By David Carnevali
(Reuters) -NV5 Global Inc, a U.S. engineering consultant whose business has taken a hit from its exposure to commercial real estate, is exploring a sale, according to people familiar with the matter.
NV5 is in the early stages of a sale process and is working with advisers to establish whether a deal would be financially attractive, the sources said.
NV5 could decide not to go through with a transaction, the sources added, requesting anonymity because the matter is confidential. NV5 representatives did not respond to requests for comment.
NV5 shares rose as much as 16% on the news and were up 6% at $109.97 on Tuesday afternoon, giving the company a market value of about $1.7 billion.
Based in Hollywood, Florida, NV5 offers services such as infrastructure engineering and building inspection to federal, state and local governments, as well as to the private sector.
While much of its work is performed on public buildings such as hospitals, schools and airports, NV5 has a real estate transaction services business that caters to commercial property, offering surveys and seismic risk assessments. It expanded this practice through the acquisition of Bock & Clark in 2017 and Global Realty Services Group in 2021.
This exposure to commercial real estate has weighed on NV5's business and stock price. Chief Executive Dickerson Wright said in February that NV5 would have achieved more than 11% gross revenue growth in 2022 had it not been for its real estate transactions business taking a hit in the wake of high interest rates. The company's municipal services business has been negatively affected too, he added.
NV5 shares have lost about a fifth of their value since the start of the year, underperforming a 31% rise in the NASDAQ Composite Index.
Wright, who helped launch the company in 2009 and is its second-largest shareholder with an almost 11% stake, has been a serial dealmaker, completing 57 acquisitions for NV5.
NV5 generated almost half of its $786.8 million revenue in 2022 from its infrastructure business, while its buildings consulting and geospatial solutions make up the rest.