Vice president of corporate development at J.S. Held, a global consulting firm providing technical, scientific, and financial expertise across all assets and value at risk.
By Liisa Andreassen
Bueti is used to carrying out complex financial transactions. He’s responsible for assisting J.S. Held (Jericho, NY) in achieving its inorganic growth initiatives and helping businesses to achieve their short- and long-term growth goals.
“We view our acquisitions as ‘partnerships,’” Bueti says. “Each and every acquisition we do is either to further develop an existing service line or to expand into an adjacent service. Firms that 'acquire to acquire' often run into snags in building a cohesive business. We fully integrate businesses and provide a global J.S. Held brand, which we believe leads to collaboration.”
A conversation with Carmelo Bueti.
The Zweig Letter: Specifically, when it comes to working with AEC firms, are there any unique challenges re: M&As? How does it differ from say healthcare or digital environments?
Carmelo Bueti: Having worked in the tech space prior to joining J.S. Held, the key difference between a product-based business (such as software, biotechnology, hardware, etc.) and professional services is that the people are the assets in a service business. With that, there must be a focus on ensuring that people are happy, including titles, wages, and benefits. A happy staff, the main driver of billable hours and therefore revenue, is most important.
TZL: Personally, what do you enjoy most about helping companies to achieve inorganic growth? What’s the most difficult part of the process and how do you meet that challenge?
CB: While cliché, making one plus one equal something more than two is a joy. Watching former owners of businesses connect, cross-pollinate, and work jointly on files to grow revenue is a fantastic feeling. It can become difficult as you approach the finer points of a transaction leading up to a close. Selling a business is a very emotional endeavor. Throughout the transaction, but especially at the close, I find it vital to continue recognizing that a business often is a life’s work realized and someone is parting with that. To approach the deal terms from a seller’s view to understand what is truly mission-critical is paramount to me.
TZL: Since you’ve been working in the business, what’s the greatest evolution you’ve seen in how business is done?
CB: By far, it has been COVID and how that has led to more remote meetings and work. This has been quite helpful in the M&A world, as it is now more acceptable to hold initial meetings virtually. On the other hand, it makes an in-person visit all the more valuable, if you show the extra bit of care.
TZL: What are some of the most important factors to consider when entering into a merger or acquisition?
CB: While I could focus on strategic fit or financial profile, unquestionably the leading indicator of a successful acquisition versus a failed one is cultural match. The only failed acquisitions I see are when two companies come together and, regardless of how well the products or services fit, there was not proper diligence done for the method by which each company completes its work. This leads to employee attrition and poorly-served clients.
TZL: What do you feel will be a top challenge in your business in say the next five years? What is your company doing to meet that challenge?
CB: Employee retention has become a top priority and we view both the inflationary environment and work-from-home trends to be the two that drive employee retention. Creating a vibrant company culture is paramount to ensure a business is able to retain top talent despite these trends. Having the flexibility to work remotely is a top concern now, yet it is difficult to build an excellent culture without the ability to bring people together. Therefore, we are focused on having strong physical presences in major hubs (both within and outside of the U.S.) where employees have the ability to collaborate if necessary.
TZL: How many acquisitions has J.S. Held completed in the past three years?
CB: Thirty. However, we view our acquisitions as “partnerships.” Each and every acquisition we do is either to further develop an existing service line or to expand into an adjacent service. Firms that “acquire to acquire” often run into snags in building a cohesive business. We fully integrate businesses and provide a global J.S. Held brand, which we believe leads to collaboration.
TZL: How does J.S. Held attract so many strong acquisition partners in such a competitive M&A environment? What differentiates you?
CB: We have a significant focus during our diligence process on integration and I believe this shows. I firmly believe that few firms are as focused on the success of the staff coming over and the continued joint entity running as smoothly as we do. There is a lot to think about around integration including, HR, marketing, business development, finance, accounting, technology, etc., which many acquirers put aside simply to get a transaction closed. For us, once the deal closes, we have plans, processes, and teams in place to ensure we’re not maniacally trying to figure out, “what’s next?” That sense of calm planning seems to have worked its way around our industry.
TZL: What advice would you have for a buyer or seller who is considering M&A for the first time?
CB: For a first-time acquirer or seller, ensure your legal and financial advisors are not only strong, but have significant M&A experience. Quite often we meet sellers who will use a general business lawyer or a personal accountant, as the rates may be cheaper. However, what you lose in fees with firms that have significant M&A experience, you more than gain back in improved offer terms. Even as a buyer, we sometimes prefer advisors for the seller that may lead to a slightly worse deal for us because we gain efficiency through the documentation and diligence processes by having a party on the other side that has “walked the walk.”
TZL: Is J.S. Held taking any precautionary measures relating to what some believe is an impending recession?
CB: Our business is structured to temper impacts from cyclicality. Significant pieces of our business include insurance claims often resulting from bad weather events, litigation, and restructuring. All three of these services either don’t listen to the economy (bad weather) or may be counter-cyclical (litigation, restructuring). In my experience through the last two years, costs have increased and talent is a commodity. I feel we have the best talent to offer across many disciplines, so while we may have the aforementioned expertise that we believe may do well in a recession, our top-class talent makes us a sound choice for any client.
TZL: How can newly formed entities reconcile disparate work environments behind a cohesive vision? Have you seen any shifts in conversations about work environment and flexibility, telecommuting, etc., post-COVID?
CB: A motto here at J.S. Held is that “we hire adults.” Therefore, if a manager believes the best path for his or her group is to be in the office every day, we support that. If a different manager believes in a fully remote or hybrid remote/in-office environment, we support that as well. We feel that performance is almost always reflected in the bottom line. One of our core values is to think outside the box, so this practice and line of thought has been here for our people, even in the years leading up to the pandemic. We have a distinct culture that anyone can get behind. Anyone can get behind a company that starts small, adheres to its values, puts its people and talent first, does what it say it will do, and grows systematically without sacrificing culture. Talent and acquired firms respect that because it is a language they particularly understand.