Five deals: PE firms bet on architecture, engineering and construction

Shifting demographics, government funding, climate change and the need to revamp aging infrastructure in the US are some of the factors driving private equity firms into architecture, engineering and construction (AEC) investments, said Jeff Koonce, a partner at Bernhard Capital.

His firm is diving deep into the AEC sector. Most of the projects can withstand the heat of the current macroeconomic environment. “We are not inflation proof, but we are inflation resistant,” Koonce said. “Interest rates and slowing down of the projects can affect us but we feel like there are enough tailwinds in these areas.”

Through various funding initiatives such as the Infrastructure Investment and Jobs Act from the government, a lot of projects are coming online. “There is deteriorating infrastructure that needs to be repaired or replaced,” he said.

Changing demographics is playing a part too. Since the pandemic there’s been a huge shift as people moved to the Southeast, and there is need for new infrastructure in places such as Texas, the Carolinas, Georgia and Florida to accommodate the rising population, Koonce said.

Changing climate and its effects on infrastructure demand major investments for reinforcements or new engineering altogether, which adds to the rising demand for AEC services, he added.

Below are five notable recent deals, including three announced this year, in the AEC sector.

1 Blackstone invests in Salas O’Brien

Earlier this week, Blackstone made a strategic minority growth investment in Salas O’Brien, an AEC company with multiple offices across the US, in a move to help accelerate the company’s growth.

Blackstone said it will leverage its global scale, resources and operational expertise to help grow Salas O’Brien. “The current market environment has clearly demonstrated the critical need for resilient, differentiated, high-quality AEC solutions, and we look forward to helping accelerate the growth of this exceptional leader in this sector,” Shary Moalemzadeh, senior managing director, and Evan Middleton, a managing director, at Blackstone said in a statement.

Other opportunities for the company are rooted in the desire by more companies to pursue their decarbonization, energy transition and critical infrastructure goals, Darin Anderson, chairman and CEO of Salas O’Brien, said.

2 HIG buys CHA Consulting

Miami-based HIG Capital earlier this week acquired CHA Consulting, an engineering, design, consulting and program management firm, from First Reserve.

CHA, headquartered in Albany, New York, is a provider of technology-enabled design, engineering, project management and consulting services to public, private and institutional clients across numerous end markets such as government, manufacturing, transportation, utility, water resources, commercial and education.

HIG is planning to support CHA Consulting growth strategy through “selectively broadening its operational scope across North America, both organically and through continued acquisitions,” Matt Hankins, a managing director at HIG, said.

3 Wind Point acquires MOREgroup from Godspeed

Godspeed Capital earlier this month exited MOREgroup, based in Fort Worth, Texas, to Wind Point Partners.

MOREgroup comprises architecture, design and engineering brands with sector-focused expertise in the education, healthcare and federal government markets. Godspeed Capital initiated the platform in March 2022 through a partnership with Huckabee Architects that included the complementary add-on acquisitions of Rachlin Partners, TSK Architects, Image Engineering Group and E4H.

4 OceanSound Partners-backed RMA purchases Rone Engineering

RMA, a portfolio company of OceanSound Partners, in December acquired Rone Engineering, a Dallas-based geotechnical engineering, materials testing and environmental services firm.

Headquartered in Rancho Cucamonga, California, RMA works with critical public and private infrastructure assets.

“The addition of Rone to the RMA family marks our seventh acquisition of 2023, which has been a monumental year of growth,” said Ed Lyon, CEO of RMA, in a statement. “Rone operates offices in the critical Texas Triangle that is poised to receive over $17 billion in IIJA funding over the next five years.”

5 Bernhard Capital-backed GHC acquires Hahnfeld Hoffer Stanford

In November, Grace Hebert Curtis Architects, a portfolio company of Bernhard Capital, acquired Hahnfeld Hoffer Stanford, an architecture firm in the Dallas-Fort Worth region.

Bernhard Capital invested in GHC in September 2022. Add-ons for GHC last year include BSSW Architects in December and Bullock Tice Associates in April, both based in Florida.

“As southwestern Florida continues to experience consistent population growth and increased public infrastructure demand, we believe BSSW’s client-first focus and expertise, coupled with its outstanding reputation, provides immediate near- and long-term value for GHC,” said Koonce in a statement following the BSSW deal.