In addition, several foreign buyers have also recently shown an interest in acquiring capacity in the U.S. business. England's AMEC recently acquired Agra-Canada's largest environmental and infrastructure engineering firm-and British engineering firms and water companies have been buying up stakes in the U.S. engineering (though not totally environmental) business. For example, PA Consulting Group acquired Hagler Bailly earlier this summer, and the WSP Group of the U.K. recently acquired several smallish U.S. engineering firms. Skanska AB, the Swedish giant, recently paid $60 million for Baugh Enterprises, a construction management firm in the northwest, and top German engineering and construction firm Hochtief AG gobbled up Turner Construction last year. Asian firms are also beginning to dabble in the business.
What is behind this increasing urge to merge? Most deals are driven by one of two major considerations: the ability to buy revenue, profits and customers at a price below what it might cost to develop them from scratch, and/or an attempt to quickly and more cheaply diversify into an end market or geographic region which is deemed to be strategically desirable. The former is certainly the key motivation behind many of the bigger stateside consolidators, while foreign players looking for an expansion platform or U.S. companies seeking strategic diversification are characterized by the latter. Most of current initiatives in the consulting industry revolve around the urgency of building expertise in water/wastewater infrastructure and transportation-two historical of most major engineering firms.
There are many companies 'on the market' in the C&E business today, and the opportunity to grow in quantum leaps via acquisition is still there for financially qualified firms. However, successful acquirers need to remember that it is one thing to identify strategically desirable targets and cut reasonably-priced deals with them. It is quite another thing to successfully integrate the operations and cultures of multiple firms-and to truly make several firms merge into a smoothly operating single entity. Many firms have demonstrated the capability to identify and consummate deals, but few have been able to successfully accomplish long-term profitability on a consistent basis. A consistently successful integration and implementation record is the real hallmark of a prosperous acquirer-something that remains notably rare in the environmental engineering industry.