
Broad range of mission-critical, nondiscretionary services
Exceptional platform diversity from a geographically and end-market-diverse customer base
Focus on high-volume, mission-critical services with revenue touchpoints across the built environment
Highly skilled base of employees with advanced technical expertise
Entrenched, long-term relationships with high-quality customer base
Commercial 44%
Transportation 26%
Industrial 14%
Government 8%
Education 7%
has been acquired by
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
Select Recent M&A Transactions
WSP Global acquires LT Environmental
WSP Global acquired LT Environmental, an environmental consulting firm serving clients in the Rocky Mountain West region.
The acquisition strengthens WSP’s expertise in the environmental sector and expands WSP’s geographic presence in the Rocky Mountain West.
Announced January 2020
The Kleinfelder Group acquires the Geotechnical, Environmental & Testing Divisions of Advantage Engineers
The Kleinfelder Group acquired the Geotechnical, Environmental & Testing Divisions of Advantage Engineers, a provider of consulting services and engineering solutions for a range of complex challenges. The Kleinfelder Group is a portfolio company of Wind Point Partners.
Regional expansion and penetration into new markets fueled Kleinfelder’s first acquisition since 2014.
EN Engineering acquires QC Data
EN Engineering acquired QC Data, an engineering and data services company providing business process outsourcing and project delivery services. EN Engineering is a portfolio company of Kohlberg & Co.
QC Data will allow EN Engineering to expand utility and telecom services, given their intelligent infrastructure services and data capabilities.
TRC Companies acquires Environmental Partners
TRC Companies acquired Environmental Partners, a provider of geo-environmental services including investigation and remediation solutions.
The acquisition of Environmental Partners strengthens TRC’s presence in the Southwest, in addition to broadening the range of services provided to existing clients.
Atlas Technical Consultants acquires Long Engineering
Atlas Technical Consultants acquired Long Engineering, a provider of civil engineering, architectural, and land surveying services. Atlas Technical Consultants is a portfolio company of Boxwood Merger Corporation.
Long Engineering’s strong technical capabilities and access to a broad customer base were key for Atlas in deciding to complete this tuck-in acquisition.
Announced December 2019
Announced November 2019
Announced November 2019
Announced November 2019
CONSOR Engineers acquires TKW Consulting Engineers
CONSOR Engineers acquired TKW Consulting Engineers, a provider of engineering and inspection services for government and private development, specializing in water and civil projects. CONSOR Engineers is a portfolio company of Keystone Capital Partners.
Strong cultural alignment and TKW’s technical expertise in water/wastewater, a new discipline that helps CONSOR to diversify its platform, facilitated this acquisition.
Announced October 2019
Geotechnical, Environmental, & Testing Divisions
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
1/27/2020 Brashear Construction Consulting U.S. based customized construction consulting firm providing services including forensic delay analysis and contract / risk management. Rimkus Consulting Group
1/21/2020 Arrasmith U.S. based architectural and planning firm specializing in healthcare, workplace, and community-centered projects. Schmidt Associates
1/21/2020 Lundstrom & Associates U.S. based architecture firm specializing in laboratory design for science, technology, and education end markets. Lionakis
1/20/2020 Vieau Associates U.S. based provider of environmental consulting and due diligence services. GZA GeoEnvironmental
1/15/2020 Sammel Architecture U.S. based architectural design firms serving clients in the healthcare, education, corporate, municipal, and transportation sectors. CPL
1/14/2020 Gilleece & Associates U.S. based provider of civil engineering services, with a focus on residential subdivision design in the Raleigh market. American Engineering
1/14/2020 Gills, Guard & Johnson U.S. based provider of professional landscape architecture, planning, civil and environmental engineering, construction inspection, and surveying. LJB
1/14/2020 The Lion'esque Group U.S. based architecture and design firm specializing in retail consultancy. MG2
