Overall M&A activity down: It’s no surprise that the number of deals in the industry dropped in 2009. M&A activity fell by 25% from a high of 305 transactions in 2008 to 230 deals last year. Essentially M&A activity reverted to 2006 levels. It should be noted however that this level of
activity is still double that seen after the 2001 recession, providing an indication that M&A activity is much more common in the industry now than ever before—even in a market downturn. We anticipate that M&A activity will increase to the 250 to 260 range this year as the global economy recovers.

Global M&A Activity: 2000 through 2009    

More defensive deals being done: The biggest surprise emerging from the data is the fact that interstate M&A activity has fallen to its lowest level on record. In 2009, some 58% of deals occurred across state lines. Historically, interstate M&A activity has accounted for between two-thirds and three-quarters of industry consolidation, representing strategic growth across state lines. This year however, the recession has forced management teams to consider more “defensive” mergers or firm sales— consolidating with firms that they are already familiar with to pool together their strongest features or assets and trim out non-performing elements. We expect this trend to continue—particularly among architecture and AE firms.

Interstate M&A Activity: 2000 through 2009    

Publics play less of a role in shaping the industry: Publicly traded industry giants were relatively less active in 2009 than in prior years— representing just 31.3% of global deals in 2009, down from 36.7% in 2008 and almost 35.7% in 2007. The most active publicly traded acquirers last year (and the number of deals they made) were Genivar (11), SNC-Lavalin (6), TetraTech (6), Fugro (6), AMEC (6) and AECOM (5). The same trend held for the U.S market where only 20% of the deals involved a publicly traded buyer, down from 21% last year and almost 30% in 2007. We anticipate that in 2010, the publics will return to form and represent between 25% and 30% of activity.

Relative attractiveness of the U.S market holds as globalization continues: Almost 13% of domestic transactions involved a non-US buyer in 2009, up from 9.4% last year. There were more non-US firms buying into the U.S. in 2009 (19) than there were U.S. firms making acquisitions overseas (11), reversing a trend seen in 2009. As the U.S. economy’s recovery lags that of other nations, we anticipate to see a pronounced increase in firm sales to non-U.S. firms in 2010.

For a full listing of industry M&A activity, click here >