1. M&A in the Engineering Consulting sector
Paul Collins
Chairman, Equiteq
9th November, 2017

2. Engineering Consulting
Engineering Consulting is a core sector focus for Equiteq
Equiteq is dedicated to knowledge-led business models in six core sectors
Industry Sectors
Engineering Consulting
100% focused on knowledge-intensive businesses that leverage expertise and other IP to deliver services
People businesses
IP / technology intensive
Global
Fragmented market
Management Consulting
Life Sciences & Healthcare
IT Services
Engineering
Marketing / Media
Engineering
Human Resources

3. Deals in the Engineering space
We deliver synergistic buyers by leveraging our market knowledge and industry expertise
Property Consulting Sold to
Advised on the sale
Property Consulting Sold to
Advised on the sale
Operations Consulting Sold to
Advised on the sale
Engineering Consulting Sold to
Advised on the sale preparation and sale
Property Consulting
Sold to
Advised on the sale
Oil & Gas Consulting Sold to
Advised on the sale preparation and sale
2016
International Development Consulting Sold to
Advised on the sale preparation and sale
2016
Property Consulting Sold to
Advised on the sale preparation and sale
2016
Energy Engineering
Acquired
Advised on target acquisitions

4. Overall Engineering deal volumes reflect a mature but very active market
Engineering Consulting M&A activity, annually (2007 to 2016)*
Recent downturn has left smaller (<£4bn) firms vulnerable and larger firms seeking acquisitions to meet their strategic targets
Recovery of oil and commodity prices is reawakening M&A activity in oil & gas and other E&C segments
Overall steady / slightly declining though bigger deals than last year
- Engineering Consulting M&A activity fell against a backdrop of slow economic growth and continued low oil prices.
- The number of transactions has fallen by 9% from 2016 to 2015 and median deal values have fallen 4% from 2016 to
*Source: Equiteq Global Engineering Services M&A Report 2017

5. Convergence is broadening the player pool beyond E&C
M’gement consulting
IT services
Media & marketing
Engineering consulting
Human resources consulting
Private equity
Management consulting
*Source: Equiteq Buyers Research Report 2018 (pre-release)
Buyers
= high demand
= medium demand
= low interest
(Abridged) heatmap of buyer interest for 2018 by segment*
= convergence
Targets
KPMG bought High Point Rendell (international generalist engineering consultancy) in 2015
Arcadis (NL) acquired E2 Managetech in 2017 – a Chicago-based IT services company serving the Environmental Health & Safety (EHS) market
Altran acquired IRM in 2017, a UK-based risk management/advisory/cybersecurity firm
Tractebel acquired Red in 2016, a UK-based design and business modelling firm, offering services to data centres for commercial buildings

6. Europe and Asia-Pacific observed substantial growth in M&A volumes
Regional Review: # and size of Engineering Consulting M&A deals
European M&A up 13% for the period (and Asia-Pacific up 14%)
North American sector deal volumes fell dramatically preceding the Presidential election, ending the year 24% down on 2015
Cross-border activity accounted for 28% of all sector deals
Source: Equiteq Global Engineering Services M&A Report 2017

7. Deal size distribution
Engineering Consulting M&A activity in 2016: Deals Value Range*
Mega deals drove high average deal sizes
Strong activity also for small to medium-sized businesses valued between $10m to $500m
Average deal sizes increased by 80% to $110m in 2016, supported by large deals from buyers like Stantec. WSP and WS Atkins. Deals under $100m represented 76% of deal volume, but only c.10% by value. We typically observe that smaller transactions are consolidated through small mergers or team grabs, with little cash involved. M&A with a material cash component was strongest over $10m.
*Source: Equiteq Global Engineering Services M&A Report 2017

8. Emerging Technologies
Drivers of deal activity in Engineering
Achieving
Scale
Scale enables bidding on larger projects
Large firms bidding on smaller projects too
Emerging Technologies
Firms rely on M&A to stay ahead of the curve
Shifts in contracting also driving technology
Geographical
Expansion
Acquiring a local and established firm can lower the risk of entering a new geography
Multinational expansion impacts regional players
Organised by Offensive and Defensive factors: one of each for each category
Contracting: Lump Sum Turn Key (LSTK) and PPP projects are shifting risk to E&C firms, driving requirement for estimation, cost control and procurement technologies
Emerging technologies: Big Data, IoT, new building materials, sustainability
Geography: Expanding Chinese, Indian and Korean E&C players in particular

9. Conclusion and wrap-up
Overall sector M&A activity steady and poised to grow
Antonio Bonet,
International development consultancy.
Sold.
Scale, technology and geographic expansion key themes
Convergence expanding the pool for M&A
People businesses are complex to grow, value and integrate
Sector focus and transaction experience are essential

10. Get the report at www.equiteq.com
The Global Engineering Services M&A Report 2017
Get the report at