Recruiting tools

According to Zweig Group’s 2018 Recruitment & Retention Survey, firms that focused on their website as a recruiting tool grew more than firms that focused on other methods of recruiting. Firms focusing on their website as a recruiting tool grew by 10.7 percent, followed by firms using recruiting agencies at 9.9 percent, referrals at 9.5 percent, and college recruitment at 8.6 percent. Firms that focused on internet advertising experienced the least amount of growth, at 8 percent.

T R E N D L I N E S

F I R M I N D E X

W W W . T H E Z W E I G L E T T E R . C O M

T H E V O I C E O F R E A S O N F O R A / E / P & E N V I R O N M E N T A L C O N S U L T I N G F I R M S

Bassenian Lagoni ...................................8BIG RED DOG ........................................7Burns Engineering ..................................6Comprehensive Environmental, Inc. ........7David Evans and Associates, Inc. ...........6DCI Engineers ........................................7Fehr Graham ..........................................7Gunda Corporation .................................6HED, Inc. ................................................6HRP Associates, Inc. ..............................7OHM Advisors ........................................6Pennoni ..............................................2, 7PM Environmental, Inc. ...........................7SEPI Engineering & Construction, Inc. ....7Sullivan Engineering ................................7The Thrasher Group ...............................7Wade Trim ..............................................7W&M Environmental Group, LLC ............7

Page 6

J u l y 3 0 , 2 0 1 8 , I s s u e 1 2 5 8

Conference call: Lessons learned

See MARK ZWEIG, page 2

Mark Zweig

“Understanding these two

financial concepts could

potentially change

everything that an AEC firm

does.”

Let’s face it. While there certainly has been an increase over the years in the number

of architects, engineers, and other design professionals who have had formal business education, the solid majority of firm owners today still do not have any. And even though some owners do have a business degree or MBA, not even all of them understand a few of the most critical financial concepts that they should know in order to run their firms effectively.

Let’s take a look at two of these financial concepts that every firm owner SHOULD know and understand:

1) Return on equity. It has been interesting to me over the years to hear discussions of own-ers talking about the low profitability of our industry, coming to the conclusion that their money would be better invested elsewhere. To start with, profitability is only one aspect of “return.” More important is return on equity. If I told you I sold a house and made only $10,000 on it, you may not be very impressed. But if I told you I borrowed 100 percent of the money and sold a house that I made $10,000 on five days a week, you might feel differently. The same idea applies to our business.

Return on equity is defined as our pre-tax, pre-bonus profit divided by our “book value” or “net worth.” Net worth is assets minus liabili-ties (what we own vs. what we owe). According to Zweig Group’s 2017 Financial Performance Survey, the median return on equity for all firms was 63.9 percent. Lower quartile firms made (only) 23.4 percent, and upper quartile

OPEN FOR PARTICIPATIONzweiggroup.com/survey-participation/

Financial concepts AEC owners should know

MORE COLUMNSxz GUEST SPEAKER: Authentic values Page 3

xz CONTINUING ED: Five good reasons Page 5

xz M&A INSIGHTS: An attractive seller Page 9

xz M&A INSIGHTS: Limbic leadership Page 11

© Copyright 2018. Zweig Group.

All rights reserved. THE ZWEIG LETTER July 30, 2018, ISSUE 1258

2

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firms 102.6 percent! And this is after paying out salaries and benefits and other good things to the owners.

What other investment does so well? Not many I can think of! Compare this to real es-tate appreciation. The AEC firm looks pretty darned good! This is important for people to understand. I think if they DID understand it, they’d be a lot more willing to invest in their firms versus stripping out all the profits every year as many small companies tend to do. They do so on the advice of their accountants to avoid paying taxes and in the process ensure their companies can’t grow and maximize their real returns to owners.

