Revenues and Acquisitions on the Rise
Engineering firms posted strong revenue growth in 2000 and a growing interest in merger and acquisitions, according to two recent surveys conducted by Zweig, White & Associates, Inc. (ZWA), a Natick, Mass.-based market-research firm specializing in design professions...
Engineering firms posted strong revenue growth in 2000 and a growing interest in merger and acquisitions, according to two recent surveys conducted by Zweig, White & Associates, Inc. (ZWA), a Natick, Mass.-based market-research firm specializing in the design professions.
By calculating the EBITDA margin-earnings before interest, taxes, depreciation and amortization-researchers found that as a percentage of net revenues, profit margins grew from 12.4 percent in 1999 to 13.7 percent in the year 2000. Similarly, net revenue per employee jumped from $72,948 in 1997 to $79,683 in 2000, as noted in ZWA’s 2000 Finance & Accounting Survey of Architecture, Engineering & Planning Firms .
“On an industry-wide basis, the most remarkable change in financial performance is the increase in profitability,” says Zweig White analyst Ian Rusk. “But with little change in labor multipliers and chargeability, this increase appears to be most attributable to lower overhead rates.”
That being the case, Rusk recommends that firms invest in marketing and information technology to plan for the inevitable slowing of the economy.
On the merger and acquisition front, another ZWA study found that 86 percent of responding firms are currently considering such activity, compared to 74 percent in 1999. ZWA research also points out that mergers and acquisitions grew by 40 percent from 1999 to 2000.
ZWA’s merger and acquisition study is available free of charge for engineers at www.zweigwhite.com .
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