Keys to Successful Mergers and Acquisitions in the AEC Industry

Over the last several years the AEC industry has seen a marked increase in mergers and acquisitions activity. Architecture firms nowadays are more commonly considering mergers and acquisitions or have reported that their strategic plans for the next 5 years include a merger or acquisition. Consolidation has become more common as firms seek to either serve as a ‘one-stop shop’ and provide full-service design, building, and engineering services, or seek to specialize and find niche markets to fuel growth.

Some of the significant mergers and acquisitions in the industry in the recent past include HED, a national architecture and engineering firm merging with Dallas-based VAI Architects Incorporated (VAI) – expanding the local team and leveraging community relationships to create new opportunities; the merger of Perkins Eastman and BLTa, with the intention to expand services in hospitality, education, and mixed-use sectors; Shepley Bulfinch acquiring Parc Design Lab to increase their focus on science and tech projects; HED’s merger with Pacific Cornerstone Architects with the hopes of bringing expanded expertise in life sciences, higher education and commercial market segments; and the S/L/A/M Collaborative (SLAM) strategic acquisition of five CBRE / Heery architectural design practices focused on healthcare, sports facilities and justice, bringing deep expertise in critical segments of the market and doubling their number of offices.

Mergers and acquisitions can often be compared to the process of recruiting for positions within companies. Just as businesses and recruiters look for the best candidates to fill open positions, they also seek out other businesses that would be a good fit for a merger or acquisition. In both cases, the process includes identifying potential candidates, assessing their suitability and then negotiating terms that are beneficial for both parties.

There are a number of characteristics that are important for successful mergers and acquisitions. First, it is essential that the two companies have complementary strengths and weaknesses. This ensures that the merger will be able to capitalize on the strengths of both companies while mitigating the potential downfalls. Second, it is important that the cultures of the two companies are compatible. The synergy between two compatible companies greatly increases chances of success and profitability. Finally, it is important that there is clear communication between the leadership of both companies. Honest and transparent communication ensures parties are on the same page and can create a cohesive unit moving forward.