Word on the Street: Issue 200

Viva Las Vegas!

Last week’s Western States M&A and Business Symposium in Las Vegas was memorable for many things. Sizzling 100-plus-degree days? Check. A great group of 200 AE and environmental industry executives, investors, and experts to network with? Yup. Real-time, hot-off-the press, mid-year (that’s a lot of sequential hyphens) 2024 industry performance data and forecasts? Got you covered. Insight on best practices and the latest thinking on M&A, strategy, and business management? Sure. 

But don’t take my word for it. Let’s hear from the Morrissey Goodale advisory team who were on the ground facilitating panels, presenting content, and enjoying the receptions.

1.  Mid-year “State of the Industry” presentation:

 
Nick Belitz, Principal
Morrissey Goodale (Denver)


I was thrilled to once again partner with Megan Miller of our Platinum Sponsor Deltek to share the latest industry financial performance metrics and forecasts. Referencing the data from Deltek’s 45^th annual Clarity Architecture & Engineering Industry Study of over 650 AE firms, Morrissey Goodale databases, and symposium attendees, the message is clear: It’s simply a great time to be in the AE and environmental industry. Revenue growth continues apace, operating profits are robust, and backlogs and balance sheets are as strong as ever. While industry executives and owners have some concerns—chief among them staff recruiting and retention and figuring out how (not if) to incorporate AI applications to get work done faster and better—strong financial results are enabling firm leaders to invest in people, acquisitions, and technology. While not quite every market is in expansion mode—corporate interiors and some residential markets are taking a breather—the core infrastructure markets of water, roads, and power and energy, plus the federal, education, and industrial markets, are expected to lead growth in the year ahead.

2.  2024 M&A Best Practices Award: 

Trinity Consultants (Dallas, TX) was the recipient of this year’s M&A Best Practices Award for their excellent approach to integration. Accepting the award for Trinity Consultants was CEO Paul Greywall, who also provided his expertise on the “Buyers Best Practices Panel” (see below).

2024 M&A Best Practices Award Ceremony
Jon Escobar, Lisa Elster, Paul Greywall, Katharine Van Leer, Nick Belitz

3. “Future of the Industry ENR 500 CEO Panel”:

 
Sarah Thornhill, Strategy Consultant
Morrissey Goodale (Denver)


I could have talked for hours longer with the incredible leaders on the CEO panel who offered profound insights on the AE and environmental industry. They acknowledged that while AE firms have faced significant challenges in recent years, the pace of change is not slowing down. “There will be clear winners and losers,” said Darin P. Anderson, chairman and CEO of Salas O’Brien (Irvine, CA) (ENR #39), emphasizing that companies adept at adopting and leveraging technology will create substantial gaps between themselves and those that do not. The CEOs highlighted that people and leadership skills are more critical than ever for those leading AE firms. Steve Thompson, chairman of Veenstra & Kimm (West Des Moines, IA) (ENR #453), advised attendees to enhance their leadership skills: “Be curious about everything, both about yourself and the company.” The ability to engage in difficult conversations and maintain a growth mindset are also crucial skills for the future. Diversity, equity, and inclusion are top priorities for these leaders, not just because of their prominence in current discourse, but because they want employees to bring their full selves to work. They stressed the importance of reflecting the communities they serve and recognizing diversity beyond race and gender to include neurodiversity and other characteristics. This approach means valuing the whole person, not just their output. M. Gayle Packer, president & CEO of Terracon (Olathe, KS) (ENR #18), shared a poignant story from a supervisor whose employee said, “If you don’t see the color of my skin, you don’t see me,” underscoring the importance of genuine inclusion. There are challenges on the horizon, but these leaders see them as opportunities to grow and change. I was inspired by these leaders to meet challenges head on!

4. Learning from the best—“Buyers Best Practices Panel”:

 
Lisa Elster, M&A Consultant
Morrissey Goodale (Natick)


I was excited to host a panel where three of the industry’s most prolific and proficient acquirers discussed best practices and shared their perspectives on the market. Rebecca Ashton, COO of Verdantas (Tampa, FL) (ENR #113); David Richter, executive vice president of Atwell (Southfield, MI) (ENR #71); and Paul Greywall, CEO of Trinity Consultants (Dallas, TX), stressed that a buyer’s transparency about their goals and acquisition process are key to greatly increasing the chances of a successful transaction. Additionally, a seller’s ability to understand their unique value is crucial for attracting the right buyer. Together, these elements create a more efficient and effective M&A environment, ensuring that both parties achieve their objectives.

5. Don’t worry, you can do this—“Sellers Best Practices Panel”:

 
Nate Wentworth, Senior Consultant
Morrissey Goodale (Denver)


Remember the KISS principle: Keep it simple, stupid! That was the message from the panel of CEOs and principals who had recently sold their firms that I hosted. Cortney Brand, president and CEO of LRE Water (Denver, CO) (which last year became part of Spheros Environmental); Dylan Crawford, president of O’Dell Engineering (Modesto, CA) (a Westwood company); and Allen Ramsey, regional president of RaganSmith (Nashville, TN) (a Pape-Dawson company), stressed the importance of focusing on what truly matters in a transaction—and it’s not valuation. What are the reasons why you and your shareholders are looking for a partner? Whether being acquired is part of your growth plan or a way to facilitate ownership transition, keeping the must-haves top-of-mind will serve as the North Star helping to guide you through the complex emotional roller coaster that is a sell-side process.

6. Behind the deal:

 
Brendon Cussio, Principal
Morrissey Goodale (Denver)


We’re always looking to bring new and informative content to our symposiums. So last week, I hosted a panel discussion of the principals behind one of the industry’s most impactful transactions to share how the deal came together and how it’s progressing. In March of this year, Salas O’Brien (Irvine, CA) (ENR #39) announced that I.C. Thomasson Associates (ICT) (Nashville, TN) (ENR #276) had joined the company, creating a combined presence of more than 80 North American offices with over 2,800 team members. Joining me on stage were John Wimberly, chairman & CEO, and Shane Kirby, president, of I.C. Thomasson and Grant Reindl, CFO, and Nathan Rust, vice president of corporate development, of Salas O’Brien. Since this was the last session on Thursday, we of course opened the bar for an even more relaxed and fun conversation and questions from the audience. From the discussion, these are the five big takeaways that sellers should consider and recognize when looking for right partner: a strong cultural fit, give-and-take during the negotiation, leveraging the sale process to maximize outcomes, remembering that each deal is unique with its own challenges, and ensuring the partnership is a win/win for both parties. These are the foundational elements that lead to a successful partnership.

7. Words of wisdom from the 1000 Club:

 
Katharine Van Leer, M&A Consultant
Morrissey Goodale (Durham, NC)


“The 1000 Club” panel, always one of the symposium’s most interesting and entertaining sessions, featured insights from George E. Christodoulo, a partner at Lawson & Weitzen, LLP;  David M. Sullivan, partner at PKF O’Connor Davies; and Brendon Cussio, a Morrissey Goodale principal. We opened the session by continuing the previous evening’s ICT/Salas O’Brien discussion since all three panelists played a key role in the process, and it gave us an opportunity to dig deeper into the mechanics of the deal. From there, the discussion covered the upcoming election, FTC regulations,  and relatively high interest rates on the current M&A climate—spoiler alert, not much! As always, attendees left the session full of legal, tax, and advisory advice on current trends in valuations, deal structures, and due diligence while having some good laughs at the same time. 

8.  Mid-year M&A update:

 
Jon Escobar, Principal
Morrissey Goodale (Chicago)


The AE and environmental industry is experiencing unprecedented levels of M&A activity, with nearly 1,500 U.S. deals announced since the start of 2021. This growth is driven by robust firm performance, substantial public sector and institutional funding, and an increased presence of private equity. Hot markets such as water, transportation, and power are leading the charge, while pandemic-affected sectors such as hospitality, retail, and commercial continue to face challenges. The median buyer size has grown significantly, reflecting the scale of consolidations, while the median seller size remains consistent, underscoring the industry’s fragmentation. With high M&A activity and elevated valuations expected to continue, firms are strategically navigating this dynamic landscape to maximize growth and capitalize on emerging opportunities.

9. Thank you to our sponsors, partners, and exhibitors! We have three goals for each of our symposiums. The first is to bring real-time intelligence and data on the trends that are transforming the industry to the attendees so that they are armed with information to make better strategic decisions. The second is to share best practices in the areas of M&A, strategy, and business management. The third is to provide a unique forum for attendees to connect with strategic partners, buyers, sellers, and experts. We would like to thank our sponsors and partners who (a) are experts who know the AE industry inside and out and (b) help us deliver on achieving our three goals every single symposium. Our sponsors and partners for Vegas were Deltek, Lockton, BST Global, CTA, Full Sail Partners, Fox Rothschild, Lawson & Weitzen, PKF O’Connor Davies, ClientSavvy, Quire, and Transcend. 

The message was loud and clear in Las Vegas: These are great times to be an owner of an AE or environmental consulting firm. Maybe even the greatest. And for most of the industry, it’s still full steam ahead. 

If you were unable to join us, your peers, and potential investors, acquirers, and sellers for your firm in Las Vegas, there’s no need for FOMO. Instead, get your name on the waitlist for the Texas and the South M&A and Business Symposium at the five-star Post Oak Hotel at Uptown Houston in October to be first to know when registration goes live.

Questions? Comments? Suggestions? You can reach Mick Morrissey at 508.380.1868 or [email protected].

Weekly M&A Round Up

Yet another active week: Last week we reported eight more domestic deals. Almost halfway through 2024, we have tracked 226 domestic deals. We are on track to surpass the 443 deals announced last year and come close to the high-water mark of activity in 2022, which saw 484 deals. You can check all the week’s M&A news here.