When Mergers & Acquisitions conducted our 2023 Outlook Survey we asked a group of mergers and acquisition professionals to identify sectors they saw opportunities. They identified a myriad of sectors poised for growth in the new year. It appears OceanSound Partners listened to Randy Schwimmer, co-head of Senior Lending, Churchill Asset Management’s prediction of engineering and infrastructure consulting services.

OceanSound Partners, a private equity firm focused on technology and technology-enabled services, has made a strategic investment in Gannett Fleming, an engineering and infrastructure services provider. The target offers infrastructure consulting services such as engineering, architecture and construction and program management for the transportation, water, federal, power and energy markets.

“The U.S. is undergoing a massive infrastructure transformation where the combined impacts of climate change, aging infrastructure, decades of underinvestment and electric vehicle demand, among other factors, are driving investments in infrastructure at an increasing rate,” says Joe Benavides, managing partner and co-founder of OceanSound Partners. “These investments are largely led by government constituents and programs which have increased the national priority of infrastructure.”

Dealmakers like OceanSound are looking to take advantage of the tremendous tailwinds playing on the aging infrastructure in the U.S. 2022’s infrastructure law and Build Back America, will result in over $1 trillion in aggregate spending in the coming years. Consulting companies represent just a small part of overall infrastructure project costs, enjoy favorable contract pricing, yield tremendous free cash flow due to high margins, low working capital and is ripe for consolidation as a result of fragmentation.

Benavides says, “The teams at Gannett Fleming and OceanSound are committed to leveraging the company’s record levels of backlog together with the increasing demand resulting from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act to improve product delivery, invest in emerging technologies and attract and retain the best talent – and these initiatives will be complimented through future corporate acquisitions and partnerships.”

What are your thoughts on the market for infrastructure consulting services investments? Let me know your thoughts at [email protected]

Cole Lipsky