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The
PSI Opportunity is...
A
newsletter series exploring the process
of successfully acquiring and integrating
compatible companies into the PSI family.
In
This Issue...
We
will look at why firms buy or sell and
the importance of having a plan to support
your transaction goals and objectives.
About
PSI...
PSI
is a 2,500 employee geotechnical engineering,
construction materials testing and environmental
services firm. Over the last 25 years,
PSI has grown into an industry leader
primarily through the successful acquisition
of more than 80 companies. Currently,
we are one of the largest and most
successful firms in our industry.
PSI
has 125 offices across the
U.S.
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An
increasing number of engineering, consulting and
testing firms are considering the possibility
of either selling their firm or buying a firm
as a means to meet their strategic goals. Our
industry has matured and we have learned from
experience, both good and bad, how to maximize
the benefits and value of the deal and avoid costly
mistakes. It is important to understand the reasons
firms buy or sell and that both buyers and sellers
understand each others' motives and objectives.
Remember, two turkeys put together don't make
an eagle.
So,
Why Sell?
There
are numerous circumstances that might prompt a
firm to consider to sell. These include: credit
needs, retirement/boredom, management succession/ownership
transition, career opportunities for staff, estate
planning, growth or diversification, capitalization
on valuable assets, resolution of dissension in
management, personal risk, declining market/increasing
competition, turnaround situations/rescue missions,
marketing exposure/reach, lack of or inadequate
administrative, information management or financial
systems, and offers too good to refuse. And, based
on the nearly 100 successful deals PSI has negotiated,
there are a few common reasons or themes that
resonate.
One
recurring theme, especially with small to mid-sized
firms, is the desire or need to grow. Many firms
of this type have strong technical capabilities,
a good local client base and decent reputation
but lack the financial, staff and marketing resources
to expand geographically or to land larger projects.
Selling to a larger firm gives your firm the benefit
of a larger firm's geographic, technical and client
diversity along with more sophisticated and established
marketing programs. Also, larger firms typically
have more advanced and stronger administrative
and corporate support systems which allow operating
offices to focus on meeting the business goals
and project needs of their clients.
The
other most common theme is related to the broad
area of ownership transition or management succession.
Principals and owners of firms have different
reasons to consider exit or transition strategies
and the age, financial situation and goals of
the ownership team all impact the sell decision.
Whatever the reason, each scenario presents a
new set of questions and considerations for both
the buyer and seller to consider and bring to
the negotiating table. Obviously, it is in the
seller's best interest to invest the time, energy
and resources to determine clear objectives for
the sale of their company and how a potential
buyer will best help them meet those objectives.
(continued
below)
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