Investment Banking

  • Acquisitions and the Art of Integration

    Posted on March 22, 2017 by FMI Corporation

    Acquisitions have always been a means to maximize value and create a sustainable competitive advantage for engineering and construction (E&C) firms. However, acquisitions of any size are a major undertaking for both the acquirer and the target. Substantial financial returns are required not only to create stockholder value, but also to justify the enormous investment of managerial time and effort that goes into a takeover. A handful of E&C firms have been active and masterful acquirers; putting these firms aside, acquisition results for the masses have been mixed. Often, the rationale is flawed, or the post-acquisition strategy ill-executed in cases where the strategic relationship does not last. Acquisition fever, failure to recognize the costs of an acquisition, or a flawed understanding of the target company has derailed many plans for expansion. Within the E&C industry, acquisitions are a vital driver of competition and growth among varied players. However, the post-acquisition strategy of each can differ significantly. At one end of the spectrum, the parent company allows the acquired firm to operate entirely as an independent subsidiary – we term these ‘operators.’ At the opposite end, the parent company works to fully integrate the culture and processes of the acquired firm into their own, effectively expanding the parent company – typically known as an ‘integrator.’ While either strategy will work, it is important to note that successful acquirers make a very conscious decision about where their strategy falls on the operator-integrator spectrum. They are successful acquirers because they have a defined acquisition integration strategy.

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    This post was posted in Investment Banking and was tagged with Mergers and Acquisitions, Acquisition search best practices, construction, NRCI 2014 Q2, engineering blog, construction blog, construction acquisitions, acquisition construction industry

  • Navigating a Clear Path to Successful Ownership Transfer

    Posted on November 1, 2016 by FMI Corporation

    While there are no cookie-cutter solutions for ownership transfer, there are some viable strategies to consider when it’s time to successfully hand over your company’s ownership to the next generation. As baby boomers move into retirement and millennials continue to make their way into the workforce, the issue of ownership has become acute among many of the nation’s engineering and construction firms. If owners cannot find the talent to manage their firms following their (eventual) retirement, they will lose the ability to dictate how ownership will be transitioned. With these dynamics in play, it is increasingly important for owners to start planning early and focus on the long-term development of the next generation of leaders.

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    This post was posted in Consulting, Investment Banking, Center for Strategic Leadership and was tagged with Ownership Transfer, Succession planning, construction, NRCI 2014 Q2, construction ownership transfer, construction succession management, fmi icons, fmi industry icons

  • M&A Trends in Oil and Gas

    Posted on May 26, 2015 by FMI Corporation

    Shale gasThe energy infrastructure market has gone through a period of unprecedented expansion over the past five years and many companies exhibited exponential growth over this period. Only six months ago, most companies were preparing strategies for talent acquisition/retention and geographic/service line expansion. With the price of oil falling by more than 50 percent, many firms are being forced to cut costs and reevaluate strategy. The decline in oil prices has forced many producers to cut 2015 drilling capex. As a result, demand for upstream services, in particular, will begin to slow and margins will compress. Midstream and downstream markets will also be affected, but likely not until later in the year or until production begins to decline in earnest.

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    This post was posted in Investment Banking, Research and was tagged with Scott Duncan, Inc.

  • Construction Materials

    Posted on May 19, 2015 by FMI Corporation

    ConstructionMaterials497268779Small, strategic, bolt-on acquisition and corporate divestitures dominated M&A activity in 2014 in the construction materials segment of aggregate, asphalt and ready-mixed concrete producers. These small, strategic transactions were successful because the strategic benefits of the deal resulted in pricing that satisfied both buyer and seller. These deals were often among competitors with all the typical benefits associated with eliminating local competition. Additionally, there were continued planned divestitures by some of the major players in the sector to continue balance sheet management to raise capital for targeted acquisitions. We also saw the return of growth acquisitions in new markets for select players.

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    This post was posted in Investment Banking and was tagged with Mergers and Acquisitions, NRCI 2014 Q2

  • FMI's M&A Trends: Engineering and Construction

    Posted on May 11, 2015 by FMI Corporation

    ConstructionSiteBuildings178633737Large, transformational deals defined M&A activity in the integrated engineering and construction (E&C) sector in 2014. The fallout from these acquisitions — some of which had been several years in the works — will spur continued activity into 2015. While we do not believe 2015 M&A activity will surpass that of 2014, we do believe integrated E&C firms (especially the largest firms) will continue to look to acquisitions as a conduit for growth and margin expansion.

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    This post was posted in Investment Banking

  • How to Capitalize on Market Information

    Posted on May 5, 2015 by FMI Corporation

    InvestmentBanking494507603Most successful companies in the oil and gas engineering and construction industry are constantly monitoring the market and staying abreast of the most recent trends. They try to best prepare for what the future will look like in the market and how the company will compete. One of the lessons FMI has learned is that market research must be placed in a proper strategic framework to guide your thinking and ultimately increase your ability to make the right decisions for your company’s future success. Without this framework, it is simply a collection of data points without a unified purpose. As seen in Exhibit 1, the strategic framework we suggest to our clients for implementation is the 4-C approach of climate, customers, competitors and company.

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    This post was posted in Investment Banking, Research and was tagged with Strategy, Oil and Gas Infrastructure Valuations

  • Adapting to the “New Normal” in Oil and Gas Construction

    Posted on April 15, 2015 by FMI Corporation

    Energy170548899How the Market Will Endure Growing Regulatory, Labor and Commodity Pricing Pressures

    On February 24, President Obama vetoed legislation authorizing TransCanada's Keystone XL pipeline.  The 7-year regulatory saga is emblematic of the regulatory and public relations burdens on U.S. energy projects. With the Keystone veto, this burden will grow.

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    This post was posted in Investment Banking and was tagged with FMI Capital Advisors, Oil and Gas Infrastructure Valuations

  • Ownership Exit Planning: Is Time on Your Side?

    Posted on October 28, 2014 by FMI Corporation

    HandsiStock_000020010614_MediumFMI all too often sees owners waiting until the last minute to formulate and implement an exit strategy. This usually results in limited exit options and an increased probability of failure. However, with proper planning and timing, an owner can realize the full value of his/her business.

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    This post was posted in Investment Banking and was tagged with Ownership Transfer, construction, NRCI 2014 Q2, Talent Development

  • Will Falling World LNG Prices Slow Down the U.S. LNG Boom?

    Posted on July 31, 2014 by FMI Corporation

    LNGChartThe advent of horizontal drilling and hydraulic fracturing in the United States has fundamentally changed global energy economics. One of the most notable changes is that U.S. natural gas is now so cheap that it is marketable overseas, where prices are significantly higher. This disparity is what has driven a wave of applications with FERC and DOE to construct LNG export facilities in the U.S.

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    This post was posted in Investment Banking and was tagged with Scott Duncan, Oil and Gas Infrastructure Valuations

  • What's Your Company Worth?

    Posted on July 11, 2014 by FMI Corporation

    What's Your Company WorthMost business owners have heard of the saying, “it’s all in the details,” and, accordingly, most business owners tend to embody a detail-oriented management approach. They keep their finger on the pulse of the organization, maintaining a constant stream of communication with customers, vendors, and employees. They scrutinize the numbers behind major estimates and lose sleep agonizing over the intricacies of key jobs. They monitor the company’s financial situation in fine detail, and debate over the outlook of the industry as well as the strategic vision of their organization. But at the end of the day, most owners remain uninformed about one major detail relating to their business. How much is it worth?

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    This post was posted in Investment Banking and was tagged with Inc., Fairness Opinions, Business Owner, Employee Engagement

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