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Episode 069: Inside Private Equity and M&A in AEC (Top Replay)
Welcome again to the 2021 End of Summer Podcast Series – where I’m taking a fresh look at the 7 most downloaded podcast episodes over the past year!
Private Equity and M&A in AEC
This series ties into a greater overall theme of issues and opportunities I continue to see express themselves in leadership teams throughout the industry and across the country, and in both smaller and larger firms.
Today’s episode is one focused on a topic that many owners, principals, and professionals want to learn more about – Episode 60 with Todd Musterait, Chief Growth Officer with Apex Companies.
“With private equity, we’re dealing with professional businesspeople, bankers, and investors – and they’re playing a much different, more strategic, and often bigger game.”
–Peter C. Atherton, P.E.
As I relistened to this episode, five big things stood out:
1 – Private Equity-backed Ownership and Investment is Truly Different
It’s not the same as public ‘stock market’–based ownership and it’s not the same as private employee or principal-led firm ownership.
2 – Not all Firms are the Same
As with most all groups of businesses or organizations, not all are the same and, as Todd shared with us, that’s certainly true for private equity firms.
3 – Appreciation for the Insight and Information
I really appreciate Todd walking us through exactly how private equity ownership is different, what they look for, and the mechanics of a deal in terms of courtship, structure, and integration in an open and honest way, and as a practitioner who truly cares about our craft.
4 – New Path Provided
I can see the appeal of private equity-backed ownership and investment. If I was an owner of a firm, as Todd describes “in the upper right quadrant” in terms of high growth and profits – and wanted to maintain that, had a group of fully aligned employees, but was looking to transition or exit – and, for whatever reason, had no immediate successor or successors, private equity seems to offer a path that before was much harder to find.
5 – It’s Business
With private equity, we’re dealing with professional businesspeople, bankers, and investors – and they’re playing a much different, more strategic, and often bigger game.
They see ‘assets’, have a clear financial interest, and focus on both growth and a return on investment (ROI) – and in capturing the value created through recapitalization every 3 to 7 years.
This is not the ‘quarterly focus’ of Wall Street, but it’s also not the long-term internal transfer ‘legacy focus’ many of us are used to.
And while the best private equity firms – with great vision and people, culture, and practice alignment – are certainly investing in operations and organic growth – there is, for sure, a shorter ownership cycle.
Whether you think private equity-backed ownership and investment is a good thing or not, it’s here and it’s and becoming a larger part of our industry.
And whether we’re looking to be a successful legacy firm or to be a coveted acquisition target, the more we know about it and understand it, the better.
“While the best private equity firms – with great vision and people, culture, and practice alignment – are certainly investing in operations and organic growth – there is, for sure, a shorter ownership cycle.”
–Peter C. Atherton, P.E.
Thanks for listening to the AEC Leadership Today Podcast!
I sincerely hope you enjoyed today’s episode. Be sure to check out Pete’s contact information and the other resources provided throughout the ActionsProve website designed to help you and your firm grow and prosper in the 21st century. And, if you like what you heard, please leave a review on iTunes and share the podcast with your friends and colleagues. We look forward to seeing you in the next episode!
Resources Mentioned in This Episode
- Podcast episode with Tracey Eaves on “How to Maximize the Value of Your Firm”: https://actionsprove.com/podcast/episode-068-how-to-maximize-the-value-of-your-firm-top-replay/
- Podcast episode with Alex Moss on “Understanding and Excelling with ESOPs in AEC”: https://actionsprove.com/podcast/episode-062-understanding-and-excelling-with-esops-in-aec/
- Podcast episode with Kristen Gallagher on “Better Onboarding for Greater Success”: https://actionsprove.com/podcast/episode-018-better-onboarding-for-greater-success
- Podcast Episode with Bob Kelleher on “The Evolution of Employee Engagement and HR”: https://actionsprove.com/podcast/episode-016-the-evolution-of-employee-engagement-and-hr
- Link to original episode shownotes with Todd Musterait: Inside Private Equity and M&A in AEC
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About the Host
Peter C. Atherton, P.E. is an AEC industry insider having spent more than 20 years as a successful professional civil engineer, principal, major owner, and member of the board of directors for high-achieving firms. Pete is now the President and Founder of ActionsProve, LLC, author of Reversing Burnout. How to Immediately Engage Top Talent and Grow! A Blueprint for Professionals and Business Owners, and the creator of the I.M.P.A.C.T. process. Pete works with AEC firms and leaders to grow and advance their success through modern and new era focused strategic planning and implementation, executive coaching, leadership and management development, performance-based employee engagement, and corporate impact design.