Well, not really. But, the message here is that, as one architecture or engineering firm acquires another, it isn’t buying much in the way of physical assets, patents, copyrights, and other intellectual property. In essence, it buys the people.

In other industries like real estate or manufacturing, you are buying a lot more physical and tangible “stuff.” But, not here.

You’re buying their knowledge and abilities, as well as the systems that are in place to help the people do their work. In other words, you’re acquiring the intellectual capital of the employees, the company history and reputation, and the firm’s ability to generate future cash flow based on its people and its brand.

In the A/E industry, there are several key measures of intellectual capital, such as:

• Technical expertise (does the firm do the same work that everyone else does?)

• Brand differentiation (can the firm command higher fees than the competition?)

• Client experience (does the firm treat clients the same as everyone else does?)

• Client loyalty (do clients stick around and value the firm’s work?)

• Bench strength (is the brand tied to a handful of key individuals?)

• Market growth potential (is the firm in growing or shrinking markets?)

Of course, there are many others, but you get the point. These elements of value can easily be lost in a transaction if they aren’t recognized and managed correctly. That starts with identifying the value drivers of the firm early on (before the Letter of Intent is signed) and developing a plan in due diligence and integration planning to, not just preserve, but leverage and expand these drivers after the transaction is closed.

You can learn more identifying and leveraging your A/E firm's value drivers in PSMJ’s "just-released" Navigate the Hurdles to M&A Success: The Ultimate A/E Mergers & Acquisitions Manual . It provides hundreds of pages of insights and advice, backed up by innovative thinking that only the successful PSMJ advisers can make. PLUS, you get dozens of tables, charts, worksheets, and templates to get on track for success!