Who Will Be Next to Join the M&A Party?

Real estate has been rocked by some huge M&As in the developer (Prologis/KTR) and brokerage (DTZ/Cushman & Wakefield) spaces. Are architecture and engineering firms about to get into the trend? Stonemill Partners managing partner Patrick Neal (left, with Al Lautenslager at AIA's national convention today), who exclusively handles engineering and architecture M&A transactions throughout the country (his team has closed over 100 in the last three years), tells us he’s been getting a lot of interest from groups hoping to acquire a foothold in Houston because of our strength through the recession. (Houston, Dallas and Nashville are getting the most inquiries lately.)

Stonemill is currently listing three small (less than 10 employees) Houston architecture firms for sale. Although they’ve all come available in the last 30 days, Patrick says it’s no indication of weakness in the market; each one is spearheaded by someone preparing for retirement. (Patrick says the ideal time to sell your architecture or engineering company is three to five years before retirement—the transition time is particularly long for the industry.) Patrick expects the smallest firm to be bought by a local group but anticipates the other two to be purchased by companies hoping to expand into Houston. He’s particularly targeting firms in Austin or Dallas who see Houston as the missing piece, but Stonemill is also getting a lot of attention from firms in Memphis.