Word on the Street: Issue 211

What’s Up With Texas Consolidation?

The 10^th annual Texas and the South M&A and Business Symposium takes place next month in Houston, the epicenter of industry M&A in the Lone Star State (more on that later). Given that we’ve advised on 53 deals involving Texas sellers and buyers, we know a thing or two about how M&A is playing out in the state. Here are some insights into industry consolidation in Texas:

1. Leading the nation—again: With 31 deals as of the end of July, Texas is seeing the most M&A activity of any state. If you think that stat sounds familiar, you’d be correct. Texas has led the country in terms of consolidation in seven out of the last ten years. 
2. You from outta town? Year-to-date, three-quarters of all Texas transactions have included out-of-state acquirers. Since 2018, two-thirds of all transactions in the state have involved out-of-state firms using acquisitions to enter or further grow their business in the state. The Texas market is viewed by many leading AE and environmental firms as critical to their future growth and success, and they’re prepared to make big investments to get in on the action. 
3. Origin stories: Where have all of these out-of-state acquirers been coming from? Since 2018, California firms have been the most active acquirers in Texas with a total of 23. Illinois is a close second with 19. Rounding out the top five origin states for acquirers of Texas firms are New York (16), Florida (14), and Maryland (11).
4. Homemade deal-making: While out-of-state firms make up the lion’s share of acquisitions in the state, they are not the only ones making their marks. The three most prolific in-state acquirers of Texas firms since 2018 are LJA Engineering (Houston, TX) (ENR #67) with eight acquisitions, DCCM (Houston, TX) (ENR #130) with six, and Dunaway (Fort Worth, TX), which has made five. 
5. Deal size increasing: The median-sized seller in the Lone State has more than doubled over the past five years. This year, the median Texas seller had revenues of $5.1 million, up from $2.5 million in 2019. 
6. Where the action is: Houston has seen the most consolidation of any metro area in the state since 2018, with a whopping 88 transactions. This is followed closely by the Dallas-Fort Worth metroplex with 85. Austin is a close third with 60 deals. Then there is a sharp fall off to San Antonio (17) and Corpus Christi (5). 
7. A harbinger of things to come? This year, 59% of transactions in the state have involved a recapitalization or acquisition by private equity. That’s a significant shift from past patterns. When looking at Texas deals since 2018, 50% of all transactions have involved an employee or ESOP acquirer, 42% a private equity buyer, and 8% a publicly traded buyer. We’ll be keeping a close eye on this trend over the next few months and will be reporting our findings at the upcoming Texas and the South M&A and Business Symposium in Houston. 
8. Texas firms making waves: What’s been the impact of Texas acquirers on consolidation nationally? Pretty substantial. Since 2018, Texas acquirers have accounted for 10% of all acquisitions in the U.S. 
9. Lonesome Dove: Where have Texas firms been acquiring when they venture out of state? Since 2018, the top four states where Texas firms have made acquisitions have been Florida (28), Georgia (18), California (16), and Colorado (11). 

There are more transactions of AE and environmental consulting firms in Houston than any other U.S. city (and most states). It’s the center of the action. That’s one of the reasons why we host our annual Texas and the South M&A and Business Symposium at the beautiful five-star Post Oak Hotel at Uptown Houston every year. 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. 

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

Sometimes You Just Need to Let Go

I am well aware that many, if not most, of the AE firm principals reading this article didn’t dive into architecture or engineering to deal with HR headaches, endless administrative tasks, and running endless meetings. You were drawn to this world because of your love for design, innovation, and the thrill of bringing ideas to life. 

Yet, here you are, trying your best to take care of your firm’s concerns—namely making sure that a) the firm has enough work to do and enough people to do it, b) clients are getting their fair share of value and a terrific experience along the way, and c) the company is making enough money to pay the bills and still invest in the future. 

And here’s the real conundrum: The very traits that make you great at your craft can also make you terrible at letting go. You’ve been trained to scrutinize every detail, to find perfection in the precise placement of a beam or the curve of a line. That’s what makes you exceptional. But it’s also why delegation feels like handing over your firstborn to a stranger. Yet, if you want to grow your firm, sustain your energy, and avoid burnout, delegation isn’t just a good idea—it’s a necessity.

The Delegation Dilemma: Why AE Leaders Struggle to Let Go

Delegation is hard. And for leaders in AE firms in particular, it’s even harder. Here’s why:

1. Control freaks anonymous. If you’re leading an AE firm, chances are you’ve got a healthy streak of perfectionism. You’ve built your career on the idea that the devil is in the details. When you delegate, you risk those details slipping through the cracks. It’s not just about losing control; it’s about the fear that your high standards won’t be met. And let’s face it, trusting someone else with your responsibilities feels like an impossible leap.
2. The expertise trap. Your expertise is your pride. You’re not just a leader; you’re an expert in your field. It’s easy to think that no one can do it quite like you. The problem? You’ve fallen into the expertise trap, where you believe that if you don’t do it, it won’t get done right. This mindset not only limits your growth but also stifles the development of those around you. They don’t get the chance to shine because you’re too busy holding the spotlight.
3. Fear of redundancy. Here’s a harsh truth: Delegation can make you feel replaceable. If someone else can do your job, what’s left for you? This fear keeps you clinging to tasks you should have let go of years ago. But the irony is that by refusing to delegate, you’re actually putting your career at risk. You’re too busy working in the business to work on the business, and that’s a surefire way to stagnate both personally and professionally.

