Environmental Consulting Firms Plan To Increase Acquisitions

Natick, Mass. - More environmental consulting firms are considering selling their business today than four years ago, according to a recent survey.

The survey, conducted by Mark Zweig & Associates Inc. in Natick, Mass., polled 1,000 environmental and design firms. Of the firms that responded, 77 percent expressed an interest in buying, selling or merging with another firm.

More than one-third of the firms interested in selling were environmental consulting firms, according to the survey. In 1990, a similar survey reported that no environmental consulting firms were prospective sellers.

"This is just one indication that the bloom is off the rose for some specialties," said Frederick White, principal of Zweig. "On the other hand, almost half of the buyers we looked at are still interested in acquiring environmental firms." Overall, buyers and sellers were evenly divided - 60 percent of the participants would consider buying another firm; 57 percent would consider selling; and 48 percent would consider merging with another firm. About half of the firms selected more than one option, the survey said.

Most of the interested buyers were larger, multidiscipline companies looking for firms smaller than themselves, although 13 percent of the prospective buyers were considering firms larger than themselves.

The median buyer had 102 employees and the median seller employed 42 people. The biggest seller, however, was a 150-person firm and the smallest one was a 38-person firm, according to the survey.

The most sought after acquisitions for respondents were environmental consulting firms (46 percent) and general civil engineering firms (30 percent), according to the survey.

The most common reason for planning an acquisition was geographic expansion in the same service areas - not diversification into new areas. Buyers are reportedly looking for firms in a different state or region that offer similar services to what they offer now.

Only 20 percent preferred acquisitions in their own state (headquarters) and 28 percent of the prospective buyers are focusing on the South Atlantic region.

Lastly, many of these prospective buyers and sellers have recently completed a purchase. During the 1990s, 33 percent bought, sold or merged at least once.

Mark Zweig & Associates Inc. is a management consulting and publishing firm specializing in the design and environmental consultant industries. For further information or a copy of the report, contact: Frederick D. White or Cara Hayes, One Apple Hill, Box 8325, Natick, Mass. 01760. (508) 651-1559. Fax: (508) 653-6522.