I Would Have Appreciated a Heads Up About the Scorpions

I Would Have Appreciated a Heads Up About the Scorpions

Last year, my long-suffering business partner, Mark Goodale, traveled to Italy for a family vacation. Being the consummate professional and tireless industry advocate, he took what he learned from his visit to the Pagani factory in Modena and penned the insightful “Five Business Lessons from a Pagani Factory Tour” article for Word on the Street upon his return. It elicited a ton of reactions from our readers. (Was I jealous? Of course not.) Even on vacation, he was thinking about how he could help the industry. This was just one more example of why our clients and the team here at Morrissey Goodale love working with Mark. And one more reason for me to resent him…deeply.

So, when I set off with my family last month for our Italian vacation, I was determined to out-do him and write the seminal “What I learned in Italy” article. I’d planned day trips to hill towns all over Tuscany—Perugia, Montepulciano, Assisi. You name it, every town in that old Etruscan province was fair game for me to examine on a mission for Word on the Street. The Catacombs? The Forum? Trevi Fountain? Every iconic structure was potential fodder for what I envisioned as a classic “Here’s What AE CEOs Can Learn from Roman Builders.” (Very Life of Brian—“What have the Romans ever done for us?”) With the hubris of a returning Roman general, I crossed the Rubicon confident that my months of “learning” Italian with Duolingo had prepared me for deep and meaningful conversations with the locals that would bring an authenticity and grittiness to my article, something I saw as sorely missing in that Pagani factory piece.

But it was not to be. Rather than a robust Byron-esque romp through Italy, my visit more closely resembled the last days of Shelley or Keats as I lay Covid-confined in a darkened room—shutters closed—for over a week. While family and friends gallivanted from one vineyard to another, and took selfies with various semi-clothed statues, I was left in a darkened room alone. Or at least I thought I was alone.

I would have appreciated a heads up about the scorpions. Sure—in Italy they don’t pack a deadly venomous sting. But you only figure that out after gingerly tiptoeing (where did I leave my sandals!?) around a creature that had apparently just stepped out of an Indiana Jones movie and desperately Googling “scorpions Italy.” It would have been nice if Rick Steves or Stanley Tucci had just once said something like, “Oh, by the way, a word on scorpions…”

So, I returned from Italy with no great insights, a new-found phobia, and no article. But I did return to over 500 emails. Because this was my first-ever vacation that I had travelled sans laptop. Part of my “condition” is that I’m a workaholic. (I actually went into the office the morning of my wedding day.) I’ve taken my laptop and worked on every single vacation. Sure, I’ve posted the “Out of Office” message on Outlook, but it was just a cover. If there was a client or prospect email or inquiry, I NEVER wanted to miss it. As any of you who run/own a business know, you can never really step away. But for this Italian trip I was determined to disconnect completely. So, I left the laptop at home. And the emails piled up while me and my Covid Scorpions (excellent band name) got acquainted. (Final score: Mick 3 Scorpions 0.)

And four things jumped out at me from those over 500 emails.

1. First, I was stunned to see the sheer number of inquiries from private equity firms looking to enter the AE industry. Based on the volume of emails from firms (all of which seemed to have a name that included one of “Rock,” “Lake,” “View,” “Stone,” or “Valley”) I doubt we are anywhere close to “peak” industry recapitalization. This level of interest simply didn’t exist prior to 2018, and it shows no sign of slowing down.
2. Second, I was struck by the behavior of different types of clients over the 17 days that I was out. Closely related to the point above, my observation was that the management teams of employee-owned firms make corporate decisions—particularly around M&A—in a far more ponderous manner than firms that have private equity as part of their capital stack. This is something that we’ve observed in general in our advisory work over the years. But this 17-day period provided an amazing snapshot of just how different the cadence of decision-making is between these two types of firms. 
3. Third, there’s a massive amount of capital being directed at further consolidation in the transportation, water, wastewater, T&D, and data center markets. It’s as if every leadership team is working off of the same “investment thesis” and believing it’s unique. It’s not. But it’s happy days for owners of firms in those markets.
4. Fourth, they may not be household names now, but within five years, there’s a handful of European firms that will have established themselves as legitimate ENR Top 100 players in the U.S. market.

These and many other topics will be featured at our annual Texas and the South M&A and Business Symposium at the beautiful five-star Post Oak Hotel at Uptown in Houston next month. We will also be recognizing the recipients of the Best Post-Transaction Performance Awards. So register today to join over 200 AE industry executives and investors at the #1 deal-making event of the year in the #1 city for deals. Ciao!

You can contact Mick Morrissey at [email protected] or 508.380.1868.