EFCG Managing Partner Jessica Zofnass Barclay recently presented on "Mergers, Acquisitions, & Financial Partnership Models: Trends and Impact" to the EnvironmentAnalyst Global Business Summit 2023. A summary of Jessica's M&A takeaways and the full EA article can be found below.
Mergers, acquisitions & financial partnership models: trends and impact
Moderator: Jessica Barclay, Managing Partner, EFCG
Context: Exploring recent M&A transactions and financial restructuring activity in the environmental & sustainability consulting sector and the impact of these transactions on market structure & service delivery, as well as assessing options for accelerating company growth.
Are we at the peak when it comes to M&A valuations? Although we don’t have a crystal ball, we agree we aren’t at the top. It is a recession-resilient industry. In some cases, the trend for acquisition strategies is adjusting towards investments in minority structures, and other JVs and partnerships.
There's a big focus on technology and particularly AI investments and acquisitions, and also sustainability management consulting firms, and there will likely be more sales of these types of businesses into the environmental consulting space (e.g. Accenture’s acquisition of Anser).
Despite the macro market hurdles, the fundamentals remain solid, and private equity and strategic appetite for making acquisitions are still very strong. But firms have become pickier, which has resulted in differentiation in multiples and valuations. In-demand firms are still achieving 20x EBITDA valuations, but we are also seeing acquisitions that are 3x or 4x EBITDA.
There are, and will continue to be, major constraints around talent and organic growth, but with massive layoffs in the finance industry, both the technology and engineering & consulting industries are benefiting from the new qualified talent pool with experience in technology, AI, and management consulting.