When it comes to M&A, stay flexible and remember that it takes drive, determination, and the ability to connect people and ideas to achieve remarkable results.
The ECS Group of Companies is one of the largest and most rapidly growing engineering and consulting companies in the U.S. Our growth is a natural outcome of our commitment and dedication to the success of our clients and employees. As a culture of doers, we roll up our sleeves and use our skills to help solve problems. We hustle. This commitment allows ECS to grow in each market we serve organically and through strategic acquisitions.
Over the last five years, ECS has acquired five companies throughout the U.S. with two being in the first quarter of 2020. In this article, we will discuss the key factors ECS focuses on for a successful mergers and acquisitions program.
- Define strategic objectives. When ECS is looking for opportunity for growth, we begin by defining our objectives. Objectives could include market share, talent, specific technical expertise, or technology. In addition to growth, this is a good time to consider any specific operational concerns around capabilities that may need to be maximized or minimized. Depending on the strategy, acquisitions may serve as a way to achieve objectives quickly and effectively.
Conduct preliminary research on potential acquisition candidates. Our first step in a selection process is to develop a long list of potential acquisition candidates. Search criteria could include candidates based on:
- Competitive position within the industry
- Market capitalization
- Location of operations
- After creating a list of potential acquisition candidates, we go back to the previously defined strategic objectives. This helps us to effectively narrow down the list of candidates.
Prioritize synergy. Put simply, synergy is either the “revenue enhancing” or “cost savings” achieved by integrating the companies. An initial part of due diligence is identifying potential synergy opportunities between candidates and ECS (the buyer).
Synergy opportunities can be analyzed early in the integration process to build momentum and credibility amongst internal and external audiences. Focusing on the high-end, quick-hit projects to create momentum by creating a plan to monitor results. Some types of projects include talent retention and financial planning.
- Understanding people concerns
- Retaining key talent
- Redundancy and severance
- Financial planning and design:
- Finance and administration integration
- Engaging external service providers
- In 2018, ECS acquired GEM Engineering, Inc. to not only expand our footprint into a new state, but also to increase our technical capability. GEM and ECS were an ideal match and created unprecedented opportunities for our employees and our clients.
Communication. Throughout the acquisition process, communication with different messages are required for different stakeholders involved. Key stakeholders of each company may include current and prospective customers, employees, business/professional organizations, news media, and regulatory bodies. By developing separate messages and delivery formats (e.g. open forum meeting, official letter, memo, email, newsletter, and media), effective communications can be achieved.
A few critical factors to a successful strategy include communicating:
- Early and often
- Openly and honestly
- Consistently, both internally and externally
- Our marketing team works alongside the mergers and acquisition teams to create (internal and external) messaging that ensures communication and our level of service remains consistent throughout the transition. Additionally, marketing materials like business cards, letterheads, logos to website and social media content, and communicating early and often is key to establishing and maintaining our brand.
Understand and integrate culture. We focus on humanizing the merger by addressing the communications needs of employees through each phase of the integration. This helps address potential culture issues and makes for a smoother integration process.
In addition to communication, gaining an insight of the acquired organization’s culture helps us develop an effective plan.
Four steps to consider:
- Understand the acquired organization’s operating style
- Determine the future operating style of the merged organization
- Develop a plan to narrow the gap
- Implement solutions and monitor progress
With each merger or acquisition, we learn something new to build upon for our next opportunity. We have learned to stay flexible and that it takes drive, determination and the ability to connect people and ideas to achieve remarkable results. While challenging, the opportunities to collaborate and think outside the box are endless.
Tony Fiorillo is president of ECS Group of Companies. Contact him at email@example.com.Click here to read this week's issue of The Zweig Letter.