It’s always a hot topic, and particularly so today, with all of the buying and selling going on in the AEC industry – integration of an acquired firm. Let’s look at three common questions and the answers I would give to them:
Q: Should we even to try to integrate them or are we better off keeping them at arm’s length?
A: This is a major strategic question that only you can answer. Most buyers of AEC firms don’t buy them so they can keep them off to the side, but there are some examples of where this has been successfully done. More often than not it isn’t successful because once ownership changes, motivation and leadership may decline. Yet some buyers insist on separation so they can tell how their purchase is performing. There may be an earn-out as a part of the acquisition, and the way the transaction is structured, it reinforces the idea of separation versus integration. When a “keeping them separate” strategy is successful, there are usually efforts made to, at a minimum, co-market and share clients so the acquired company and the acquirer both see their work volume go up.
Q: Should we keep their name or go to our name? If we keep their name, how long should we keep it? Or should we come up with a new name that combines both companies?
A: If you acquire a company with a great name in its market or specialty area, that could be a good part of the value of the brand. CH2M is a great example of a brand name in water. They get work just because of who they are. There are many other examples, both large and small. Throwing that away may not be smart. On the other hand, my experience is that if you let them keep their name you will have a harder time integrating every other aspect of the firm. Their people may assume it is business as usual – the way it was pre-acquisition – and it might be difficult to change their behavior on other matters. There are pros and cons. Most buyers of AEC firms are other AEC firms, and that is the assumption here. Those who do keep the acquired company’s name usually don’t do so for more than a couple years at most, unless they have a “portfolio” strategy where they keep all their acquisitions functioning independently. Combined names usually result when two strong companies – both brand names – come together. Some may say that’s the way to have the best of both worlds. Some may say that hurts both companies. There is not one best answer.
Q: How do you handle a troublemaker in the firm we just bought – i.e., someone who breeds discontent in the troops and clients?
A: This is a toughie and may not be easy to solve. The person may be a valuable person to you and part of the reason you bought the company. It could be a former principal or key employee. In any case, it has to be confronted – gently at first and forcefully if that doesn’t work. You cannot let this person go on polluting the minds of anyone who will listen to them or the cancer will grow. The ultimate sanction is to exorcise the demon from the firm. That is a course of last resort because it can generate unwanted negative consequences when this person is popular inside and/or outside of the firm.
Mark Zweig is Zweig Group’s chairman and founder. Contact him at email@example.com.
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