As a consultant with Zweig Group’s Merger and Acquisition (M&A) services, I work with architecture and engineering firms across the U.S. Always mindful of trends, last year alone we saw a significant increase in M&A activity in the state of Colorado — 15 sale-side transactions all within the AE industry alone.
Looking ahead, it’s interesting to note that both the city and county of Denver are registered members of The National Council for Public-Private Partnerships (www.ncppp.org), a Washington, D.C.-based advocate for public-private partnerships (P3s). An emerging and innovative way to finance important infrastructure projects, P3s could be crucial as cash-strapped state and local governments look beyond traditional funding mechanisms — taxes and bonds — by tapping into private-sector resources. The state of Colorado has broad-ranging P3 legislation. These business-friendly policies along with Colorado’s expanding economy and employment base continue to attract individuals and businesses to the state.
The Colorado state demography office paints an interesting portrait of the state’s future. According to the most recent data, the agency estimates that the state’s population will increase by nearly 52 percent, from today’s population of about 5.6 million to an astounding 8.5 million by 2050. That translates into a long-term need for more roads, single- and multi-family housing, office, and retail — an ideal environment for architects and engineers and the firms that employ them.
The M&A industry is complex and there are plenty of moving pieces, but a big piece of the equation is simple: talent. In a tight labor market, entry-level engineers are relatively easy to find. But the project manager with 10 years of experience? That’s a different issue. Buying a firm is often the easiest way to obtain the people a firm needs.
A big question mark looming over the U.S. engineering industry is the fate of the much talked about infrastructure bill. The Trump administration has yet to propose a detailed plan, and the specifics that have been made public are scant. But $1 trillion in upgrades has been mentioned, and it seems that the entire world was listening. In July, Korea-based HanmiGlobal, through its American-based subsidiary, OTAK, acquired Denver-based Loris and Associates, a firm represented by Zweig Group.
With the transaction, Otak expects to share project information with public construction customers in the U.S. and hold the lead in the urban restoration and environment-friendly infrastructure construction markets. HanmiGlobal chairman Kim Jong-hoon said the acquisition was made to gain an “advantage in the Trump administration’s infrastructure construction market.”
At Zweig Group, we expect to see M&A activity remain consistently high within Colorado based on the state’s expanding economy, strong population growth, business friendly policies, and talented workforce.
Noah Hunt is a consultant with Zweig Group’s Merger & Acquisition services. Contact him at email@example.com or at 479-856-6244.