For professionals currently working in these industries or new professionals considering their career path, there could be big changes ahead in the size and composition of environmental firms.
Guest blogger Megan Foreman zeros in on the major business trends that affected the environmental sector, particularly in environmental consulting and engineering.
What’s happened so far:
On the business news front, 2011 featured numerous reports of major environmental consulting and engineering firms acquiring mid-size organizations. Based on PSMJ Resources Inc.
, there were more than 200 transactions last year, with GENIVAR leading the pack at seven deals, followed by six at SNC-Lavalin and five at Stantec.
Why all the activity? The reasons vary: from owners looking to monetize equity holdings before retirement, to improvements in investor confidence. Another likely explanation is that large, fast-growing firms are intending to use healthy cash-flows to dominate the maturing North American market and exploit growth opportunities in emerging international markets.
According to PricewaterhouseCoopers (PwC)
, mergers and acquisitions (M&As) are the strategy of choice for securing growth and expanding into new markets. M&As are also a deliberate way to fill skilled labour shortages, increase service offerings, and improve a firm’s competitive position on large projects.
When organizations join for the right reasons, there is the opportunity to gain specialized expertise and service offerings – opportunities that neither firm could accomplish independently.
For example, Aqua Data (a company of 100 that specializes in water distribution and wastewater collection systems), was acquired by SNC-Lavalin in June 2011. In a news release, Francis Lebuis
, president of Aqua Data said, "This is a win-win situation for both our companies. Our specialized expertise, proprietary equipment and computerized tools bring added value to SNC-Lavalin's service offering, and Aqua Data will benefit from SNC-Lavalin's global presence in the infrastructure and water sectors."
For organizations that are considering growth opportunities in emerging markets outside of North America, M&As are key to developing global capabilities, says PwC.
AECOM announced on January 6, 2012
that it acquired Capital Engineering Corporation (CEC), a 160-person environmental and engineering consultancy firm based in Taiwan. AECOM Chairman and CEO John M. Dionisio stated, “CEC’s 24-year track record of providing specialized environmental and engineering services in Taiwan expands our footprint in Asia, which reflects our commitment to growth in new and emerging markets.” The acquisition is perceived as a natural fit within AECOM’s global environment and water practices, as well as a strategic way to integrate service offerings to clients.
The investment supports GENIVAR’s domestic and international growth strategy. According to Pierre Shoiry, President and Chief Executive Officer of GENIVAR, the financing will allow GENIVAR to continue growing Canadian business while moving forward on executing international expansion plans.
If the latest transactions predict similar business behaviour in 2012, what does the future hold for medium-sized organizations? As the owners of mid-size firms look to retire and implement a succession plan, and the market becomes more competitive due to the increased efficiencies and geographic reach of large firms, will mid-size players be absorbed and disappear completely?
What’s your prediction?