Everything is bigger in Texas, including spending on roads, bridges, pipes and other infrastructure.
- “It’s the place to be in our world,” said Bob Scaer, CEO of engineering firm Gannett Fleming. “And you can’t penetrate that by hiring a person to start growing. The only way in is acquisition.”
- For Camp Hill-based Gannett Fleming, that acquisition was of DEC, a Houston-based engineering firm with seven offices in the Lone Star state.
- Announced yesterday, the deal adds more than 200 employees, bringing Gannett Fleming to a staff of more than 3,000.
- Terms of the transaction were not disclosed.
Why is this happening: Gannett Fleming is on a mission to grow but not just for the sake of getting bigger, Scaer said.
- The firm wants enough scale to tackle larger, multimillion-dollar projects, both to ensure financial stability and to attract employees.
- Gannett Fleming has annual revenue of about $600 million but is aiming for $1.2 billion by 2030.
- “It’s not a race to be big,” Scaer said in an interview with biznewsPA. “It’s a strategy to be big enough.”
- The company also wants to expand beyond its stronghold in the Northeast, Scaer added.
- Competitors include engineering giants like AECOM and WSP, each of which employs tens of thousands of people.
Is there a partner: Yes
- In early 2023, Gannett Fleming sold an undisclosed stake to OceanSound Partners, an investment firm specializing in middle-market service companies.
- The acquisition of DEC is Gannett Fleming’s third — and its largest — since OceanSound’s investment.
- In February, Gannett Fleming bought California-based Flaherty Engineering.
- And last fall, the company acquired DiGioia Gray, an engineering firm with offices in Pittsburgh, Monroeville, Phoenix, Charlotte and Roanoke, Virginia.
What’s next: Gannett Fleming aims to pursue larger projects in Texas than DEC could take on solo, Scaer said.
- Gannett Fleming also plans to bring a broader array of services to DEC clients, Scaer said. DEC has typically focused on water and transportation projects.
- Michel Maksoud, CEO of DEC, is joining Gannett Fleming as senior director of Texas operations.
- Gannett Fleming had an existing office in Austin, Scaer added.
- On the deal side, Gannett Fleming expects to close more acquisitions.
- “The locations we’re looking at are countrywide,” Scaer said, declining to share additional details.
The background: Thanks to both state and federal infrastructure funding, Texas projects are generating more revenue for engineering and design firms than any other state, with the exception of California, according to a report last year by the research arm of the American Council of Engineering Companies.
- “Texas continues to be a behemoth in the industry,” the ACEC Research Institute wrote in the report. “In addition to its massive contribution to industry revenue, favorable laws and business conditions continue to attract firms and talent.”
