Clark’s Corner: Be a dealmaker in mergers and acquisitions
By Jeff Clark
Many firm owners are afraid to market their firms, for fear that once the word is out that they are for sale, their perceived value will go down and their staff will leave. This is not the case, and all principals should be prepared to sell at any time to truly maximize the value of their firms. Be prepared to sell yourself, your people, and your firm at any moment. You never know when the right buyer might present themselves.
Promote your firm so you can be viewed as a desirable buyer and suitor as well. Every owner is a buyer or a seller, depending on what day of the week you talk to them. Think, ‘closing a deal with a desirable firm’ and don’t worry about what side of the table you might be perceived to be on. This mindset will truly allow you to think and grow rich in today’s mergers and acquisitions landscape, where consolidation is dominant.
I was watching Donald Trump the other day and was reminded how brilliant a salesman he is by constantly promoting all of his assets, and even his liabilities. Tacky, gaudy, and obnoxious at times, yes, but incredibly talented in creating value through his persona and brand.
He plans to run for president in 2012. Recently, he was the target of a Celebrity Roast on Comedy Central. He loved it. Any mud that could be slung at him was thrown his way— but it was done in an environment that was controlled by him. He is the consummate dealmaker. You will always find him selling his assortment of baubles and wares— from buildings to mainstream media shows— his confident grin letting everyone know that if he doesn’t get what he wants at that particular moment, he eventually will. It’s just a matter of time. Even if you dislike him, it would be hard to deny his skill as a dealmaker.
If you can think it, you can make it so. Napoleon Hill is another great salesman from the last century. His beliefs and books have helped millions become more successful. He learned from studying many of the masters of industry during his generation— Edison, Ford, Morgan, Carnegie, and Schwab, to name a few. These men knew how to make a deal.
Morgan, Carnegie and Schwab did what many today would view as the quintessential industry roll up when they formed U.S. Steel. They all made out like bandits! Morgan and his buying syndicate made hundreds of millions, more than doubling the value of the previously separate entities before the deal, while Carnegie, as the largest seller, made his fortune as well. This was a transactional success for both the buyer and seller of such monumental proportions that I had to mention it in this article as a cornerstone to my belief that this deal— or any deal— requires at least one knowledgeable industry expert to champion and pitch the arrangement. Charles Schwab was that person in the U.S. Steel story. He negotiated the buyout of Carnegie assets that led to the formation of U.S. Steel. When founded in 1901, U.S. Steel Corporation was the largest business enterprise ever launched, with an authorized capitalization of $1.4 billion (www.ussteel.com/corp/company/profile/history.asp).
Getting back to the present need for being a dealmaker in today’s A/E market for mergers and acquisitions, here are my key points as to why this is so important:
1. If you’re not active in mergers and acquisitions discussions, you’re simply not a player, but rather a pawn threatened to be knocked off the game board at any time.
2. Your firm intelligence and overall industry IQ increases dramatically by looking at acquisition targets as a buyer or at possible suitors as a seller.
3. Growth through acquisitions vs. organic growth is simply faster— but not always better— and when you do acquire or merge successfully with another firm, the opportunities are numerous and extremely advantageous, from cost-cutting and shared services to cross-selling and leveraging client relationships, not to mention how many items can be written off as a cost of the transaction.
4. You can make the world a better place through better mergers and acquisitions. Architects and engineers have long been seen as civic leaders. Do you really want the real estate developers and the Donald Trumps of the world to have all the power deciding what gets built and what doesn’t? Empower yourself and your firm and become a dealmaker.
There is no doubt that one can grow rich through mergers and acquisitions and give back to the community in return. You can also lose your shirt. Be smart about those you align with in building your mergers and acquisitions team. Hire the right advisors, attend the best industry events, and don’t be afraid to try and fail at this game, provided you know how to mitigate the risks. The trend of consolidation can be your friend. Be a dealmaker and control your firm’s destiny with successful M&A.