Using acquisition as a tool for growth is a valid strategy but one that requires adequate counsel. Acquisition of an inappropriate firm can cause financial and other stresses. A smart, methodical approach that brings together two well-matched firms can help a firm grow while providing richer resources from which to draw.
A well-known architecture firm based in the Pacific Northwest wanted to expand its fledgling California office by acquiring another firm.
The firm had established a California office in 2008, shortly before the economy crashed and a multi-year recession devastated the architecture profession. To their credit, the leadership kept the office open through this period, but realized that it needed to acquire another firm to build a stronger presence and capitalize on its local reputation.
We went through a process to ascertain the qualities a candidate firm would require to be compatible with them and conducted a thorough search of possible targets and sources for acquisition.
We worked with our client to reach out to potential sellers and other advisory practices to create a broad pool of candidate firms. The process identified candidate firms with an eye towards their markets, geographic reach, type of projects, profitability, ownership structure, and more.
We introduced our client to these candidate firms and orchestrated conversations to help them understand more about the firms. The discussions were about each firm’s culture and financial expectations if an acquisition were to be made. Through this process, our client quickly singled out one firm with which to negotiate an acquisition.
The firm negotiated an acquisition that has turned out to be successful for everyone involved.
Once the target firm had been identified, we helped our client issue a Letter of Intent and initiate a due diligence process. The negotiations involved discussions about the name of the merged entity, the role of the incoming principals, leadership of the local office, valuation of the business, transaction terms, and integration planning.
The California office boomed, doubling in size in a few short years—helped by a recovering economy, the right leadership, and collaborative practice with the Pacific Northwest home office.