The six big takeaways from Morrissey Goodale’s Texas M&A Symposium

Year-to-date there have been 335 transactions of A/E and environmental firms. That number eclipses the prior full-year record of 318 deals set in 2019.

By Morrissey Goodale October 25, 2021
Downtown Chicago. Courtesy: CFE Media

Morrissey Goodale’s Texas M&A Symposium was held at the beautiful Post Oak Hotel in Houston. It was great to reconnect in person with industry leaders, M&A decision makers, and investors after 18 months of virtual interaction. Here are the six big takeaways from the Symposium.

Industry M&A—we’re in uncharted territory! Year-to-date there have been 335 transactions of A/E and environmental firms. That number eclipses the prior full-year record of 318 deals set in 2019. And there’s still two months to go in the year! We’re anticipating that deal-making in Q4 will be lit and that 2021 will be the first year to see 400-plus transactions. There has been a step-function increase in the pace of industry consolidation since 2018, and it’s only gathering momentum.

Jaw-dropping deal multiples: When we were last in Houston in October 2019, we reported that deal valuations were at record levels. Well guess what? EBITDA multiples across all quartiles have increased over the past two years. Median multiples are up 7.6%. Upper-quartile multiples have jumped 7.5%. And lower-quartile multiples edged up 4.8%. Bottom line—it’s a great market for sellers.

Confidence among buyers is at record-high levels: How do we measure that confidence? In our cross-border M&A activity index. In 2021, 7 in 10 transactions have involved the acquirer buying a firm in a different state. We’ve never seen this level of interstate deal-making before. Buying across state lines is riskier than buying in-state. But that train has left the station, and buyers are using acquisitions to aggressively diversify. Message for sellers—there’s a high probability that your buyer does not move in the same local professional industry circles that you do.

Everything’s not just bigger in Texas: It’s also more valuable. Well, at least that’s the case for Texas A/E and environmental firms. All things being equal, a firm in Texas is 14% more valuable than one in any other state in the Union.

All roads lead to the Texas Triangle: The area bounded by Dallas-Fort Worth, Houston, San Antonio, and Austin—known as the Texas Triangle—is by far the most active region for industry deal-making in the state. It’s no surprise. With some 500,000 people moving to Texas annually and most of them heading to the Texas Triangle, the demand for design and environmental firms (and their valuations) is off the charts.

A fast-moving industry recapitalization: Private equity and family offices are behind over one-third of all industry deals this year. And that will likely grow to over 40% next year. Buyers backed by private equity make up the majority of the most prolific acquirers in the market. The private-capital model is supplanting the traditional employee-owned model. We are moving rapidly from a majority employee-owned industry to a minority employee-owned one. Employees will still have ownership—but on a much-diminished scale than in pre-Great Recession times.

This article originally appeared on Morrissey Goodale’s websiteMorrissey Goodale is a CFE Media content partner.

Original content can be found at