1/11/2020 ECS U.S. based provider of environmental consulting services. Atlanta Environmental Management
1/10/2020 GCA U.S. based consulting firm specializing in transportation planning and engineering. KCI
1/10/2020 Massmann Land Surveyors U.S. based provider of land surveying services in St. Louis. Weihe Engineers
1/9/2020 CME Associates U.S. based transportation engineering firm with a focus on complex highway and bridge projects. CHA Consulting
1/9/2020 Construction Project Analytics Group
U.S. based professional consulting firm for contract management, planning, scheduling, project controls, and analysis for construction projects. Vidaris
1/7/2020 Belt Collins Hawaii U.S. based provider of planning, civil engineering, landscape architecture, and environmental consulting services. Bowers + Kubota Consulting
1/7/2020 Naismith Marine Services U.S. based provider of hydrographic and geophysical surveying and environmental solutions. T. Baker Smith
1/7/2020 J.S. Dyer & Associates U.S. based provider of structural engineering capabilities including risk assessments and forensic engineering investigations. J.S. Held
1/7/2020 SAFire Korean-based major fire protection engineering firm serving Asia-Pacific markets. Jensen Hughes
1/6/2020 Landpoint U.S. based provider of land surveying services for sectors including energy, industrials, and utilities. Cotton Creek Capital
1/6/2020 LT Environmental U.S. based environmental consulting firm serving clients in the Rocky Mountain West region. WSP Global
Announced Date Target Target Description Acquirer
Recent M&A Transactions
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
1/6/2020 Primal Architecture U.S. based provider of architectural and design services for large and small scale construction projects. Method Architecture
1/3/2020 MC Consultants – Environmental Services Division
U.S. based provider of high quality and cost effective environmental consulting and industrial hygiene services. Partner Engineering and Science
1/2/2020 Vibrantcy U.S. based provider of consulting services for commissioning, LEED, energy modeling, and MEP (mechanical, electrical, plumbing) design. Energy Engineering Associates
1/2/2020 OMNITEC Solutions U.S. based provider of enterprise technology, cloud, analytical, strategic advisory, and advanced engineering solutions. Gryphon Technologies
1/2/2020 Pacific Power Engineers U.S. based power systems engineering firm that offers electrical engineering and project management services. Ulteig Engineers
1/2/2020 Halvorson Design U.S. based provider of landscape architecture, planning, and urban design services for public, private, and institutional clients. Tighe & Bond
1/2/2020 Puchlik Design Associates U.S. based architectural firm specializing in healthcare facility design. HED
12/31/2019 W.L. Cassell & Associates U.S. based engineering firm providing design and construction administration of mechanical, electric, and communications systems. IMEG Corp.
12/31/2019 Monroe & Newell Engineers U.S. based structural engineering firm providing a range of consulting services with expertise in concrete, structural steel, and wood. IMEG Corp.
12/23/2019 Aptus Group USA U.S. based provider of turnkey engineering and infrastructure services for utility companies, natural gas providers, and state DOTs. 3 Rivers Capital
12/23/2019 Broadspectrum Australia based provider of operations and maintenance, asset management, and project management services. Ventia
12/20/2019 BC Consultants U.S. based multidisciplinary firm providing planning, land surveying, civil engineering, and land architecture services. LandDesign
12/20/2019 Southern Mapping Company South Africa based provider of aerial and space-based remote sensing, topographic surveys, mapping, and analysis for South Africa and internationally. Woolpert
12/12/2019 Epoch U.S. based provider of in-house design services including architecture, engineering, interior design, and landscape architecture. Shive-Hattery
12/12/2019 IFIC Forensics U.K. based forensics firm specializing in fire, explosion, chemical spill, and water escape investigations. Jensen Hughes
12/11/2019 Advantage Engineers - Geotechnical, Environmental, & Testing Divisions
U.S. based provider of geotechnical engineering, environmental consulting, and construction observation and materials testing (CoMET) services. The Kleinfelder Group
