Mergers Launch Local Firm into Explosive Growth
A lot of little boys growing up in the 1960s ran around in cowboy boots. Not Mark Israel. He sported a pair of engineering boots. So did his father, Sy, and those were some big shoes to fill for a son who wanted to be just like his dad.
Today, Mark Israel serves as CEO of Universal Engineering Sciences (UES), an Orlando-based company his father founded in 1964 in Merritt Island. In the past two years, even through the challenges of the COVID-19 pandemic, Israel has forged a series of partnerships that have expanded the geotechnical engineering services firm from its Florida and Southeast roots into an operation with 48 offices and 2,150 employees coast to coast.
“It’s been an interesting evolution for me,” Israel said. “We were a family-owned company and we were big, about 920 people. Looking around in the engineering space in this country, there wasn’t another firm like us that had basically one owner. I would meet people and they’d look at me like I was crazy. They’d ask, ‘How do you do that without a board of directors or without partners?’ and my answer was, ‘I don’t know, but it’s the only thing I’ve ever done. That’s all I know.’”
In early 2020, UES teamed up with Palm Beach Capital, a private equity firm out of South Florida that has handled hundreds of acquisitions in the past two decades, many of them by family-owned companies looking to grow. The partners brought in GFA International (GFA), a Delray Beach geotechnical engineering firm founded in 1998, which had six offices and 300 professionals offering similar services and some specialties not yet developed at UES.
Since then, the UES family has expanded to include six other firms that all work in geotechnical engineering, a specialty branch of civil engineering that involves collecting and interpreting physical properties of the ground for use in building construction.
On June 4, UES was named the fastest-growing firm in the United States in the architecture, engineering, planning, environmental and construction (AEC) industry on the Zweig Group’s 2021 Hot Firm List. Rankings are based on three years’ growth in revenue, both percentage and dollar amounts. This marked the first time in four years a new company took the top spot on the list.
UES has worked on notable projects in Central Florida that include the Amway Center and Dr. Phillips Performing Arts Center in downtown Orlando, the Orange County Convention Center, Sunrail and Brightline high-speed rail, the Daytona International Speedway redevelopment, and the NASA Headquarters Building Central Campus at Kennedy Space Center in Brevard County. Other projects include the Miami Beach Convention Center renovation and the Ziggurat Building in West Sacramento, California, a 10-story pyramidal office tower.
“Since we’ve partnered with Palm Beach Capital, we’ve doubled in size in one year through acquisitions,” Israel said. “This is a nuts-and-bolts, linear business. Every time we want to grow, we’ve got to hire a person, buy a truck and all that. It’s not like an internet company, where a million people can buy your app from one little room. It’s incremental, slow growth, even through acquisition.”
New Phases, New Faces
Israel expects the company to continue expanding and has welcomed the help.
“Now I have partners, and we have a board of directors and it’s much more formalized,” he said. “We have a corporate staff, which has grown and needs to grow more. We’ve hired a new president to help me run that, and I have managing partners who help run their divisions around the country. I’ve had to delegate.”
In February, Israel appointed James Walsh president of the company. Walsh brings with him a wealth of experience in the work that goes into successful mergers and acquisitions. Formerly chief operating officer at Degree-One, which provides HVAC, refrigeration and food equipment services, he integrated several acquisitions and significantly improved the company’s earnings. Among Walsh’s other positions, he served as senior vice president and chief technology officer at AECOM Technology Corp., where he was a member of the global mergers and acquisitions team.
“Jim is recognized for delivering results in complex, dynamic environments by steering strategy, promoting culture, driving change and creating consistent processes,” Israel said in a release announcing the appointment. “He will drive enterprise-level consistency and stability across our national organization, partnering with key stakeholders to achieve long-term and short-term objectives.”
In April, Palm Beach Capital announced a new chair of the UES board of directors: Michael Burke, the chair and CEO of AECOM. Burke, who invested in UES himself, plans to continue to grow the privately held company from about $300 million to $1 billion, partly by focusing on the Biden administration’s plan to address aging infrastructure such as roads and bridges throughout the United States.
Like Walsh, Burke brings extensive knowledge in mergers and acquisitions. He was instrumental in leading AECOM through its transition from a midsize private engineering firm to a publicly traded company with revenues of more than $21 billion. AECOM’s initial public offering on the New York Stock Exchange in 2007 represented one of the largest engineering IPOs of all time.
“UES is well-positioned to be the leading infrastructure company in the geotechnical engineering space,” Burke said in a release announcing his appointment. “I’m excited to join UES at this pivotal moment in its history and to seize the opportunity to address the nation’s current and anticipated infrastructure demands.”
