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M&A And The Construction Drilling Industry

Posted on September 29, 2019 By

The construction drilling industry is a very diverse market that handles various private and public contracts that include infrastructure expansion, excavation, road boring, poly piping, trench work, geotechnical drilling, and foundation drilling.

M&A Drivers

The key drivers for mergers and acquisitions in the construction drilling industry for most companies include:

  • The objective to grow and diversify the businesses
  • Expansion of services and capabilities
  • The need to address qualified labor shortages in an industry where talent is increasingly difficult to find

At the same time, labor shortages can also be a reason that some drilling businesses may hesitate to make a major acquisition, as they do not have enough young leader talent to make it work in their favor.

The sectors that continue to be ripe for acquisition activity are civil infrastructure and industrial. Organic growth and access to labor is challenging for both of these areas.

Consolidation is also driven by a customer demand for large companies that offer integrated, single-source solutions. This includes the collaboration by design and construction firms looking to vertically integrate and expand their delivery capabilities. Additionally, strategies are about more than the creation of better solutions for clients in the construction drilling industry. They are also motivated to create a better platform for employees. In what is a very competitive labor environment, offering a solid growth platform is just as crucial to employee retention as it is to customer satisfaction and shareholder value. Employees can benefit from the advantages and growth possibilities that come with being part of a larger infrastructure company.

 

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Buyer Interest

The interest of buyers in the drilling sector is partially driven by the need to remain competitive by adding capabilities and scale in a market where competitors are acquisitively expanding their own capabilities and scale. With a divide between large integrated firms and smaller niche providers, those that are not growing at the same rate as their competitors risk getting lost somewhere in the gap.

Horizontal Directional Drilling (HDD)

Horizontal Directional Drilling is a trenchless procedure that is utilized to install underground pipes, cables and conduits along a pre-determined route by using a surface-launched drilling rig. It has gained great popularity in the industry because it causes minor damage to the topography of the adjacent areas.

The opportunities for growth in the HDD market are strong because of the high demand that comes from the telecommunications sector. As telecom companies take action to expand broadband service availability, it increases the demand for the installation of cellular towers. As digitization is steadfast in both developed and developing countries worldwide, cable, broadband and fiber companies are expanding networks to serve the growing demand. The growth of the HDD market is also heavily supported by the steady demand from utilities such as electric, water and natural gas distribution. Utilities account for more than half of the overall revenue in this market.

Some of the unique challenges this industry faces are related to a lack of contractor review for construction assessment prior to starting projects, and the hiring of unqualified engineers and consultants with no prior experience.

The HDD market sees significant activity in North America, with telecommunication and energy amassing a major share of the revenue. Other major markets that have a high demand for utility installations and broadband access include China, India, Australia, and Japan.

Contact Us

The world is full of opportunities and Benchmark International has the connections to help you effectively grow your business or sell your company whether it is domestically or across borders. Set up a call with one of our M&A experts and we can begin to delve into what how we can maximize your value and make the markets work for you.

Schedule A Call

 

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkCorporate.com

Europe: Carl Settle at +44 (0) 161 359 4400 / Settle@BenchmarkCorporate.com

Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkCorporate.com

ABOUT BENCHMARK INTERNATIONAL:

Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $6B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 12 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.

Website: http://www.benchmarkcorporate.com
Blog: http://blog.benchmarkcorporate.com/Construction_Drilling_Social

 

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