Reflections From a Busy Q2

Reflections From a Busy Q2

It’s been a busy second quarter for us here at Morrissey Goodale, and there’s no slowdown in sight. Our M&A advisory team has celebrated nine separate successful transactions for our clients since the beginning of the quarter including (a) five firm sales for DTR Consulting Services (Roseville, CA), Rampart (Baton Rouge, LA), Burrell Consulting Group (Roseville, CA), Advanced Earth Sciences (Irvine, CA), and WLB Group (Tucson, AZ) and (b) four firm acquisitions for Salas O’Brien (Irvine CA) (ENR #31), Forte & Tablada (Baton Rouge, LA), Kleinfelder (San Diego, CA) (ENR #47), and Thomas & Hutton (Savannah, GA) and one confidential recapitalization. In all, we’ve now advised on 285 transactions for over $3 billion in enterprise value. We’ll have several more transaction announcements before the end of Q2. 

Meanwhile, our strategy and market research team has been working all over the country this quarter on 34 separate engagements for clients in Maryland, New York, California, Illinois, Utah, Washington State, Pennsylvania, Massachusetts, Texas, Florida, North Carolina, and North Dakota. Oh, and Mexico, too. These clients range in size from over $500 million to $2 million.

In addition, we’ve been spending a lot of time this quarter poring over all of the submittals for this year’s M&A Best Practices Award. (We’ll be announcing the recipient next week.) And, of course, it’s all hands on deck getting ready to host the 11^th Western States M&A and Business Symposium in Las Vegas next month.

In the middle of all of this busyness, I’ve been consciously doing more “journaling” (I know, I know, very new agey) so that I can more deeply reflect on how the industry is changing and where it might be headed. Here are some of my reflections during this super-busy quarter:

The eternal succession dance: It never fails to amaze me how consistently the topics of leadership succession and ownership transition (capitalization) are top of mind for every CEO and leadership team. At least they are in every firm that has been in business for 15 years or more. The folks who have the reins right now are almost always somewhat skeptical of the ability of the next generation to successfully run the firm. The next generation almost always feels that the process of transition is moving way too slowly.

Faster, better: The rapid deployment of AI by savvy leadership and management teams to drive efficiencies is (a) a testament to just how smart and talented the folks in this industry are and (b) speaks to an impending bifurcation of the industry between firms that “get” AI and those that do not. The latter I believe will see their values decline relative to the former. Who wants to pay premium prices for the stock of laggards?

Get comfortable being uncomfortable: This is a phrase that resonated with me in conversations with the CEO of an ENR Top 200 firm for a recent Word on the Street Podcast recording that will “drop” later this summer. He’s CEO of a very established firm. It’s almost 100 years old. And yet it’s remarkably innovative and “tech-forward.” As my pod co-host Mark Goodale observes, they have built a culture that doesn’t just tolerate entrepreneurialism, they intentionally fund it. The firm is a high performer, and this requires everyone on the leadership team to be (a) “all in” and (b) comfortable with being uncomfortable. 

M&A plateau: Year-to-date industry consolidation looks pretty much the same as last year, with 202 total transactions through the middle of Q2. However, there are some noticeable variations in its composition. Employee/ESOP acquirers account for 48% of the total (down 4%); PE-backed acquirers account for 36% of the total (up 1%); PE recaps account for 6% of the total (up 1%); and publicly traded acquirers account for 9% of the total (up 1%). 

Big, bigger, biggest: Last week’s announcement of the intended merger between Acuren Corporation (Tomball, TX) and NV5 Global, Inc. (Hollywood, FL) (ENR #26) is another step on NV5’s remarkable journey. In a little over 15 years NV5’s leadership team has created and grown one of the most successful brands the industry has ever seen.

You’re killing it: The 46th Deltek Clarity report just dropped with the most in-depth assessment of how the industry performed in 2024. The results are a “chef’s kiss!” Nick Belitz and Megan Miller will be interpreting the results and updating them with our proprietary year-to-date industry performance data during their “State of the Industry” presentation in Las Vegas next month. Sneak preview? Let’s just say 2024 was the 10^th year in a remarkable decade for the industry, and in many ways one of the best.

When a strategist takes the CEO seat: Great things happen. That’s my big take away from our Word on the Street Podcast recorded just last week with Andra Kidd, CEO of science-forward firm Spheros Environmental. I learned a lot from her about building a culture that’s ready to scale, intentionally fostering collaboration, and what it takes to lead a purpose-driven firm. The podcast will be available to view soon.

That’s it from the middle of Q2. I hope to see you in Las Vegas next month as we reflect on the quarter and talk about what’s next for the industry.

If you want to discuss any AE industry topic or share some journaling tips, contact Mick Morrissey at [email protected] or 508.380.1868.