2) Average collection period. We were at a client’s office a few months ago when one of the principals questioned why having a 100-plus day average collection period was a bad thing. He said the clients would eventually pay and they have been able to stay in business in spite of it, so “what’s the big deal?” The big deal – and it is big – is when the receivables get that old, the risk of ever collecting them increases dramatically. Not to mention another super critical idea – that being the amount of capital that is needed in the firm to cover that ridiculously slow collection of money owed them.

If they were doing $20 million a year in net service revenue, they would need to have 100/365 worth of their annual operating expenses in cash and credit just to pay their bills. Assuming a 10 percent profit, that would be $4,931,507 in cash and credit needed to cover their expenses for 100 days. That’s insane! It also drives down your return on equity because equity has to be higher to finance the businesses of your clients who don’t pay their bills. For every day they can reduce that average collection period, our example firm could extract more than $49K from their firm – or pay off more than $49K of their debt. That’s significant!!

Understanding these two financial concepts could potentially change everything that an AEC firm does. The entire strategy of investment versus harvest, ownership transition, and even what types of clients and work a firm undertakes, may need to change.

MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

MARK ZWEIG, from page 1

ON THE MOVEPENNONI’S NEWARK, NJ OFFICE WELCOMES NEW OFFICE DIRECTOR John Colagrande, PE, has been promoted to Pennoni’s Newark, New Jersey, office director. Colagrande previously served as a senior engineer/project manager in the site/design division of Pennoni’s Newark office. He has almost 30 years of experience with expertise in geotechnical engineering and land development. Todd Hay, PE, CME, will continue to serve as regional vice president of New York, Northern New Jersey, and New England.Colagrande looks forward to collaborating with offices throughout the firm to improve the surrounding community, to better understand their client base, and stay engaged in the area’s unique opportunities. Colagrande says, “As office director, I intend to continue to promote Pennoni values, and grow the office staff, while enhancing our capabilities, maintaining a positive image to the community, and working closely with Pennoni’s other offices to provide a seamless resource for all our client needs.” Colagrande and his Newark team currently serve a diverse group of clients and markets including: municipal, commercial development, education, industrial, energy, mixed-use residential, parks, utilities, and federal.Starting his career as a field engineer overseeing earthwork projects, Colagrande worked his

way up into a project management position overseeing the design of telecommunication facilities in the New York Metro region. During this assignment, Colagrande developed land development skills, including grading plans and site plan preparation, in addition to providing testimony before local planning and zoning boards. Due to the multidisciplinary elements of the projects, Colagrande developed his skills managing multiple engineers of varying disciplines. Amongst other opportunities, this one skill set will be paramount to the Newark office. Pennoni looks forward to Colagrande’s leadership because he will utilize his broad career to manage complex engineering design projects and foster a sustainable and smart engineering future in the area.Hay says, “John’s role will be to strengthen our presence in North Jersey with our existing client base, as well as develop a new client base that has emerged in the past few months. We believe John’s penchant for honesty, service, value, and responsibility will solidify Pennoni’s brand name in the competitive Greater New York market.” Pennoni provides engineering and design consulting services to local, state, and federal government clients, as well as private, commercial, industrial, construction, and other professional firms in the United States.

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THE ZWEIG LETTER July 30, 2018, ISSUE 1258

Christina Zweig Niehues and I are conducting a Building your Personal Brand workshop at the 2018 Zweig Group Hot Firm + A/E Industry Awards Conference

in Dallas and we hope you’ll attend. This will be a roll-up-your-sleeves, “git ‘er done” (it is Dallas after all) kind of session, and you’ll come out of it with a much clearer understanding of how to build, renovate, and evolve your brand. So, in preparation for the conference, I thought I’d give you a little background from personal experience, on brand creation and brand destruction in the media.

In the AEC industry, both individuals and firms need to brand and present themselves as ‘core brands for core viewers.’

O P I N I O N

Personal brand, as we think about it, also includes your firm’s brand. Personal brands are “core brands” distinguished from the mass market brands like Coca-Cola, Procter & Gamble and Johnson & Johnson. The Steve Thomas or Zweig Group brand is a different animal than Band-Aid or Bengay. Back in the day you didn’t have to worry about building a brand because that’s what your resume, curriculum vitae, or company’s reputation did. Plus, there were no channels by which to project your brand, other than the mainstream media – three networks and PBS – and newspapers and radio.

