Tuesday, June 12, 2012

Stantec's Growth Story

Robert Gomes, president and CEO of fast-growing, serial acquiring AE firm Stantec, Inc. (Edmonton, Alberta), did double duty at the MFA M&A Forum. Gomes sat calmly on a panel during one of Thursday morning's breakout sessions at the Trump International Towers in Chicago, then stood solo and delivered the luncheon keynote, "The Stantec Growth Story."

In both cases, Gomes' contribution was considerable.

The breakout session -- "The Boardroom: How M&A Changes the Game" -- was adeptly moderated by Laura Howard of MBV Law (San Francisco, CA) and also featured leadership consultant Kathryn Sprankle of Sprankle Leadership (San Francisco, CA) and Brad Strittmater, president of Olsson Associates (Lincoln, NE). In this session, Gomes offered deep insight into how his firm approaches integration and leadership transition in an acquisition.

Gomes said that the LOI (Letter of Intent) stage, for Stantec, is the first part of the integration process. "By the time we sign the LOI, all the questions should be answered," he said. "The LOI stage is to verify that our assumptions are correct. If we sign an LOI, we're almost certainly going to do the deal."

Gomes added that Stantec doesn't rely solely on financial metrics to gauge the success of an acquisition. "We measure M&A success by whether we won a project that we wouldn't have otherwise and whether the selling firm's leaders are still there after a certain point in time," he said.

In his keynote, Gomes presented a comprehensive overview of how Stantec grew from a 600-person firm known primarily in Western Canada to a North American AE giant of 12,000 in the course of his 24 years with the company.

Gomes discussed what drives a firm's decision to sell, including:
  • If they're too big to be small and too small to be big.
  • It's capital intensive to continue to grow.
  • If they have succession planning issues.
  • If they have ownership transition pressures.
  • A desire to work on larger projects and with larger clients.
The right strategic acquisition can deliver these results and more for a seller, Gomes said. As a buyer, Stantec is living proof that a growth through acquisition strategy can work -- the firm has completed 78 acquisitions since 1994. Gomes added that three-quarters of the firm's growth during his tenure with the firm has come through acquisition, a percentage the company is hoping to reverse as they focus more on organic growth.

For firms looking to grow through acquisition, Gomes advises that they have good cash flow, leadership opportunities to entice the selling partners, the willingness to be flexible with the acquiring company while devising and adhering to clear objectives in the process, and a strong foundation on which to build the new combined company.

Gomes added that Stantec changes the brand of the companies it acquires more quickly than most. "The brand has to be singular, clear and focused," he said. The best way to do this, he says, is by moving as quickly as possible to the Stantec brand.

Friday, June 8, 2012

The Sheriff

HDR Controller Galen Meysenburg just told a war story that hit home with the audience at the Matheson Financial Advisors M&A Forum's morning General Session - "The Measure of Success."

The principal of a firm that HDR acquired said all the right things during negotiations and seemed sincere about integrating his company with HDR after the deal. Early in the process, HDR got wind of some potential issues and began to check into it. They found that the principal had called together his staff and told them that, although the deal had gone through, he was "still the sheriff" and retained complete authority to run the company.

HDR immediately began negotiations to sever the relationship with this principal. Later, when HDR conducted an employee survey, it found that the staff was pleased with the outcome. One said he didn't alert HDR about the principal because he wanted the deal to go through, assuming that the truth would eventually come out. Another wrote that it was a relief that he could finally stand up in the office and say he worked for HDR. This had apparently been prohibited before the principal's departure.

Thursday, June 7, 2012

STV's Peter Knipe talks ESOP

STV Group has had an interesting history over the last 100 years. This morning at the Matheson Financial Advisors M&A Forum, STV CFO Peter Knipe talked about the firm's long journey to its current state as a 100% ESOP firm. One big takeaway for the AEC firm leaders at this breakfast keynote was that the 100%-funded ESOP option that the firm chose in 2001 was driven greatly by the fact that the public markets on which the firm traded historically typically don't understand nor appreciate AE firms. Knipe said that financing for the ESOP closed less than a month before the 9/11 terrorist attacks - if they'd been any later, it may have never happened.

The company's three major goals for the ESOP were clearly stated, Knipe said:
  • Increase the value of the firm significantly
  • Ensure that the ESOP is funded and maintained as a pension plan and capable of doing what it's supposed to do
  • Focus on the employees and make sure it's a good place to work
Knipe said the value of the ESOP has increased every year, averaging 9% during its 10-year lifespan. He added that it is a vehicle that the employees have faith in to be a future benefit for everyone participating in it.

STV is #32 on the ENR 500.

Tucker Carlson wows at MFA Forum

Tucker Carlson rocked the audience of top AEC firm leaders with his assessment of the coming presidential election, as well as some of the ancillary hijinks he encounters as a political journalist for Fox News, at the Opening Keynote of the Matheson Financial Advisors M&A Forum in Chicago Wednesday night. The key takeaway from Carlson's talk - during which he frequently went off page and offered his no-holds-barred view of the candidates and the parties - was that President Obama's seemingly insurmountable advantage in the his battle for re-election has been whittled away by numerous missteps and misfortunes.

According to Carlson, the Republicans are primed to do something that, in his words, is never done - defeat a sitting president who faced no primary challenge from his own party. The problem, says Carlson, is that Obama's greatest weakness is the univeral health care plan he passed, but Obama's opponent, Mitt Romney, is the only other person out of 312 million Americans that has signed a law requiring people to pay for health insurance (i.e., the individual mandate).

