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Mechanical, electrical, plumbing (MEP), and fire protection engineering firms accelerate dealmaking as industry continues to consolidate at unprecedented pace.
Last year was a remarkable year for mergers and acquisitions (M&A) in the architectural and engineering (A/E) industry. Morrissey Goodale tracked 203 domestic deals in 2014--a new record for the industry--and a nearly 13% increase over the 180 domestic deals in 2013. Not only were the number of deals at record levels, but some of the largest deals in the history of our industry took place in 2014. M&A among Consulting-Specifying Engineer's MEP Giants contributed to the flurry of activity. Twenty-one of this year's MEP Giants reported acquiring another firm in 2014. This represents an uptick compared to 16 of the MEP Giants reporting acquisitions in both 2013 and 2012.
Buyers focus on U.S.
The increase in activity among the MEP Giants was part of a broader rise in dealmaking in the A/E industry. The 203 domestic deals tracked in 2014 (deals involving a U.S.-based seller) are an indication that industry firms see the U.S. market as a prime place to invest for the long term (see Figure 1). The U.S. economy has been on a roll, which has led to new project opportunities across a wide range of end markets for MEP firms. Project owners in the public, private, and institutional sectors continue to advance their capital investment programs while the economy is strong.
Cities like Dallas; Raleigh, N.C.; Austin, Texas; and Seattle have been hotbeds for growth, leading MEP firms to seek expansion through key hires or M&A. Houston has been a particularly hot market for MEP deals. What was once an economy driven almost entirely...