Increasing Mergers and Acquisitions for A/Es in 2005 First Quarter
There has been an increase in the amount of A/E merger and acquisition activity and deals announced in the first quarter of 2005 compared to 2004. “Many acquirers credit the improving economy, the need to expand into new markets and services, and strong financial performance and cash positions as the reasons to shop,” says Steve Gido, an associate with Natick, Mass.-based ZweigWhite.
However, says Gido, for every deal announced, there are as many as five to ten that are never consummated because of a variety of issues, such as incompatible cultures, management egos, unrealistic price expectations and integration concerns that arise from due diligence.
Consequently, he has a few tips to share with A/Es who want to purchase other design firms and improve their deal-making chances:
Reflect on the purpose for acquiring. Buyers should create clear objectives and criteria when deciding on the type of firm to acquire. In addition buyers also need to determine what their firm can offer a target firm and their owners, staff and clients that they cannot achieve on their own.
Consider the deal structure. Buyers need to have an accurate assessment of their financial resources and a flexible game plan for ultimately structuring and paying for the target firm. Many buyers fail because they approach each deal with the same framework without addressing the concerns of the seller.
Plan the integration of both firms. Over-communication at every level is pivotal with professional service firms where people and their talents and relationships are the motivating factors. Understanding and effectively addressing all parties’ concerns and questions will help to minimize surprises and manage expectations.
For more information go to www.zweigwhite.com .