When she’s not enjoying the great outdoors, Tracey Eaves is finding share value for firms that are either preparing to be acquired or are planning an internal transition.
By Richard Massey
Whether it’s out on an elk hunt or snugged up in her cabin in the Rocky Mountains, that’s where Tracey Eaves, valuation services advisor at Zweig Group, loves to be. But she’s not always in her hiking boots. She spends plenty of time plying her trade finding share value for firms that are either preparing to be acquired, or are planning an internal transition. With 20 years in the field, she knows what firms need to do at that critical moment in their history.
SEVEN QUESTIONS WITH TRACEY EAVES.
The Zweig Letter: In your role at Zweig Group, how do you Elevate the Industry?
Tracey Eaves: I am helping to Elevate the Industry by extending the longevity of firms, either through ownership transition internally, or an exit through an acquisition. A majority of the valuation work I do is either for internal share transactions or an acquisition. The determination of the value of shares facilitates transactions that bring in the next level of leadership internally or it allows a firm to grow and become stronger through acquisition.
TZL: You have been affiliated with Zweig Group for 10 years. Since 2012, you have worked as a remote advisor. What’s the key to staying engaged with a company when you are only in the home office once a year?
TE: The valuation work that I perform with clients doesn’t require my presence in the home office. I work closely with clients during the valuation process and establish a relationship with them that allows us to communicate frequently and discuss matters of a confidential nature. While I tend to visit the home office in Fayetteville in person only for our annual strategic planning exercise, staying connected with my colleagues is a nearly daily activity. I work closely with other people located in the home office on client projects and administrative matters and we communicate frequently via conference calls and email.
TZL: The upturn in the economy has been good to the AEC industry for about the last decade. But there is certainly talk of a downturn. How can an engineering or architecture firm best protect its valuation during a bear market?
TE: Firms can protect value in many ways, such as diversification of their client base, markets served, reducing reliance on only a few clients for a majority of revenue, and being careful not to overload on debt. In the last recession, all too often I worked with companies that thought the recession was going to be short-lived and they spent too much money retaining their talent for too long. In some cases, it caused balance sheets to become burdened with a large amount of debt that put a damper on value.
TZL: As baby boomers continue to retire, ownership transition remains a major concern for outgoing owners and those who will replace them. What’s the best way to preserve, and even enhance, a firm’s valuation during an ownership transition?
TE: The first point I will make about ownership transition is that firm owners should start the process sooner rather than later. We oftentimes get calls from firm owners who are in their early to late 60s and ready to transition. Unfortunately, in some cases, it can’t happen because there isn’t enough time to let the process play out. By starting the transition process long before an exit window, it allows for more cash flow stability and management stability, which generally leads to enhanced value.
TZL: You conduct valuations across a broad spectrum of business types. What makes the AEC industry unique?
TE: The industry is unique in several aspects and several elements have to be understood when valuing a firm. The primary client base and lengthy collections on receivables can have a big impact on cash flows, while other industries don’t face the same cash management issues. In my opinion, one of the most unique aspects of the AEC industry is the length of time that the employee base and management are associated with a firm. In today’s world in other industries, an average employment period with one company might be three to five years, but it is not uncommon for my AEC clients to have employment relationships of 15 to 20 years or more. It certainly adds to the stability of the management team and generally reduces the risk around losing key people that could have a downward effect on earnings.
TZL: How do you earn the trust of your clients?
TE: I always want to do what’s right for the client and provide them with the type of advisory services that they need to move their agenda forward. I have been in the industry long enough that I know what the hot button issues are likely to be and I’ve had a 20-year career in valuation that has allowed me to see most every kind of situation. I can guide clients based on what mistakes or good moves previous clients have made.
TZL: How did your experience working for the US Small Business Administration shape the work that you do now?
TE: I actually found valuation work through the attendance at an SBDC conference. I walked away from a presentation on valuing privately held companies and knew that is what I wanted to pursue. In my time with the SBDC program, I worked with clients that ranged from start-up mode to mature businesses that needed help with a variety of issues. It allowed me to become very well-rounded in my experience as a consultant and I still employ that knowledge with every valuation that I perform.
To learn more about Zweig Group’s Valuation Services, click here.