Tetra Tech buys technical consultancy WYG for £43 million
Troubled professional services firm WYG has been bought up by US consulting conglomerate Tetra Tech, offering the company a new lease of life following a turbulent start to 2019. Earlier in the year, WYG’s Chief Financial Officer resigned in the wake of a profit warning and worries it would come under pressure from debtors.
Headquartered in California, Tetra Tech is a consulting and engineering services firm which provides consulting, engineering, program management, and construction management services in the areas of water, environment, infrastructure, resource management, energy, and international development. According to Crunchbase, before April 2019, the firm had completed a total of 35 acquisitions since its launch in 1966, helping take its number of locations to 450, with some 20,000 employees globally.
As the firm has sought to heighten its tally further, and increase its fee-earning potential in the European consulting market, Tetra Tech has acquired UK-headquartered consultancy WYG. After an offer was accepted in May, Tetra Tech’s purchase of all the outstanding shares of WYG has become effective. The deal takes advantage of an increasingly favourable exchange rate, with the floundering value of the pound having made British properties more attractive to overseas investment since the beginning of the Brexit process.
WYG employs some 1,600 staff across the UK and Europe who deliver consulting and engineering solutions across many of the sectors Tetra Tech specialises in, including planning, water and environment, transport, infrastructure, the built environment, architecture, urban design, surveying, asset management, program management, and international development. This offers an important level of cultural synergy for Tetra Tech, while the purchase also enhances its international development business, and gives access to major clients such as the European Union and the UK’s Department for International Development.
Commenting on the purchase, Dan Batrack, Tetra Tech Chair and CEO, said, “The addition of WYG advances our strategy to be the premier global high-end consulting, engineering, and programme management firm. WYG’s expertise in infrastructure and programme management, as well as water and environmental services, enables us to deliver innovative solutions to support the UK’s infrastructure needs. Together, we will provide an expanded scope of services to our customers and offer our combined staff even greater professional opportunities.”
For WYG, meanwhile, the move sees the firm strengthened by new financial backing, having been in something of a tight spot entering 2019. While the changing demands of its client portfolio led WYG to expand its headcount in 2018, the firm did not meet its expected financial targets in the last year. As a result, in mid-February, WYG issued a surprise profit warning, suggesting that its profit for 2018/19 would be hit by delays to a number of projects in the UK. This followed the firm’s half-year results for the six months to September 2018, which it announced in December.
Following the group’s profit warning, WYG’s shares fell 42%, and just two weeks later plummeted by a further 11%, and in a further blow, WYG was also understood to be struggling to secure deferrals from its debtors as a result. After this, WYG’s Chief Financial Officer Iain Clarkson announced his resignation from his role with immediate effect, leaving the firm in an awkward position as it sought to secure a waiver from debtors because of its inability to meet its debt-to-earnings or interest cover covenants.
