M&A activity down in 2013 among architecture, engineering firms: Report

In 2013, consultant Morrissey Goodale observed 168 sales of U.S.-based architecture and engineering (“A/E”) firms – down nearly 7% from the record 180 sales of U.S.-based A/E firms in 2012. Similarly, just 107 international A/E firms sold in 2013, a drop of more than 20% from the 135 deals in 2012. Yet 2013 was anticipated by many to be another break-neck, record-setting year for A/E industry M&A. The economy continued to recover, performance at many firms climbed back to pre-recession levels, and things were looking up for a year of rapid deal-making. So what caused industry dealmakers to slow down after living 2012 in the fast lane?

· Owners rode the (modest) wave. As the economy persisted to creep toward respectability in 2013 and value continued to build in A/E firms, prospective sellers showed an increasing reluctance to jump at offers. Instead, they were inclined to take the longer view of building a track record of solid performance, desiring to sell at the high (or at least higher) water mark that many A/E firm leaders believe is still on the horizon.

· Tax-driven deal spike late in 2012. U.S. sellers seemed to be certain they needed to sell in 2012 to minimize capital gains which were anticipated to climb in 2013. We observed an unusually high flurry of deal activity in late 2012, seemingly driven by a desire to get deals done by year end. With tax rates steady for the foreseeable future, we anticipate the competitive environment, age, ownership and leadership transition, and other factors will drive owners’ desires to sell their firms.

· Large firms took a breather in 2013. Many of the firms that have traditionally been the most active buyers in the industry spent 2013 mostly on the sidelines. Firms like AECOM, SNC-Lavalin, Genivar (now WSP Global), IBI Group, ARCADIS, and URS, among others, slowed or stopped their M&A programs in 2013. This decline may be attributable to the need to integrate the firms they acquired over the last few years, work on internal initiatives, or simply being unable to find and close deals that met their strategic needs at appropriate valuations in 2013.

About Morrissey Goodale LLC

Based in Newton, Mass., Morrissey Goodale LLC is a leading management consulting and research firm serving the architecture, engineering, and Construction (AEC) industry.

Humphreys and Partners, Gensler, Solomon Cordwell Buenz, Niles Bolton Associates, and AO top the ranking of the nation's largest multifamily housing sector architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report. Note: This ranking factors revenue for all multifamily buildings work, including apartments, condominiums, student housing facilities, and senior living facilities.

The Cedar Crossing development in Seattle features street-level retail and businesses.

Affordable Housing | Oct 20, 2023

Cracking the code of affordable housing

Perkins Eastman's affordable housing projects show how designers can help to advance the conversation of affordable housing.

Senior Living Design | Oct 19, 2023

Senior living construction poised for steady recovery

Senior housing demand, as measured by the change in occupied units, continued to outpace new supply in the third quarter, according to NIC MAP Vision. It was the ninth consecutive quarter of growth with a net absorption gain. On the supply side, construction starts continued to be limited compared with pre-pandemic levels.

Warehouses | Oct 19, 2023

JLL report outlines 'tremendous potential' for multi-story warehouses

A new category of buildings, multi-story warehouses, is beginning to take hold in the U.S. and their potential is strong. A handful of such facilities, also called “urban logistics buildings” have been built over the past five years, notes a new report by JLL.

Building Materials | Oct 19, 2023

New white papers offer best choices in drywall, flooring, and insulation for embodied carbon and health impacts

“Embodied Carbon and Material Health in Insulation” and “Embodied Carbon and Material Health in Gypsum Drywall and Flooring,” by architecture and design firm Perkins&Will in partnership with the Healthy Building Network, advise on how to select the best low-carbon products with the least impact on human health.

Contractors | Oct 19, 2023

Crane Index indicates slowing private-sector construction

Private-sector construction in major North American cities is slowing, according to the latest RLB Crane Index. The number of tower cranes in use declined 10% since the first quarter of 2023. The index, compiled by consulting firm Rider Levett Bucknall (RLB), found that only two of 14 cities—Boston and Toronto—saw increased crane counts.

Office Buildings | Oct 19, 2023

Proportion of workforce based at home drops to lowest level since pandemic began

The proportion of the U.S. workforce working remotely has dropped considerably since the start of the Covid 19 pandemic, but office vacancy rates continue to rise. Fewer than 26% of households have someone who worked remotely at least one day a week, down sharply from 39% in early 2021, according to the latest Census Bureau Household Pulse Surveys.

Main bedroom in a One Chicago high-rise apartment.

Luxury Residential | Oct 18, 2023

One Chicago wins 2023 International Architecture Award

One Chicago, a two-tower luxury residential and mixed-use complex completed last year, has won the 2023 International Architecture Award. The project was led by JDL Development and designed in partnership between architecture firms Goettsch Partners and Hartshorne Plunkard Architecture.

Giants 400 | Oct 17, 2023

Top 130 Sports Facility Architecture Firms for 2023

Populous, Gensler, HOK, and HKS head BD+C's ranking of the nation's largest sports facility architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.

Currently Reading

M&A activity down in 2013 among architecture, engineering firms: Report

Tags

MFPRO+ Special Reports | Oct 27, 2023

Giants 400 | Oct 23, 2023

Affordable Housing | Oct 20, 2023

Senior Living Design | Oct 19, 2023

Warehouses | Oct 19, 2023

Building Materials | Oct 19, 2023

Contractors | Oct 19, 2023

Office Buildings | Oct 19, 2023

Luxury Residential | Oct 18, 2023

Giants 400 | Oct 17, 2023

Most Popular Content

Magazine Subscription

Get our Newsletters

Follow BD+C: