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Archive for the ‘Engineering/Construction’ Category

M&A Quarterly News In The Engineering and Construction Industry Sector

By Peter Heydenrych | Sep 19, 2018

The report below gives a good overview of the third quarter M&A activity in the Engineering and Construction Industry Sector. M&A activity for North American based target companies in the Engineering and Construction sector for Q2 2018 included 98 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions closed in June when Gutridge Plumbing, Inc., a portfolio company of Kassel Equity Group, LLC, acquired Titan Electrical Construction & Design, Inc. for an undisclosed amount. The acquisition would enhance Gutridge Plumbing’s service capabilities. Titan Electrical Construction & Design is located in Ohio and provides electrical contracting services.

Building permits were on the rise in quarter, which bodes well for the construction sector. Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,311,000. This is 1.5 percent (±1.3 percent) above the revised June rate of 1,292,000 and is 4.2 percent (±1.7 percent) above the July 2017 rate of 1,258,000.
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M&A Quarterly News | Engineering and Construction Industry Sector

By Peter Heydenrych | Jun 28, 2018

The report below gives a good overview of the second quarter M&A activity in the Engineering and Construction Industry Sector. M&A activity for North American based target companies in the Engineering and Construction sector for Q1 2018 included 81 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in March when TopBuild Corp acquired USI, Inc., formerly known as United Subcontractors, Inc., a portfolio company of Reinet Investments Manager SA and Trilantic Capital Management LP, for US$475 million in cash. Founded in 1998, USI is located in St. Paul, Minnesota and engages in the installation of residential and commercial products. It generated revenues of approximately US$375 million for the year ended 2017.TopBuild Corp. is an installer and distributor of insulation products.

Housing starts continued on an upward curve in the first quarter as the economy remains strong.
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M&A Quarterly News | Engineering and Construction Industry Sector

By Peter Heydenrych | Mar 26, 2018

The report below gives a good overview of the first quarter M&A activity in the Engineering and Construction Industry Sector. M&A activity for North American based target companies in the Engineering and Construction sector for Q4 2017 included 86 closed deals, according to data published by industry data tracker FactSet.

One of the notable transactions of the quarter was announced in October when Lennar Corp acquired CalAtlantic Group, Inc. for US$6.1 billion in cash and stock. The transaction is expected to generate annual cost savings and synergies of approximately US$250 million, with approximately US$75 million achieved in fiscal year 2018. Based in Irvine, California, CalAtlantic Group, Inc. provides home building services.

As the economy strengthens, construction spending across all sectors has increased.

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M&A Quarterly News | Engineering and Construction Sector

By Peter Heydenrych | Nov 10, 2017

The report below gives a good overview of the fourth quarter M&A activity in the Engineering and Construction Industry Sector. M&A activity for North American based target companies in the Engineering and Construction sector for Q3 2017 included 52 closed deals, according to data published by industry data tracker FactSet.

The nonresidential building market is expected to be among the weakest-performing segments of the overall US construction market over the next few years, according to a July 2017 forecast by ConstructConnect and Oxford Economics. US nonresidential building construction activity fell nearly 18% in the second quarter of 2017 compared to the same period a year earlier.

Second-quarter activity was particularly weak for retail and parking garage segments. Between 2017 and 2021, nonresidential building construction starts are forecast to see annual growth of less than 2%. While starts were weak in the second quarter 2017, construction projects in the manufacturing sector could be a bright spot moving forward amid low energy costs, technical expertise in competitive world markets, and pressure from the Trump administration to keep manufacturing jobs in the US. Manufacturing-related construction starts are expected to drop more than 11% in 2017, then rise more than 9% in 2018. After a slight rise in 2018, commercial starts are forecast to gradually decline through 2021, but institutional projects should see modest annual upticks in activity.

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M&A News From The Engineering & Construction Industry

By Peter Heydenrych | Sep 13, 2017

The report below gives a good overview of the third quarter M&A activity in the Engineering and Construction Industry Sector. M&A activity for North American based target companies in the Engineering and Construction sector for Q2 2017 included 88 closed deals, according to data published by industry data tracker FactSet. The average transaction value was $81 million.

One of the largest deals of the quarter closed in April when Tallgrass Energy Partners LP acquired an additional 24.99% minority stake in Rockies Express Pipeline LLC from Tallgrass Development for US$400 million in cash. Rockies Express Pipeline LLC provides water, sewer and pipeline construction services.

The Trump administration has promised to spend on improving the condition of the United States’ infrastructure. New large infrastructure projects will certainly benefit the industry and could spur a flurry of M&A as larger companies look to acquire smaller companies to increase capabilities.

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Construction & Engineering Sector | M&A News

By Jeff Johnson | Feb 15, 2017

construction & engineeringNew US infrastructure projects such as repaving roads, shoring up bridges, and expanding busy highways with toll roads – a key source of demand for contractors – are predicted to rise in value in 2017 compared to the year before, according to Dodge Data & Analytics. The value of new public works construction & engineering projects, which include highway, street, and bridge construction as well as natural gas and oil pipelines and environmental work, is expected to rise 6%. The forecast represents improvement over 2016, when the value of new public works projects fell by 3% year over year. Demand is being driven in part by highway and bridge work funded by the new federal transportation bill.

New US regulations make it easier for companies that construct highways, streets, and bridges to begin or expand their use of drones. The FAA in mid-2016 issued commercial drone regulations that allow construction companies to begin using drones within days, rather than weeks or months. The infrastructure sector, along with the engineering & construction sector, leads in the number of exemption applications since the FAA began granting exceptions to its ban on the commercial use of drones. According to the Association for Unmanned Vehicle Systems International, nearly 40% of FAA-approved exemptions so far have come from these sectors.

Industry Indicators

  • The value of US nonresidential construction spending, a demand indicator for builders, rose 4.1% year-to-date in November 2016 compared to the same period in 2015.
  • US steel mill product prices, an indicator of commodity steel product costs used in construction, rose 8.7% in December 2016 compared to the same month in 2015.
  • The spot price of crude oil, which affects highway construction costs for asphalt, bituminous concrete, plastic pipe products, and for running equipment fleets, rose 50.3% in the week ending January 13, 2017, compared to the same week in 2016.

Posted by Jeff Johnson.

Read the Entire Engineering & Construction M&A 1st Quarter Newsletter Here


M&A News | Construction and Engineering Sector

By Jeff Johnson | Oct 20, 2016

Construction and Engineering SectorM&A activity in the Construction and Engineering Sector for North American based target companies in the Engineering & Construction sector for Q3 2016 included 63 closed deals, according to data published by industry data tracker FactSetThe average transaction value was $383 million.

Nonresidential construction and heavy engineering activity continued along an upward path during the quarter and funding for government infrastructure projects continues to be strong.

As demand for new homes rises, builders nationwide are struggling to find workers at all levels, according to the National Association of Home Builders. The association estimates that 200,000 US construction jobs are unfilled, 81% more than just two years ago. Some states, including Arizona, California, Georgia, and Missouri, are seeing 20% fewer people working in construction than at the market peak, according to the Associated General Contractors of America. The ratio of construction job openings to hiring, a measurement maintained by the Department of Labor, is at its highest level since 2007. In the meantime, the persistent lack of skilled trades has spurred companies to increase pay for hourly workers, ramp up in-house training, and add more overtime hours.

Industry Indicators

  • The value of US nonresidential construction spending, a demand indicator for builders, rose 5.1% year-to-date in July 2016 compared to the same period in 2015.
  • US steel mill product prices, an indicator of commodity steel product costs used in construction, rose 0.3% in August 2016 compared to the same month in 2015.

Posted by Jeff Johnson.

Read the Entire Engineering & Construction 4th Quarter Newsletter Here


M&A Trends | Engineering & Construction Industry

By Jeff Johnson | Aug 25, 2016

Engineering & construction industryEngineering & Construction industry companies reliant on business from energy producers may consider shifting their bidding efforts to other sectors. While 44 US states and the District of Columbia added construction jobs between March 2015 and March 2016, five energy-producing states logged construction employment declines, according to Associated General Contractors of America. Job gains were concentrated in California, Florida, New York, and Massachusetts, states that altogether added 100,400 construction jobs year-over-year. Two of the nation’s smallest states, Hawaii and Rhode Island, saw the highest percentage increases in new construction jobs. Due to declining prices for coal, oil, and other fuels, demand for construction is waning in states that rely on energy extraction for economic stability. North Dakota and Alaska, big producers of coal and natural gas, suffered the highest percentage of construction job losses during the year, along with Wyoming, Kansas, and West Virginia.