12/10/2019 RB Todd Consulting Engineers U.S. based provider of civil engineering services to clients in educational, recreational, municipal, and state sectors. ADC Engineering
12/9/2019 HFR Design U.S. based multidisciplinary architecture and engineering design firm serving Tennessee. World Architects and Engineers
12/9/2019 Brack.Hayes.Miller.Mahon U.S. based provider of architectural design and planning services, specializing in education and institutional projects. Bray Architects
Announced Date Target Target Description Acquirer
Recent M&A Transactions
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
12/7/2019 Destek Engineering U.S. based regional provider of forensic engineering and investigation services to the property and casualty industries and telecommunications sector. EFI Global
12/6/2019 JMC Professional Surveying and Mapping
U.S. based provider of surveying and mapping services. SAM Companies
12/4/2019 Aztech Environmental Technologies U.S. based full-service environmental firm of engineers, geologists, scientists, hydrogeologists and technical field professionals. LeBella
12/3/2019 Main Line Energy Consultants U.S. based multi-disciplined engineering firm providing transmission, distribution, and telecommunications design and consulting services to utilities and developers. Westwood Professional Services
12/3/2019 Pie Consulting U.S. based provider of engineering, rehabilitative design, consulting, enclosure commissioning (BECx), construction management, and field performance testing services. Lerch Bates
11/25/2019 Prime AE Group U.S. based multidiscipline engineering and architecture firm that provides creative solutions to challenges across multiple sectors. NewHold Enterprises
11/25/2019 Jedco Energy Services Canadian based provider of pipeline maintenance services, construction, engineering, and procurement to the Western Canada O&G industry. Strike Group
11/25/2019 QC Data U.S. based engineering and data services company, providing business process outsourcing and project delivery services. EN Engineering
11/25/2019 Environmental Partners U.S. based provider of geo-environmental services including investigation and remediation solutions. TRC Companies
11/20/2019 Long Engineering U.S. based provider of civil engineering, architectural, and land surveying services in the United States. Atlas Technical Consultants
11/20/2019 DW Smith Associates U.S. based consultancy provider specializing in project management, engineering, planning, surveying, and environmental services. Paulus, Sokolowski & Sartor
11/19/2019 Penoyre & Prasad U.K. based architecture firm specializing in sustainable, low-energy buildings in education, healthcare, residential, and cultural sectors. Perkins and Will
11/18/2019 RMS Engineers U.S. based provider of engineering expertise in industrial, manufacturing, bulk material, chemicals, and renewable energy projects. Salas O'Brien
11/18/2019 DBS & Associates Engineering U.S. based civil engineering company focusing on industrial and commercial projects. TTL
11/12/2019 GTC Engineering U.S. based engineering firm with capabilities in professional planning, electrical, structural, GIS, information technology, transportation and surveying services. Baxter & Woodman
11/12/2019 Bioscope Environmental Australian based leader in mine-life management, providing project lifecycle services from early approval to post-closure environmental monitoring. CDM Smith
11/12/2019 Cort Architectural Group U.S. based architecture, interior design, and planning firm. McMillan Pazdan
11/11/2019 GHD Group – Forensic Engineering Business
U.S. based forensic engineering business of Australian based GHD Group, a leading professional service firm in E&C and environmental services. NV5 Global
11/9/2019 Quantum Spatial U.S. based full-service geospatial solutions provider combining advanced remote sensing technology, analytics tools, and subscription software. NV5 Global
Announced Date Target Target Description Acquirer
Recent M&A Transactions
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
11/7/2019 Gould Turner Group U.S. based full-service architectural, planning, and interior design firm. Barge Design Solutions
11/6/2019 Timberlake Engineering Consultants U.S. based full service mechanical/HVAC, electrical, lighting, plumbing, and LEED consulting engineering company. Custom Engineering
11/5/2019 Pier Structural Engineering U.S. based telecommunications engineering and inspection firm. Tower Engineering Professionals
