Here are 6 key takeaways from our chat with global Consulting Engineering firms
Over the past month Mark Goodwin, Roger Collins-Woolcock and Warren Riddell have hosted a series of one-on-one ‘fireside’ video calls with international consulting engineering companies in the US, UK, Canada and Australia. Our objective was to get a global perspective of how the current crisis is impacting growth strategies. 1. M&A in strategic areas of focus remains unchanged. But naturally, each potential buyer will have a different focus and set of priorities. Areas of interest include: rail and road infrastructure, minerals and metals mining, energy and energy distribution, urban design and planning, water and wastewater systems. 2. Better understood geographic markets, in terms of managing business risk, are a priority. Such as North America, Western Europe and Australia/New Zealand. 3. Size of the team matters. This is an interesting issue. Scale has always been a critical issue in an acquisition, it is a proxy for corporate sustainability and resilience – relative to the specific expertise and availability of that expertise. As a general measure, a headcount of less than 50 may be deemed as sub-scale. But also head counts of over 500, depending on circumstances, may have too much impact on an existing business. So, both situations may impact the buyer’s existing management structure at a time their focus is on maintaining business as usual. The sweet spot appears to be in the 100-500 range. 4. Due diligence will be tougher, but there is no reason valuations will be impacted. Validating and interrogating forecasts and assumptions will be more rigorous. Questions from investment committees will be directed at understanding the depth of evidence based research to justifying proposals. Vendors will need to explicitly address the impact of COVID-19 on their market and their business.