Carlson is withholding any prognostication about the election until October. He says that whichever candidate is the lead story in the major newspapers the first week of October will lose. "If the headlines are about Obama, then it's a referendum on his presidency, and he will lose," Carlson said. Conversely, if the main topic is Romney, then Obama will be re-elected.

Attendees from both sides of the political aisle said after the talk that they found Carlson engaging and entertaining, and that they walked away learning something new about Washington, the political process and the upcoming election.

Today's program begins at 8 am (Central) with a keynote from Peter Knipe, CFO of STV, Inc., who will speak on "STV - An ESOP Story." We'll check back later with a summary of his talk.

Wednesday, June 6, 2012

MFA M&A Forum Schedule

The Inaugural Matheson Financial Advisors Forum boasts a wide range of perspectives and AEC financial management professionals, including leaders from several ENR 500 firms. The Forum kicks off tonight with an opening cocktail registration and a Keynote speech from Fox News Channel's Tucker Carlson.

We'll be posting news items and interesting tidbits from the following sessions.


Wednesday, June 6
4:00 - 6:00pm                Registration
6:00pm                           Opening Cocktail Reception
7:00pm                           Dinner with Keynote Speaker Tucker Carlson, Fox News Channel - The Washington Reality - Looking Ahead to 2012 Elections
Thursday, June 7
7:00am                           Registration
7:30am                           Breakfast with Keynote Speaker Peter Knipe, CFO, The STV Group, STV - An ESOP Story
9:00am                           Developing Effective M&A and Capitalization Strategies
                                       Moderator: Colvin Matheson, Managing Director, Matheson Financial Advisors
                                       Panelists: Joe Hastey, Senior Vice President, STV, Inc.
                                       Bob Paulsen, Principal, AE Guidance, LLC./Former CEO of PBSJ, Inc.
                                       James B. Stephenson, Senior VP Corporate Planning & Development, TRC Companies, Inc.
10:45am                         The Boardroom: How M&A Changes the Game
                                       Moderator: Laura Howard, Partner, MBV Law, LLP
                                       Panelists: Bob Gomes, President and CEO, Stantec Inc.
                                       Kathryn Sprankle, President, Sprankle Leadership
                                       Brad Strittmatter, President, Olsson Associates

                                       ESOPs: Making Value Easier
                                       Moderator: Bob Massengill, Managing Director, Pilot Hill Advisors
                                       Panelists: Vaughn Gordy, Chairman and CEO, GreatBanc Trust Company
                                       Mary Beth Gray, Partner, Kleinbard, Bell & Brecker, LLP
                                       Peter Knipe, CFO, STV, Inc.
12:00pm                         Luncheon with Keynote Speaker - Bob Gomes, President and CEO, Stantec Inc. The Stantec Growth Story
1:45pm                           Getting to "Close": Valuation, Negotiation, and Deal Structuring
                                       Moderator: Colvin Matheson, Managing Director, Matheson Financial Advisors
                                       Panelists: Eric Chen, Senior Vice President, Corporate Finance / Special Counsel, AECOM Technology                                           Corp Bjorn Morisbak, Vice President, Stantec Inc, Kevin Pottmeyer, Chief Strategy Officer, Kleinfelder
3:30pm                           Private Equity: Outside Capital to Support Your Strategy
                                       Moderator: Scott Cobb, Principal, Matheson Financial Advisors
                                       Panelists: Mike Decker, Principal, Wingate Partners, Jay Hofmann, President and CEO, Trinity Consultants
                                       John Jastrem, Chairman and CEO, Callison

                                       Legal: Documenting the Deal-The Paper Chase
                                       Moderator: Bill Mandel, Partner, MBV Law, LLP
                                       Panelists: Laura Howard, Partner, MBV Law, LLP
6:00pm - 11:00pm          Chicago White Sox vs. Toronto Blue Jays
Friday, June 8
7:45am                            Networking Breakfast
8:45am                            Integration: The Measure of Success
                                       Moderator: David Cohen, Managing Director, Matheson Financial Advisors
                                       Panelists: Will Ditzler, President, Cardno JF New, Ray Kogan, President, Kogan and Company LLC
                                       Galen Meysenburg, Company Controller, HDR Engineering, Inc.
10:30am                         Tax and Accounting: Managing the Tax Impact of the Deal
                                       Moderator: Dennis Graham, Lead Partner, Plante & Moran, LLC
                                       Panelists: Joseph Dailey, CFO, Perkins + Will, Matt Denman, Associate, Plante & Moran, LLC
                                       Jeff Schreier, CFO, Thornton Tomasetti

                                       Protecting the Deal - Insurance and Risk Strategies for M&A
                                       Moderator: Dan Knise, President and CEO, Ames & Gough
                                       Panelists: Doug Hamilton, National Construction Risk Specialist, Lexington Insurance Company
                                       Michael Heatwole, Executive Vice President, Ames & Gough
12:00pm                          Luncheon with Keynote Speaker Andrew Busch, BMO Capital Markets —
                                       "A Global Economic Perspective and How it Affects Your Business"
Welcome to the Matheson Financial Advisors M&A Forum Blog. We'll be live blogging throughout the conference, which begins this afternoon, June 6, 2012, at the Trump Towers in Chicago. https://mathesonadvisors.com/m&a_forum/