Preserving the Culture
Over the years, people have asked Israel if he would consider expanding by buying other companies with similar capabilities. His answer was always no. He said he was “chicken” because he’d never done it before. Partnering with a team of experts including attorneys and Palm Beach Capital helped him become comfortable with the transactions.
“It’s funny,” he said, “I was talking to a competitor and they said, ‘Oh, it’s easy. We’ve done 40.’ It’s easy because you’ve done 40. When you do one and it’s just you, it’s scary. It’s like parachuting for the first time — without an instructor.”
He calls the new partnerships mergers rather than acquisitions. “We have a soft touch,” he said. “Each of these people has built their business and it’s their baby, just like it was mine and my dad’s baby. In the engineering space, this is how companies grow, through acquisition. Our company, legacy Universal, was the only company that got to our size without acquisitions.”
UES is looking for just the right companies to bring on as partners, he said.
“We have a very tight niche in this business. Engineering means a lot of things, even civil engineering means a lot of things. We’re a very small subset of civil engineering. So we want to stay in that lane. It’s a very fragmented market, and there are thousands of companies out there, but we want to find the right ones for us — ones that are successful already, ones that fit with our values and with our culture, and that are in good locations and well managed. We’re not partnering with turnaround firms, or those that are struggling and need us. We’re partnering with firms that want us, and we want them.”
Each new partner has similar values, but each has its own culture, and Israel said UES is committed to honoring that. Palm Beach Capital brought in Brian Kirkpatrick with engineering consulting business Obsidian Group Holdings to help with the integration. Kirkpatrick had worked with the investment firm before and could lend his experience with mergers and acquisitions.
“I help bring all the businesses together to act, feel and operate as one Universal,” he said. “That way we have a national brand, and we become more of an ‘easy button’ within the footprint or geography we invest in and operate in so we’re more relevant for the customer base that stretches across state, county and city lines.
“Putting seven businesses together with different cultures, different teams and different processes would make it virtually impossible for Mark to run if they were all standalone entities. I tie it all together so we can have a more cohesive and efficient operating system.”
It’s important to understand the brand equity each new partner has created through its own work before it became part of UES, Kirkpatrick said. That equity can be leveraged for the mutual benefit of all the partners.
“To tie them together from Day One, we add the tagline ‘A Universal Engineering Sciences Company,’ which is important. That can help them win some perhaps bigger business. It’s nice for people to know that a well-run business in that community is now part of something bigger. It’s financially sound and it’s backed with institutional investors who are here to support the business, grow the business and invest in what’s required.”
One of the things that most excites Israel about the expansion is the extension of the company’s capabilities. “All the firms have some different expertise, and we’re trying to marry those types of expertise across the companies,” he said. He points to a set of occupational health and safety services brought in through the GFA partnership — specialties that proved to be especially important to the company during the pandemic.
Michelle McIntyre heads that division as the corporate director of Occupational Health and Safety (OHS) for all of UES. Shannon Palombo supports the division as its technical writer.
“I came aboard into GFA about four years ago, and GFA didn’t have these capabilities,” McIntyre said. “The goal was for me to help bring the service line into the company. I worked out of the Fort Myers branch and brought in Shannon. I needed support and a technical writer. A lot of times in our work, the fieldwork is the easy part but nobody wants to write the report.”
The merger has been exciting, McIntyre said. “I’ve really embraced it because it gives us an opportunity to tap into more skills, to bring in more people and broaden the team. We have more than 2,000 employees now instead of 300, so it’s fun to see what skill sets everybody has.”
McIntyre explained the difference between what her division does and how other firms in the expanded UES family have been operating.
“GFA and Universal both have always had an environmental department that handles things like soil testing, groundwater sampling and environmental outside air sampling. This service line is very different because we’re working with indoor air or drinking water. It’s environmental but it’s different. We also provide safety services. My role now is to help bring this service line into all of the branches across the company.”
The expanded capability has proved lucrative for UES. The OHS division’s services are easy to offer anywhere. “We don’t use rigs or large pieces of equipment that tether us to a certain geographic area,” McIntyre said. “We are very mobile, and a lot of our projects require either just our knowledge or us being there, or some sampling pumps or small equipment. So we’re able to hop on flights and go wherever we need to go.”
The expanded capability also allowed the company to branch into new work during the past year when some businesses were stymied by COVID-19.
“When we first started dealing with the pandemic last year, Shannon and I and the team rushed to get a service line together for COVID,” McIntyre said. “We put training programs together, we created an online learning management system, we wrote protocols for cleaning surfaces, and we brainstormed and worked to get everything up and running. It allowed us an opportunity for a whole new service — something else to test for, something else to train on. As unfortunate as it was that we were dealing with a new pandemic, it offered an opportunity for us.”
