“An RFP Is Not a Subpoena”
Last week’s Western States M&A, Strategy, and Innovation Symposium in Las Vegas was memorable for many things. A great group of 150 AE and environmental industry executives, investors, and experts to network with? Check. Real-time, mid-2023 industry performance and outlook metrics to benchmark your performance against? Got you covered. Insight on best practices and the latest thinking on strategy, innovation, and M&A. Sure. Quotes that stop you in your tracks? Yes. Wait, what?
“An RFP is not a subpoena”: A quote from our CEO Strategy Panel—A View from the Top where Po Sun Chen, CEO of Anchor QEA (ENR Top Environmental Firm #106); Terry Ruhl, chairman and CEO of Lochner (ENR #128); and Mercedes Sierra, CEO of Sener Engineering & Systems (ENR Top International Firm #63) engaged and entertained symposium attendees with their industry insights and predictions. The quote itself was during an exchange on the seeming unlimited demand for services overwhelming firms nationwide that Mark Goodale and Megan Miller, director of product marketing at Deltek, vividly described in their opening State of the Industry presentation. (For a deeper dive on this, check out Mark’s “2023 at the Half” article below.) A growing number of CEOs and their teams are finding that in this golden age for the AE industry they’re needing to learn how to say “no” to new work—sometimes even to long-time clients. An intimidating proposition for many, and a conversation not to be taken lightly. Other memorable quotes from this lively panel discussion included: “Eagles, pigeons, and turkeys,” “One size fits one,” “The understanding of trust has changed over the past three years,” and “Responsible autonomy is what we are all about now.”
“Innovation is the creation of abundance from scarcity”: A paraphrased quote that resonated with the audience during the Innovation—From Concept to Market panel as part of the BST Global Innovation Series. Listening to Javier Baldor, CEO of BST Global; K.P. Reddy, CEO and founder of Shadow Ventures; and John Willis, president and CEO of Parametrix (ENR #152), discuss innovation and disruptive technologies was like drinking from a firehose of knowledge and actionable intelligence. Among them, these three gents have launched, invested in, exited, acquired, or spun up multiple innovative and tech ventures in, adjacent to, and serving the AE industry. The discussion was both fascinating and engaging with standout quotes including: “You have to know the difference between friction and an immovable object to be successful as a startup,” “The innovative solution to ‘there are not enough engineers’ is not to try to hire more engineers,” and “Your innovation occurs at your weakest link.”
“Once the money goes out, it’s not coming back in”: A quote from our 500 Club panel where deal-makers Brendon Cussio, George Christodoulo of Lawson & Weitzen, and Dave Sullivan of DGC, a division of PKF O’Connor Davies, discussed how deals are getting done in 2023. Among them, these three gents and their teams have been responsible for the successful closure of over 500 transactions. The quote itself pertained to making sure that the seller’s agent holds back enough funds in a transaction should monies be needed in the future for unanticipated expenses or claims. If you don’t retain enough, it’s virtually impossible to “claw” it back. Another great quote from this panel was “I’ve yet to hear a seller go through due diligence and say, ‘Well, that went exactly according to plan!’” This panel included a deep-dive discussion on capitalization of research and experimental costs under IRC Section 174 and its impact on transactions.
“Six billion dollars of revenue acquired”: That’s just one result of the 470 acquisitions of AE and environmental firms made in 2022. That statistic was among the many used by Jon Escobar and Nick Belitz in their M&A Trends and Valuations presentation where they painted a picture of industry consolidation and valuation trends. While they cited some softening of deal valuations in certain sectors and size ranges, the market continues to be a healthy one with everything on pace to hit another 450 transactions by the end of the year.
“Announcing the transaction to employees before or after closing”: This was one of the topics debated in our Buyers Best Practices panel by Steve Betts, EVP and CFO of Merrick & Co. (ENR #92); Andra Kidd, chief growth and strategy officer for Verdantas (ENR #149); and Dan Huntington, EVP M&A synergy team for IMEG (ENR #57) (2023 Morrissey Goodale Most Prolific and Proficient Acquirer Award winner). After a healthy discussion, it was agreed that all things being equal, in many cases it can be optimal to announce a transaction to the employees of the seller ahead of the official closing so that they are engaged in what is going to happen and can help prepare for it rather than reacting to news and being concerned. All three panelists shared how their personal experiences and passions have contributed to the significant commitment their firms make to ensure a seamless integration of their acquisitions. An excellent point made was that integration is “capital-model agnostic.” All acquirers want their newly acquired employees to feel 100% part of the team.
“They never thought that they would recapitalize with private equity”: But that’s exactly what Bill Russell, regional director, Northwest for Ardurra (ENR #89); Mary Presecan, board chair of LRE Water; and Michael Sanderson, CEO of Sanderson Bellecci, all ended up doing. In this super-informative Sellers and Partnerships discussion, each of the panelists candidly shared how they came to choose a private equity option as their preferred method of recapitalization and/or transition. For each it was an education process, starting with a clear understanding of what it was exactly they and their teams needed in terms of strategic, cultural, and economic fit from a partner and then proactively finding the right option to meet their needs. An important point made by the panelists–one which echoed a discussion in the CEO panel—was that private equity and employee ownership are not mutually exclusive.
The 2023 Most Innovative Acquirer Award: Was presented to Terracon for directly connecting multiple innovations in their integration processes to their core values of caring, courage, curiosity, excellence, integrity, and prosperity. Accepting the award on behalf of Terracon at the Encore Resort in Las Vegas were Kristi Tahmasiyan, director of M&A, and Joe Aldern, senior vice president.
2023 Most Innovative Acquirer Award Recipient – Terracon
Nick Belitz, Mick Morrissey, Joe Aldern, Kristi Tahmasiyan, Mark Goodale, Jon Escobar, Brendon Cussio.
And once again, a huge thank you: To our sponsors and partners, without whom we would not be able to deliver a quality symposium experience. Thank you to our partners ACEC of Arizona, Colorado, Montana, Nevada and Utah, Anchor QEA, Ardurra, BST Global, IMEG, Lawson & Weitzen, Lochner, Merrick, Parametrix, PKF O’Connor Davies, Sener, Shadow Ventures and Verdantas. Thanks to our Premium Symposium Sponsors Deltek and Lockton, our Symposium Sponsors Corporate Tax Advisors and Walker Reid, and our Opening Reception Sponsor Full Sail Partners.
See you in Houston: We’ll be hosting our Texas and Southern States M&A, Strategy, and Innovation Symposium in Houston this October at the beautiful Post Oak Hotel at Uptown. We’ll have updated content, new sessions, and some surprising new speakers and panelists. See you there!
You can reach Mick Morrissey @ 508.380.1868 or [email protected].