Four big takeaways from virtual reality conference

Morrissey Goodale their fourth virtual reality (VR) event for A/E industry leaders. Attendees came from across North America (VR is mighty handy when the U.S.-Canadian border remains closed to non-essential travel) to learn and network in a variety of custom-designed VR spaces including auditoriums, galleries, and conference rooms. Strategy + Execution was the theme for the Wednesday sessions, while on Thursday the focus was on Capitalization + M&A. Here are the take-aways from the discussions:

• “Unprecedented Part 1:” The pandemic year of 2020 was unprecedented for all the wrong reasons. But A/E firm CEOs persevered, adapted to their new reality, and guided their firms through twelve months of craziness. They navigated a decade’s worth of change in a single year, and no leadership development program or business experience or mentor could have prepared them for the challenges they overcame. Having persevered through all of that, they could have at least expected a return to normalcy and maybe some R&R. But instead 2021 said, “Hold my beer.”
• Just like The Godfather Part 2: “Unprecedented Part 2” is so much better than the first one. This year is going to be unprecedented for overwhelmingly positive reasons. The U.S. economy will grow at its fastest clip in four decades. The current cohort of A/E firm CEOs have never experienced such a positive economic environment. Once again, they are experiencing a year for which they are unprepared. Opportunities for their firms abound like never before. The whiplash—between 2020’s uncertainty and 2021’s Great Gatsby vibe—will forge their leadership credentials.
• No one has figured it out yet: The #1 top-of-mind topic for many attendees was how leadership teams are navigating the post-pandemic work model. Firms were all over the map on this. Discussions often times started with emphatic, declarative statements such as “We have everyone back in the office now!” or “We’re targeting beginning of September to bring everyone back” or “We’re going 100% virtual.” But as the conversations flowed it became clear that everyone had a more nuanced approach and was still figuring out what their New Reality was going to be.
• The power has shifted: Talented people are the scarcest of resources in our industry. It’s a seller’s market. The events of last year objectively proved that the vast amount of the work done in the leased brick-and-mortar office space of A/E firms can be done remotely. So, if an employee wants to work for an employer from home full-time or part-time and can do so successfully, why on earth compel them to do so from a legacy office? The future work model will be a blend of remote work and shared office workspaces and will be far better at meeting the needs of employees and clients. A/E firm leaders and managers need to figure out how to fully capitalize on it.

Notable M&A trends:

2018—the tipping point: Jon Escobar shared some jaw-dropping statistics in his Thursday M&A Trends and Deal Pricing presentation as follows:

• There were 2,715 A/E and environmental firms that were sold or merged since 2010.
• Of those transactions, over 40% have taken place since 2018!
• Starting in 2018, the average annual deal volume jumped 53% from 202 to 311.

Taken together the message for A/E firm leaders is that in just the past 3.5 years, the pace of consolidation of our mature industry has dramatically accelerated, with direct impacts on the competitive environment for work AND talent. (Bigger firms tend to have better benefits and tend to invest more in learning and development of their people.)

The West’s Awake: There has been a marked increase in M&A activity in western states over the past year. Year-to-date with 27 transactions, California has seen more consolidation than any other state. And the 13 deals announced thus far in 2021 in Washington, Oregon, Nevada, and Arizona already match the total for 2020.

This article originally appeared on Morrissey Goodale’s website. Morrissey Goodale is a CFE Media content partner.

Original content can be found at www.morrisseygoodale.com.

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