Mergers & Acqui­sitions

Our unparalleled M&A experience, vast network in the industry, and objective data differentiates us from other advisors, allowing us to systematically and efficiently guide clients through a sale, merger, acquisition, or capital raise process, while protecting confidentiality.

1. Unparalleled M&A Experience: We understand our clients’ business, people, and the likely motivations and issues that they are facing during an M&A process. We provide candid advice, build and maintain momentum, and allow our clients to efficiently explore M&A options in just a few months’ time.

2. Vast Network: We know the buyers and financial sponsors in the industry and have relationships with the CEO and key decision-makers of those firms. We know what they are looking for; how they value companies; how they structure deals; and their track records of acquiring an AEC firm.

3. Objective Data: Our objective M&A valuation and KPI benchmarking data support our advice and aid in aligning expectations. We also leverage our data in negotiations to generate the best outcomes for our clients.

Protecting confidentiality, and maintaining the trust and alignment of your people, is always of the utmost importance.

Beyond typical NDAs, we are able to discreetly explore the M&A market due to our knowledge of the buyers/investors and our strong relationships with those key decision-makers. Unlike other advisors, we do not need to put up a “for sale” sign or send your name out to hundreds of firms. Instead, collaborating with your team, we can identify and target the top buyers who are most likely to have the best financial, strategic, and cultural fits with your firm. Additionally, we go directly to the key decision-maker, not a junior level person who needs to run it up management. The fewer people aware that you are testing the market, the lower the risk of confidentiality breaches. Finally, we do handle more “M&A deal flow” than any other advisor in this industry, and most potential buyer CEOs we approach are also experienced and appreciate the sensitive nature of an M&A process, and thus understand the importance of keeping things confidential.

Ideally, the best time to “test the market” is when you have demonstrated 2-3 years of consistent financial performance, have an experienced management team seeking 2-5 years of a continued role in the organization, and have a strong next generation of leaders seeking greater opportunities. While backlog, clients, and brand are important, the ultimate value of the ongoing business is tied to your people. Any buyer or investor is investing in your people and their abilities to profitably grow the organization. Showing leadership depth can be a major driver of both interest and value.

However, timing is not always perfect. Working with AEC Advisors, you can confidentially explore your M&A options to determine if there is a path forward at the right financial, strategic, and cultural fit, in just a few months’ time, while always maintaining your ability to continue the status quo if the fit is not right. We can guide you through your ownership transition options to help you make the most informed decision possible.

The most common pitfalls that lead to a failed M&A process typically include:

Unrealistic Valuation Expectations: If the seller or buyer has unrealistic expectations about the firm’s value, then an M&A process will likely lead to wasted time, energy, and costs. AEC Advisors has developed (a) a proprietary database of 400+ closed M&A transactions involving AEC firms of all sizes ($1 million to several billion dollars), markets, services, and geographies; and (b) collects financial performance data from 300+ AEC firms on an annual basis (see our latest State of the Industry Report). Combined with our deep industry experience, we leverage this data to benchmark your firm, identify strengths and weaknesses relative to peers, as well as provide comparable and realistic valuation expectations.

Protracted Process: M&A processes do not age well. Disorganized or inconsistent information, distracted management teams, and/or an advisor who is learning the industry and buyers on your dime can lead to a lengthy, drawn-out process. From a buyer’s perspective, a protracted, disorganized process can cause them to lose interest and divert attention to other more actionable opportunities, and the longer the process takes, the greater the risk of confidentiality breaches.

Distracted Management Fails to Continue Running the Business: M&A processes are time-consuming for management. However, it is critical that management continues to run the business and financially perform at a high level. A business that underperforms during an M&A process is likely to see valuation decline and can lead to a broken deal. As a result, it is important to have an experienced advisor who can manage an M&A process, minimize the involvement of your management team as much as possible, so you can continue to operate the business.

External Forces: Of course, events happen that are outside of management’s control, such as a major project being put on hold, economic recession, personnel issues, etc. In these situations, sometimes the best avenue is to pause, resolve the issue, and revisit the market at a later time.

Dedicated Individual Or Team: M&A is a full-time job that requires constant outreach and follow up (see Persistence & Patience). Successful buyers have a dedicated leader or team focused on M&A. For firms that do not have the capacity to build an M&A department, leveraging AEC Advisors’ buyside services can be an effective outsourcing solution.

Persistence & Patience: Buyside transactions can take years to develop and complete. Rejection is common, so the successful firms focus on building relationships with counterparties over time. Continued, regular dialogue and even teaming together can be useful strategies to build a long-term relationship.

Make a personal connection: M&A of AEC firms is about merging two groups of people. It is important that a personal connection is established so that both sides can be open about what it would look like to work together. Building trust and identifying cultural alignment upfront is essential to creating momentum towards a potential deal.

Cultural and Strategic Fit Drive Success, not Valuation: Successful buyers focus on the people. While valuation and structure are important, paying a little more or less will not make a good deal go bad, or vice versa. Even buying a firm at a discount does not make it a good deal, if the people do not fit and leave. A firm with the right leadership team, an aligned strategy, and who is committed to the long-term success of the merger, will lead to the best outcomes.

Keep running the business: It is imperative that your management team continues to run the business as you explore M&A options, with the attitude that a transaction may not necessarily happen, in order to keep making sound decisions with the long-term success in mind. That said, a business that underperforms during an M&A process is likely to see valuation decline and can lead to a broken deal.

Organize Financial & Other Key Data: Prepare and organize monthly financial statements and other key data such as project registers, client lists, and backlog reports. The M&A process is time-consuming, so it is important to have this information ready and organized to avoid losing momentum with buyers or overly distracting management from running the business. Having a dedicated person, usually the CFO or Controller, to focus on financial and company data is critical. However, do not check out from financial issues, the CEO needs to be on top of the numbers as well.

Establish who will be “in the know:” One or two people cannot complete a deal alone. While you will need help based on the two points above, it is also important to show leadership depth to maximize value and fit. We recommend you work with a professional advisor to establish the right internal people to assist in the process, and balance the right mix of showing leadership depth while not risking internal rumors.

Keep an open mind. No buyer or investor is the same. Utilize an advisor like AEC Advisors to show you different external options so that you can make the most informed decision and select the best fit.