Though overall 2012 merger and acquisition (M&A) activity in the engineering and construction industry did not meet levels seen in 2011, an uptick in fourth quarter activity points to signs of recovery, according to Engineering Growth, a quarterly analysis of the global engineering and construction industry by consultant PwC US.
“With the continued elevated level of uncertainty through the end of the year, we saw many deal makers staying on the sidelines or engaging in smaller, bolt-on acquisitions. However, as the global engineering and construction sector continues on its path of slow recovery, we remain cautiously optimistic and expect the M&A arena to follow a similar trajectory of modest growth in 2013. Growing infrastructure needs, expanding urbanization, and the need for cleaner, environmentally friendly and sustainable energy and water continue to be the driving forces of M&A activity in the sector,” said H. Kent Goetjen, U.S. engineering and construction leader with PwC.
In 2012, there were 168 deals (with values of $50 million or more) totaling $49.3 billion, compared with 181 transactions worth $73.3 billion in 2011. Overall 2012 M&A volume and value declined compared with 2011 levels, but the sector did see increased activity in the fourth quarter of 2012: 57 deals totaling $13.9 billion, an increase in value and volume compared with the third quarter of 2012 (31 transactions totaling $10.8 billion).
Despite the slowdown in engineering and construction dealmaking, financial investors continue to slowly gain momentum. In 2012, the participation of financial advisors was higher than the average 10-year rate of about 33 percent of financial acquirers and they were an active participant in some of the largest deals during the year, potentially suggesting signs of recovery and opportunity in the sector.
Transactions in the construction materials category led deals in the full year of 2012 in both value and volume with 46 deals over $50 million totaling $16.57 billion, outnumbering the construction segment, the usual leader and second in terms of volume in 2012. Multiple large and mega deals throughout 2012, including the only mega-deal in the fourth quarter, involved targets associated with the construction materials segment (notably, cement and concrete), contributing to a 70% increase in value in the segment’s deals over 2011.
The majority of engineering and construction transactions in 2012 were local deals, for both U.S. targets and targets and acquirers from other parts of the world. Asia and Oceania remained the most active region in engineering and construction dealmaking, representing 68 deals totaling $15.09 billion in 2012, followed by Europe and North America. The United States was the most active individual nation, engaging in the largest number of deals and also tending to generate higher deal values due to the relative maturity, size, and financial stability of U.S.-affiliated dealmakers.
For a copy of Engineering Growth, visit: www.pwc.com/us/
Related Stories
Contractors | Nov 3, 2021
RC Andersen Construction to join the STO Building Group
Merger extends both firms’ capabilities for clients in the industrial/distribution sector.
Contractors | Nov 2, 2021
Building profits: Working with a construction-cost manager
Working with an independent cost manager may be a new concept for some owners, but it holds promise of saving them money and time.
Contractors | Oct 29, 2021
A grim Market Outlook foresees more shortages that impede construction
Consigli’s new report, though, does offer glimmers of relief on the supply-chain front, and strategies for risk management.
Sustainability | Oct 28, 2021
Reducing embodied carbon in construction, with sustainability leader Sarah King
Sustainability leader Sarah King explains how developers and contractors can use the new EC3 software tool to reduce embodied carbon in their buildings.
Cladding and Facade Systems | Oct 26, 2021
14 projects recognized by DOE for high-performance building envelope design
The inaugural class of DOE’s Better Buildings Building Envelope Campaign includes a medical office building that uses hybrid vacuum-insulated glass and a net-zero concrete-and-timber community center.
Giants 400 | Oct 22, 2021
2021 Retail Giants: Top architecture, engineering, and construction firms in the U.S. retail building sector
Gensler, CallisonRTKL, Kimley-Horn, and Whiting-Turner top BD+C's rankings of the nation's largest retail sector architecture, engineering, and construction firms, as reported in the 2021 Giants 400 Report.
Giants 400 | Oct 22, 2021
2021 Industrial Sector Giants: Top architecture, engineering, and construction firms in the U.S. industrial buildings sector
Ware Malcomb, Clayco, Jacobs, and Stantec top BD+C's rankings of the nation's largest industrial buildings sector architecture, engineering, and construction firms, as reported in the 2021 Giants 400 Report.
Giants 400 | Oct 22, 2021
2021 Airport Sector Giants: Top architecture, engineering, and construction firms in the U.S. airport facilities sector
AECOM, Hensel Phelps, PGAL, and Gensler top BD+C's rankings of the nation's largest airport sector architecture, engineering, and construction firms, as reported in the 2021 Giants 400 Report.
Giants 400 | Oct 22, 2021
2021 Sports Facilities Giants: Top architecture, engineering, and construction firms in the U.S. sports and recreation facility sector
AECOM, Populous, Kimley-Horn, and HOK top BD+C's rankings of the nation's largest sports and recreation facility sector architecture, engineering, and construction firms, as reported in the 2021 Giants 400 Report.
Multifamily Housing | Oct 21, 2021
Chicago’s historic Lathrop public housing complex gets new life as mixed-income community
A revitalized New Deal–era public housing community in Chicago brings the Garden City movement of yesteryear into the 21st century.