Engineering services firms that specialize in infrastructure projects should anticipate rising requests to bid on tunneling projects as more big cities turn to underground development. Creating demand for specialized engineering services, more cities worldwide are extending their reach underground rather than building up, thanks to new technologies, analytical tools, and materials. Urban centers are tunneling at a record pace, according to The Wall Street Journal, as subterranean development has grown highly technical and surprisingly less expensive. Digging manually can cost nearly $1 million per foot as compared to about $19,000 per foot using a giant boring machine.

Industry Indicators 

  • The value of US nonresidential construction spending, an indicator of the health of the construction market, rose 7.1% year-to-date in May 2016 compared to the same period in 2015.
  • The value of US residential construction spending, an indicator of the health of the construction market, rose 9.8% year-to-date in May 2016 compared to the same period in 2015.
  • US steel mill product prices, an indicator of commodity steel product costs used in construction, fell 4.6% in June 2016 compared to the same month in 2015.

Posted by Jeff Johnson.

Read the Entire Engineering and Construction M&A 3rd Quarter Newsletter Here


Engineering & Construction Industry M&A Trends

By Jeff Johnson | May 19, 2016

engineering & constructionOne of the largest transaction announcements in the sector during Q1 was in the engineering space on March 29 when design firm Stantec (Edmonton, Alberta, Canada) entered into a definitive merger agreement to acquire MWH Global (Broomfield, CO), a 6,800-person engineering, consulting and construction management firm focused on water and natural resources for built infrastructure and the environment. The transaction is valued at approximately US$795 million or a multiple of approximately 7.3x adjusted 2015 EBITDA.

As more project owners require contractors to use certain technologies, construction companies of all sizes are now incorporating the Building Information Modeling (BIM) process into their implementations and more widely adopting emerging technologies such as 3D laser scanning. No longer limited to major companies, use of BIM is becoming a necessity for smaller firms in enhancing a project’s consistency and accuracy and speeding up the process of document generation. Additionally, owners primarily benefit from and capitalize on data that’s captured through BIM. Engineering & construction companies that use the modeling process can expect improved collaboration and coordination, as well, among a project’s stakeholders. Adoption of 3D laser scanning is also expanding. The emerging technology makes measurements more precise than conventional methods and isolates potential problems more clearly for client discussions. Laser scans produce a digital reproduction of objects and consist of millions of data points that are put into a BIM. Use of laser technology in construction projects is expected to grow for several years. Indeed, the global 3D laser scanning market is forecast to expand from an estimated $2.06 billion back in 2013 to $4.08 billion by 2018, according to industry research group MarketsandMarkets.

  • The value of US nonresidential construction spending, an indicator of the health of the construction market, rose 11.1% year-to-date in February 2016 compared to the same period in 2015.
  • The value of US residential construction spending, an indicator of the health of the construction market, rose 11.4% year-to-date in February 2016 compared to the same period in 2015.

Posted by Jeff Johnson.

Read the Entire Engineering & Construction M&A 2nd Quarter Newsletter Here


M&A News – Engineering & Construction

By Jeff Johnson | Jan 28, 2016

M&A News Construction & EngineeringIndustry Update – Engineering & Construction

Larger buyers are continually seeking smaller acquisitions of companies with specific capabilities to provide greater services to the market. This is especially true in the area of infrastructure based engineering & construction with a focus on rail and transportation.

A larger percentage of US construction firms are paying their bills sooner and receiving better credit ratings, according to The Wall Street Journal. Weather woes and shortages of labor or materials often contribute to later bill payments by companies in the construction industry than by companies in other industries. But that is changing, according to a Creditsafe study that compared data generated between July 2014 and July 2015. US construction companies paid their bills 9.5 days past due on average, compared to an average of 11.5 days past due the previous year. The business-credit company also found that roughly 250,000 construction firms, or 6%, are no longer considered to be high-credit risks as compared to a year earlier. The Associated General Contractors of America, whose members focus primarily on commercial projects, attributes the credit upswing to steadily growing demand for construction services nationwide. Also helping to improve the financial health of construction companies are double-digit increases in home-construction starts and high US construction employment.

  • The value of US nonresidential construction spending, an indicator of the health of the construction market, rose 9.3% year-to-date in November 2015 compared to the same period in 2014.
  • The value of US residential construction spending, an indicator of the health of the construction market, rose 13.1% year-to-date in November 2015 compared to the same period in 2014.

Posted by Jeff Johnson.

Read the Entire Engineering & Construction M&A 1st Quarter Newsletter Here