The Wake-Up Call—Why Delegation Is Your Golden Ticket 

So why is delegation so critical? Let’s flip the script and look at the benefits:

1. Focus on the big picture. When you’re mired in the minutiae, you can’t see the forest for the trees. Delegation frees you up to focus on the big picture—strategic planning, innovation, and growth. These are the things that will take your firm to the next level. Your job isn’t to draft every blueprint; it’s to ensure the firm’s vision is executed and evolved. When you delegate, you’re not just handing off tasks; you’re giving yourself the space to think, plan, and lead.
2. Trust and expect that your team will use their autonomy responsibly. Delegation isn’t just about offloading work; it’s about developing your team. When you delegate effectively, you’re saying, “I trust you.” This trust is the foundation of a strong team. It gives your employees the opportunity to develop their skills, take ownership of projects, and grow into leaders themselves. And when your team shines, you shine.
3. Work-life balance. Work-life balance is for you, too. AE leaders are notorious for burning the candle at both ends. But by delegating, you’re not just protecting your sanity—you’re also setting a healthy example for your team. When you delegate, you’re creating the bandwidth to take care of yourself—and you will take better care of the firm.

The Art of Letting Go—How to Master Delegation

Now that we’ve established why delegation is crucial, let’s tackle how to do it effectively. Here’s the blueprint:

1. Start small. You don’t have to delegate everything at once. Start with small tasks that are easier to hand off. This could be administrative work, scheduling, or routine project updates. As you get more comfortable, you can gradually delegate more complex tasks. The key is to build trust and confidence, both in your team and in your ability to let go.
2. Choose the right people. Delegation isn’t about dumping work on whoever’s closest. It’s about strategic placement. Match tasks with people’s strengths. If someone on your team has a knack for client relations, let them handle that tricky client meeting. If another excels at organization, put them in charge of project timelines. They need to have the competency required for the task, or the access to it, to be successful.
3. Set clear expectations. One of the biggest pitfalls in delegation is unclear expectations. If you want something done a certain way, say so. Provide detailed instructions, set deadlines, and make sure your team understands the objectives. This isn’t micromanaging; it’s setting your team up for success. Clear communication is the bridge between your vision and their execution.
4. Let go of perfection. This is a tough one. But here’s the thing—perfection is an illusion. In the real world, done is better than perfect. Allow your team the space to make mistakes and learn from them. Remember, you’re delegating tasks, not outsourcing perfection. Your role is to guide, support, and course correct.
5. Give feedback and recognize effort. Delegation doesn’t end when the task is handed over. Follow up with constructive feedback. Recognize and celebrate successes, no matter how small. This reinforces positive behavior and encourages your team to take on more responsibility. It also builds a culture of accountability, where everyone is invested in the firm’s success.

Delegation Is the X-Factor

The best leaders know that they can’t do it all. Delegation isn’t a sign of weakness—it’s a sign of wisdom. It’s about recognizing that your value lies not in doing everything yourself but getting others to share the load. By letting go, you’re actually holding on to what matters most—your firm’s future, your team’s growth, and your own well-being.

So, the next time you’re tempted to hold on to that task because “no one can do it like I can,” take a step back and ask yourself: Is this the best use of my time and talents? More often than not, the answer will be no. And that’s your cue to delegate.

Want to talk delegation? Call Mark Goodale at 508.254.3914 or email [email protected].

Market Snapshot: AE Employment Outlook

According to the U.S. Bureau of Labor Statistics, architecture and engineering occupations are projected to have 195,000 job openings each year from 2023 to 2033. Here are the numbers for common AE industry jobs:

Occupation	Employment (2023)	Projected Openings Per Year Until 2033	% Change in Employment 2023-33
Civil Engineers	341,800	22,900	6%
Mechanical Engineers	291,900	32,100	11%
Electrical Engineers	189,100	17,200	9%
Architects	127,300	9,900	8%
Surveyors	52,600	3,100	6%
Environmental Engineers	41,300	2,900	7%
Materials Engineers	25,000	1,800	7%

To learn more about market intelligence data and research services offered by Morrissey Goodale, schedule an intro call with Rafael Barbosa.

Weekly M&A Round Up

M&A activity continued apace at the end of August: Seven more domestic deals were announced last week, including one deal in Texas. We also reported transactions in CA, WY, IL, TN, KS, and FL. Internationally, a deal was announced in Canada. You can check all the week’s M&A news here.