Some client companies that were allowed to continue working, such as in construction, had to quickly meet new governmental requirements or restrictions, Palombo said. “We actually created a ‘COVID-19 Competent Person’ course. For a few months, Michelle was teaching six or eight courses a week that were one hour to four hours long. We had a couple local municipalities that were allowing construction sites to stay open only if they had a COVID-19 competent person on-site, so we were training hundreds of people. It was stressful but very exciting.”
Outside of COVID-19, the division’s most popular service line is for indoor environmental testing for potential hazards such as asbestos, mold, lead-based paint and poor air quality, McIntyre said. As UES continues to grow, McIntyre and Palombo will continue to oversee cross-training to expand the company’s OHS capabilities internally. “With a bigger footprint, it’s exciting,” McIntyre said. “I think it’s going to lead to much, much more opportunity.”
While the company moves into its future, Israel remembers what it was like when his father started UES — right down to the smell. As a new entrepreneur trying to save money, Sy Israel approached a developer friend who had an engineering office that was no longer being used in a subdivision’s packaged sewage treatment plant, which served as an alternative to a septic tank system.
“He rented it for $75 a month,” Israel said. “I remember hanging around that place from the time I was maybe 4 years old, and it smelled terrible.”
Nothing deterred him from wanting to grow up to follow in his father’s career footsteps, though. When he was cleaning out his mother’s possessions after her death about eight years ago, he found one of his fourth-grade homework assignments. He had written that he wanted to attend college at University of Southern California or Penn State, because those were schools that produced great running backs and he wanted to play college football.
“I was going to play in the NFL,” Israel said. “And I wrote that when I retired, I was going to go into ‘the testing business,’ which is what we called our business. All I’ve ever wanted to do besides play football was work for my dad.”
He jokes around about the bond between father and son. “If my dad was a florist, I would be a florist. I would be a terrible florist, but I would be one.”
Israel started working for his father’s company when he was 13. He remembers his first day well. “They sent me to a concrete pour at a construction site in Lake Mary where there were big hills of sugar sand, which is really soft. I had to fill a wheelbarrow full of concrete. In those days, we used these heavy metal wheelbarrows with big thick handles that were heavy.
“For a 13-year-old, I was already pretty big, almost the size I am now. Well, I picked this thing up full of concrete. I know now that they did this on purpose. They had filled it right to the top, and they didn’t need to. I was walking through the sugar sand, and my muscles were shaking a bit, and suddenly the wheelbarrow tipped over. The concrete went everywhere, I went flying, and everyone at the construction site was laughing.”
Finding His Place
Israel worked for his father’s company every summer until he got his driver’s license, and then he began going there after school, too. He remembers how he first started working in the company’s laboratory.
“Today our lab in Fort Myers is a big operation, with people working seven days a week. In the old days, we were much smaller. Whoever happened to be walking by got thrown into the lab. So when I was 16, I would go down there to try to find a place for myself. I became the first permanent lab person. Now we probably have 100.”
After graduating from Tulane University with a bachelor’s degree in civil engineering, he attended Rollins College Crummer Graduate School of Business for an MBA. “That summer, I got what I call my first ‘air-conditioned’ job,” he said. Instead of being out in the field, he was working in an office.
After graduate school, Israel worked with another firm in New York for about a year and joined the family business in West Palm Beach briefly before returning to Orlando, where he worked as a “grunt engineer” at UES for five years. “My dad never spoke to me during business hours. I was really one of the grunts, and gradually worked myself up into business development and then went into management.”
By about 1997, he was running the company while his father started easing into retirement. “In 2001, we had a consultant helping us. My dad was on vacation, so while he was away they made me president. I didn’t tell him till he got back. I had new business cards for him already.”
Sy Israel, who turned 88 in May, still shows up at the office when he’s not on his boat. To this day, his son looks to his father for mentorship.
“He’s given me advice my whole life,” Israel said. “He told me how to go to engineering school and coached me through it. He said, ‘Just get through it, Son. The real world’s not as bad as that.’
“And now, in the past year, we’ve become part of a much, much bigger operation. Before that we were very unusual as a company. With no partners and no board of directors, the only person I had who really was a true peer was my dad, so I’d go to him all the time.
“I’ve lectured a couple of times at the Crummer school, where there’s a class on family business. One of the things I’ve said is, ‘There is a playbook for how the kids are supposed to be in the family business, everyone knows it. You work harder and you just go the extra mile.’ There isn’t an obvious playbook for the dad or the mom.
“The truth is they have the harder job: knowing when to pull back and let you make a mistake,” Israel said. “They see it happening, and they know with their gray hair what’s going to happen. Or you do something they wouldn’t do and it turns out to be a success. They have to let you do it. My dad has been a great coach and a great guide.”