Engineering a deal: Stantec buys Penfield & Smith
Stantec, a large publicly traded design and consulting company, is acquiring Santa Barbara-based engineering firm Penfield & Smith. Terms of the deal, expected to close in October, were not disclosed.
“We first started working with Penfield [on the deal] several months ago with leadership from both sides coming together to talk about nuances and synergies,” Dean Palumbo, senior vice president for Stantec, told the Business Times. “For us, we’re a publicly traded company, and when we do an acquisition there are a couple areas we focus on … [like] making sure there is alignment of each firm’s values, which is the groundwork and basis for a long and fruitful relationship and the ability to expand our services geographic reach.”
Penfield & Smith has regional offices in Santa Barbara, Camarillo and Santa Maria. The company had revenue of $16 million last year, according to Business Times records, and 90 employees in the Tri-Counties, making it the fourth-largest engineering firm in the region. The firm expects revenue will grow to $18.5 million this year, Penfield & Smith President and CEO Hady Izadpanah told the Business Times.
Since coming out of the recession, Penfield & Smith had been growing between 5 percent and 10 percent annually but that the company wasn’t hitting its full potential, CEO Hady Izadpanah told the Business Times.
“We had been looking at what we can do to grow our business in L.A. County and create jobs on the Central Coast,” he said. “While we were doing that, it was just the right time when we crossed paths with Stantec. We felt like [the deal] was the right thing to do.”
The acquisition, which both firms are angling as a merger, gives Penfield — soon to operate under the Stantec name — access to the deep resources of a large public company and strengthens Stantec’s share of the Central Coast market.
Currently, Penfield splits its revenue stream with 55 percent coming for government clients and 45 percent from private-sector clients, the company said. About 60 percent of the company’s business is rooted in engineering and water resources work, 20 percent in surveying, 5 percent in planning and about 15 percent in construction management.
Penfield’s base of operations in Santa Barbara was a key factor in the acquisition, Stantec’s Palumbo said.
The move also comes as engineering giant AECOM, based in Los Angeles, acquired fellow engineering behemoth and San Francisco-based URS Corp. in a $6 billion deal in July. While the deal is significant in the scope of the broader engineering industry, the two major forces coming together doesn’t influence Stantec’s strategy in future deals, he said.
Stantec is based in Alberta, Canada, and already has offices in Thousand Oaks and San Luis Obispo.
“California is an important market for our firm, and Penfield & Smith strengthens our community-development presence in the state with talented practitioners that share our passion for serving clients through exceptional work,” Stantec President and CEO Bob Gomes said in a statement. “In addition to supporting our Central Coast capabilities, Penfield & Smith will also complement our operations in Los Angeles and Ventura counties.”
Penfield & Smith was founded in 1946. Its notable projects include the 135-acre master-planned marina community of Seabridge in Oxnard’s Channel Islands Harbor. The firm was the lead consultant on civil engineering, surveying and land planning for the project, which includes two retail centers and about 700 residential units. In Santa Barbara, the firm provided project management assistance and construction management for the conversion of the 40-million gallon, open-air Sheffield Reservoir into below-ground water storage facilities with a public park above.
Penfield & Smith’s regional clients include Shea Homes, Ventura County, Comstock Homes, UC Santa Barbara, Caltrans, People’s Self-Help Housing and the cities of Santa Barbara, Ventura, Oxnard, and San Luis Obispo, among others, Stantec said.
Stantec is a global firm with 14,000 employees around the world and 6,500 in the United States. The company said it has more than 1,000 employees in California. Penfield & Smith will join its firm-wide infrastructure segment, it said.
As of yet, there is not an official date for the completion of integrating both firms, Palumbo said. “We’re heading into that review currently, and this is where leadership from both sides is coming in to be a part of investigating the synergies and how best to organize, how we can leverage the expertise and push that out to our clients,” he said.