Consolidation in the Environmental Engineering Industry

Abstract

The number of mergers and acquisitions (M&A) taking place in the environmental engineering and consulting (E/C) industry continues to grow, with more than 100 (M&A) transactions expected from 1993–1994. To help firms better understand and perhaps prepare for this phenomenon, this article attempts to identify 1.) The buyers and their acquisition strategies; 2.) The sellers and their motivation; 3.) Reasons behind the sudden upsurge in 1993–94; 4.) How firms are valued for sale. The article concludes with a number hints for prospective sellers. Hints include: 1.) Picking the right time to sell, such as after the company has had a four‐ to five‐year period of consistently increasing earnings and the immediate outlook appears even better, or conversely, before a bad financial situation gets much worse. 2.) Maximizing earning consistency (for example, if a firm is about to have a bonanza year, it should consider deferring some of that profitability into next year, particularly if the next year might not be as strong); 3.) Promoting your firm's unique atributes or strengths; 4.) Institutionalizing the firm (i.e. making sure that the firm is not reliant upon one or two key people, particularly when those key people are owners who are looking to sell out).