11/5/2019 Gaudreau U.S. based architecture and planning firm with expertise in science & technology, academic, and corporate facilities design. EwingCole
11/4/2019 Aqualyze U.S. based provider of civil and environmental engineering services in storm water, wastewater, sewer collection, and water distribution systems. Murraysmith
11/4/2019 Benchmark Consulting Services U.S. based full-service construction consulting firm serving the Western United States. J.S. Held
11/2/2019 Energy and Environmental Economics (E3)
U.S. based data-driven energy analysis and strategy consulting firm. Willdan Group
10/30/2019 STV Group U.S. based provider of architectural, engineering, planning, environmental, and construction management services. The Pritzker Organization
10/26/2019 Ecosystem Research Group U.S. based environmental consulting services provider. DJ&A
10/25/2019 WorkingBuildings U.S. based provider of owner's advocate services including commissioning, related engineering, and operational services for complex facilities. Trinity Consultants
10/23/2019 DCBA Landscape Architecture U.S. based leading landscape architectural firm that serves public and private sectors. LJA Engineering
10/23/2019 Lockheed Martin – Distributed Energy Segment
U.S. based segment of Lockheed Martin, supplying distributed energy services to electric and gas utility customers. TRC Companies
10/21/2019 Genesis Planning U.S. based medical equipment planning and consulting firm. Ross & Baruzzini
10/15/2019 Natural Resources Engineering Company
U.S. based provider of engineering and management services related to the transmission petroleum industry. LHB
10/15/2019 Kirlin Design Build U.S. based provider of engineering and construction services for complex federal and private sector projects in the U.S. and internationally. Blue Wolf Capital Partners
10/14/2019 Boundary Engineering U.S. based civil engineering and construction management company serving the municipal sector. Houston Engineering
10/14/2019 AECOM – Management Services Branch
U.S. based E&C firm engaging in the designing, building, financing, and operating of infrastructure assets worldwide.
American Securities LLC, Lindsay Goldberg
10/13/2019 Retention Pond Services U.S. based regional leader in storm water compliance, maintenance, and repair services. Apex Companies
10/11/2019 Plateau Excavation U.S. based leading provider of complex, large-scale site infrastructure services in the Southeastern U.S. Sterling Construction Company
Announced Date Target Target Description Acquirer
Recent M&A Transactions
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
10/11/2019 TKW Consulting Engineers U.S. based provider of engineering and inspection services for government and private development, specializing in water and civil projects. CONSOR Engineers
10/11/2019 Lievense Holding Netherlands based multidisciplinary consulting firm active in buildings, environment, energy, infrastructure, and water sectors. WSP Global
10/9/2019 High Energy U.S. based provider of electrical, civil, and structural engineering services for electric utility and associated utility clients. Barr Engineering
10/2/2019 Garrett-Ihnen Civil Engineers U.S. based full-service engineering firm specializing in site development and design for commercial and residential end markets. Bleyl Engineering
10/1/2019 Muermann Engineering U.S. based provider of electrical, technical, plumbing, HVAC and fire sprinkler design services. MSA Professional Services
10/1/2019 Compliance Environmental International
U.S. based industrial hygiene and environmental consulting firm. The Vertex Companies
10/1/2019 Traffic Technologies U.S. based provider of consulting services in the areas of toll collection and intelligent transportation systems. Gannett Fleming
Announced Date Target Target Description Acquirer
Recent M&A Transactions
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
Public Valuations1
Trended EV / EBITDA Multiples Quarterly EV / EBITDA Multiples 5-Year Revenue CAGR
En gi
ne er
in g
C om
ps C
on st
ru ct
io n
C om
ps
Trended EV / EBITDA Multiples Quarterly EV / EBITDA Multiples 5-Year Revenue CAGR
(6.4%)
(3.6%)
5.1%
6.4%
9.8%
12.7%
19.3%
30.9%
38.5%
16.1x
9.4x
7.6x
8.9x
18.0x
13.4x
13.0x
14.9x
19.9x
9.2x
9.3x
9.6x
11.7x
11.7x
13.6x
16.5x
20.8x
21.7x
Q4 2019 Q4 2018
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
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E&C QUARTERLY SECTOR REVIEW | Q1 2020
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