Is it Time to Sell, or Time to Buy?

Apr 04, 2005

This is a question that I see the majority of principals of A/E/P and environmental firms wrestling with. Should they sell their firm to a larger company, get liquid, and ready themselves for the next phase of their lives? Or, should they be looking to buy other companies to cash in on the growth opportunities for a well-managed firm? When I work with companies at this crucial crossroad, I have to start with the person at the top. This is probably the CEO, but not always. Sometimes, it is simply the largest shareholder, whatever job that person holds. In any case, I have to figure out what that individual wants at this point in his life. Are they enjoying work, invigorated, motivated, and completely committed to what they are doing on a daily basis? Or, are they in the situation where work is a chore, they are burned out, and ready to do something else with their time every day? This is fundamental. Just doing something because you can make a lot of money doing it doesn’t make any sense to me. On the other hand, neither does cashing out of a very profitable investment that you are actively involved in just so you can take your money and put it into something else you don’t know as well that makes a lower return in the name of diversification. For the people who know they need to do something else, I would encourage them to do so. When this time is reached, you know it. Why try to fight it? You will hurt the company if you stay just because you think you have to. It may be the best thing in the world to sell that firm to another company that has committed leadership. For those who love this game and think about work 24 hours a day, I say stay in and do more of it. Better yet, if you have the proverbial “Grandma’s recipe” for how to run a design or environmental firm better than the majority of others in this business, maybe you should share that with other companies that haven’t got things so well figured out. Buy them and show them the way. Then, there’s the situation of those who sell but stick around. I have a friend— a very successful fellow— who sold the firm he and his wife created five or six years ago. They got a lot of money for it and stayed on to earn a whole lot more in the years that followed through an earn-out deal the buyers set up for them. My buddy was recently faced with a decision to re-enlist for another period of years and after a lot of soul-searching, he did it. It’s not that he has to work. He doesn’t. But the truth is, he loves it. He doesn’t have a bunch of hobbies or other businesses that he is just itching to start. He knows the business he is in and enjoys it. He also likes working with the new owners who have been willing to invest significant capital while, at the same time, giving him and his wife a lot of autonomy on how they do things. I guess your assessment of the future is another factor not to be ignored when pondering the “buy or sell” question. If you think things are good and getting better, you’re probably a buyer. If you think things are headed for a downturn with no end in sight, you’re probably going to want to sell. Either way, be ready to spend time (lots of it) and money (even more) on this process. You need experts who can help walk you through the steps of buying or selling. They are out there. Do your homework and find accountants, attorneys, advisors, and consultants who know OUR business. They will help you get where you want to go. Originally published 4/04/2005

About Zweig Group

Zweig Group, a four-time Inc. 500/5000 honoree, is the premiere authority in AEC management consulting, the go-to source for industry research, and the leading provider of customized learning and training. Zweig Group specializes in four core consulting areas: Talent, Performance, Growth, and Transition, including innovative solutions in mergers and acquisitions, strategic planning, financial management, ownership transition, executive search, business development, valuation, and more. Zweig Group exists to help AEC firms succeed in a competitive marketplace. The firm has offices in Dallas and Fayetteville, Arkansas.