Irvine-based Montrose Environmental Group Inc., which has become one of the country’s largest environmental services firms via an aggressive roll-up strategy since its 2012 founding, looked local to find its latest purchase.
The $1.2 billion-valued company (NYSE: MEG) last week announced the purchase of Laguna Beach’s Environmental Intelligence LLC, an environmental consulting firm known for its work in wildfire mitigation, biological assessments, construction monitoring and regulatory compliance services.
Financial terms of the deal were not immediately disclosed.
Environmental Intelligence, founded in 1994 and also known as EI, has about 50 employees. It ranked as Orange County’s 12th-largest environmental consulting firm last year, with about $15 million in annual billings, according to Business Journal data.
EI’s work has included hazardous tree removal projects across various utility transmission areas served by Southern California Edison, in a bid to prevent wildfires in the state.
Since early 2014, the company worked “to maximize tree removals and brush clearing while avoiding impacts to sensitive biological and cultural resources within the utility’s transmission corridors,” it said of its work related to the multiyear, SCE contract. EI’s website indicates the contract totaled $10.5 million.
EI’s website also touts its involvement in a variety of renewable energy projects in the state, as well as residential housing projects across multiple counties in Southern California.
Locally, it was involved in Chevron’s conservation work at the East Coyote Hills development site in North OC. The project included the construction of a golf course, homes, and maintenance of oil infrastructure “while restoring over 120 acres of coastal sage scrub for the resident Coastal California gnatcatcher,” it said.
The executive team of EI, including founder and Principal David Levine, will join Montrose, and the business will be integrated into the Irvine firm’s Assessment, Permitting and Response segment.
Roll-Up Specialist
The acquisition marks the first reported local deal for Montrose since it went public a year ago.
Montrose was valued under $500 million immediately following the July 2020 initial public offering; its shares have more than doubled in price since.
The company provides an assortment of environmental consulting work, including measurements and analytics, planning and permitting, environmental solutions, and waste-to-resources.
It has nearly 5,000 clients that range from government entities to gas companies to utilities. Its units provide services such as treating contaminated water, permitting work for large infrastructure projects, finding ways to reduce the carbon intensity of operations and converting waste to renewable energy.
The company has made its mark in an industry that to date hasn’t seen too much consolidation.
Montrose has made more than 50 acquisitions over its history, including seven deals in each of 2018 and 2019. Its company employee base now tops 2,000, and it counts about 70 locations.
While most companies it buys are smaller and midsized businesses such as EI, in April 2020 it went big. Montrose completed its largest deal to date with the $200 million buy of Little Rock, Ark.-based Center for Toxicology and Environmental Health LLC.
Since the IPO, it has returned to smaller-sized deals. Its largest reported buy in the first quarter was a $23 million cash and stock deal for Orlando’s MSE Group, according to regulatory filings.
Next Level Opportunity
“We see a unique opportunity in pairing EI’s pioneering work in wildfire mitigation and geospatial innovations with Montrose’s disaster response services, to offer clients a comprehensive environmental services solution for crisis preparedness and compliance,” said Montrose chief operating officer Josh LeMaire, when announcing the deal last week.
The addition of EI “will also strengthen our exposure to renewable energy projects throughout Southern California,” LeMaire added.
Said EI’s Levine: “We are excited to join a well-capitalized, growth-focused company such as Montrose that is committed to environmental stewardship and technological innovations while supporting clients in their most challenging projects.”
“Our employees will be able to apply their experience and talents to an increasing number of new clients,” Levine said. “We’re excited to take things to the next level.”
