As market conditions improve and valuations continue trending upward, we’re hearing left and right from AE firm leaders wishing to explore whether an external sale is right for them. Of course, there is never an absolute “yes” or “no” answer to this question.
But for many of these firm leaders, an external sale provides a degree of liquidity, security, and investment return that no internal transition can match.
If you are thinking that an external sale might be the right fit for your AE firm, here are five quick tips to boost your odds of getting it right:
1. Check your emotions at the door. Particularly in first-generation firms, it will be difficult to separate sentimental and emotional value from fair market value.
2. Be prepared for a process that is both exciting and draining. Designing a win-win M&A transaction is a roller coaster ride. There will be ambiguity and there will be surprises.
3. Don’t jump at the first offer that comes your way. Do your research. Understand the complete set of terms associated with the deal. And, most importantly, benchmark the deal against AE industry norms and best practices.
4. Don’t hold out for a slightly better offer. Perfection or the ideal transaction can be hard to come by. When you get to agreement on a transaction that is fair and consistent with industry norms, go for it. Timing plays a huge role in M&A. A very good deal now is often better than holding out for the perfect deal that may or may not every actually happen.
5. Find trusted and experienced M&A advisors. You only get one chance to sell and this really isn’t something you want to try on your own. The personal and professional implications for you are huge. Build a team of advisors who have been through this process before and who can think completely objectively
about the deal.
About the Author: Brad Wilson joined PSMJ as a consultant in 2002 as one of the senior M&A consultants. Since, Brad has facilitated both the purchase and sale of AEC firms of all types and sizes. His broad-based knowledge of design firms’ cultures and operations has also been invaluable in integration planning and execution resulting in the achievement of financial goals for buyers and sellers.
Brad will lead Avoiding the Million-Dollar Mistake: Winning Strategies for Today's M&A Climate, a preconference session at the PSMJ's 2015 Industry Summit.
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