Traders follow the dynamics of population growth in search of reliable and predictable cash flows. As Americans keep moving to Sunbelt statesdemand for infrastructure and investment in architecture, engineering and design firms in these regions is attracting interest from private equity firms.
Godspeed Capital Managementa private equity firm focused on defense and government services and technology, has invested in Image Engineering Group, a Texas-based mechanical, electrical and plumbing company focused on the education, commercial and retail markets. As part of the transaction, IEG will join Rachlin Partners and TSK Architects as part of Huckabee ArchitectsGodspeed’s architecture, engineering and consulting (AEC) services platform targeting education and government markets.
“Population growth momentum in the South (e.g., Texas and Florida) necessitates more investment in educational infrastructure, creating demand for Huckabee’s architecture and design capabilities,” says Doug Lake, Founder and Managing Partner, Godspeed Capital. “AEC firms offer a high-margin, high-cash-turnover professional services model that lends itself very effectively to private equity investments.”
With an uncertain economy, negotiators are looking for companies with predictable turnover and profits. Lake explains that Godspeed and Huckabee have outsourced work to IEG in the past and sees the deal as a natural and positive synergy for revenue growth, as the company can now internalize previously outsourced predictable revenue.
In addition, the company has identified the Dynamics of population growth in the solar belt which led other private equity dealmakers to invest in the demand created by the influx of people into the area. Population growth has created a need for investment in education and infrastructure where Godspeed has identified opportunities.
Keep an eye on infrastructure investment in the Sunbelt State as population growth shows no signs of slowing down.