Is a Merger or Acquisition Your Next DIY Project?

Posted on: 11/21/17

Written by: PSMJ Resources, Inc.

Topics: Mergers & Acquisitions

We’ve all seen the television programs on HGTV, online, or in many other places these days. They make it look so simple! Just run down to your local home center, load up the rented pick-up truck with the checklist of items, follow some easy steps, and bingo! By the end of the weekend, you have a new patio or bathroom or walkway…and a very sore back.

While it just may be as easy as it looks in some cases, these projects can also just as easily turn into a source of nightmare and frustration (and expense) for some time to come. The same is true for M&A; whether you are on the buying or selling side.

In some respects, there are plenty of parallels between that bathroom renovation and renovating your Company’s presence in the Chicago transportation market through an acquisition. Both have an underlying rationale of (among other things) value enhancement and both can seem easier said than done. Maybe you’ve dabbled in some small similar projects in the past and those didn’t entirely live up to long-term expectations or ever really get very far. But, this time it will be different…you are ready to make a go of it and jump right in. See where we’re going?

While there is no easy way to say this without seeming self-serving or overly promotional…our first piece of advice when it comes to buying or selling a firm is to get professional advice! For starters, have you really thought all the way through points such as:

How will you find quality targets? It isn’t just about finding the firms actively for sale. It can take significant efforts to identify and screen firms that really are the “right” fit.
How will you determine/negotiate valuation and deal structure? This is almost always an area for significant debate…and it can’t just be arbitrary debate over numbers. To be successful, you’ll need to back up your position.
Who will be the deal champion when the going gets tough of when client priorities get in the way? There will be times when it is fun and times when it isn’t. And, you could be looking at a sold year from that first discussion to a transaction closing.
Will the resources be available for post-transaction integration? This is when the excitement fades and it is too tempting to just go back to business. However, this is also when history will determine whether the deal was a success or failure.

Over the years, we’ve seen so many well-intentioned M&A efforts fail to launch and these often tie back to either competing priorities or misaligned expectations. The firm leader(s) jumped head-first into the process without the resources or horsepower to see it through to successful completion. There may not have been that very sore back, but there was surely a lot of time and expense wasted (and, potentially, a black eye on future M&A efforts for the firm).

Need some more ideas for building an acquisition pipeline and get to a winning transaction? Check out our popular two-day A/E/C Mergers & Acquisitions Senior Executive Roundtable designed exclusively for A/E firm leaders!