Now everyone has a “channel” in the form of a website, Facebook page, Twitter feed, Instagram account, and so on, and everyone has a “receiver” in the form of a smartphone, tablet, or laptop. Generally, your receiver is always in your pocket, briefcase or purse, so you can always project your brand, and tune in to other brands.

If you think of your personal brand as a media offering which competes for eyeballs with all the other media offerings out there – everything on

the web and social media that tries to grab your attention from the London Economist to ads about burning belly fat – then your brand will obey the laws pertaining to building and maintaining brands in the media.

I started thinking about branding years ago on This Old House as our ratings climbed and we became the most-watched regular series on PBS. I continued to think about it as we built the whole Renovation Nation brand on Discovery’s Planet Green. The two shows were quite different from each other – TOH was PBS, Renovation Nation was Discovery, TOH was 30 minutes, Renovation Nation was a commercial hour, TOH was of the “Ken Burns pace,” kind of slow, and Renovation Nation was on steroids. Yet both programs stuck to the “core PBS values” of “Inform, Entertain, and Inspire.”

Inspiration sounds like an outdated value, but really it belongs to the cluster of values known as “authenticity.” Think of the success of Patagonia as a brand. The clothing is produced by the world

Authentic values

Steve Thomas

GUEST SPEAKER

See STEVE THOMAS, page 4

© Copyright 2018. Zweig Group.

All rights reserved. THE ZWEIG LETTER July 30, 2018, ISSUE 1258

4

wide clothing supply chain in factories that also produce Colombia, North Face, and so forth. But Patagonia remains a premier brand because the clothing and the company is authentic, designed and favored by professionals and core outdoors people.

Patagonia’s mission statement is “Build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis.” Patagonia is a privately held company with in excess of $275 million in annual revenue that has given back in excess of $29 million to environmental causes. Founder Yvonne Chouinard was also the founder of 1% For The Planet, the non-profit which signs up companies to pledge 1 percent of gross revenue for environmental causes of their choice. In a very competitive market Patagonia has stuck to its core principals and therefore has remained successful.

This Old House was acquired by Time Warner in 2001, after which Time Warner was acquired by AOL, and AOL management took over the company. This was just as the dot-com boom flipped to the dot-com bust. The directive went out to increase the revenue from all divisions, including the one in which TOH was placed.

The show programming shifted from content that was professionally driven to content that was thought would attract more ad dollars to the magazine. One of TOH’s original core values was that we gave non-biased, professional advice on products and processes without regard to the size or ad budgets of the company that offered them. In other words, the show was authentic. However, with the shift, in my view, the show began to lose its edge, and its audience, and a great brand was eroded. Some say it was destroyed.

Defending core values requires a kind of fearlessness to stick with one’s inner principals. Once the word “inform” is replaced by “sell,” compromises ensue. One thing we all know is that the general public’s authenticity meter is set to a hair trigger. If they think they are getting sold they will switch off and you probably won’t get them back.

Renovation Nation was a commercial television show. Our brand, our popularity, and our advertising draw continued to build throughout the two-year run of the network. We did in fact integrate sponsors into the editorial, but we did so in a very up-front way. Saturn, the American automobile manufacturer, was a big advertiser and they wanted product placement on the show. We put together a program whereby Renovation Nation and Saturn built Habitat for Humanity houses in Detroit and Philly.

We drove Saturn vehicles on camera, and the volunteers,

who were Saturn employees, wore Saturn T-shirts. This represented perfectly up-front and transparent product integration to serve a great cause. It only had a positive impact on our viewership. We not only maintained our integrity but we boosted it by using the business to help solve a social need – low-income housing.

Planet Green, and Saturn, too, fell under the tidal wave of the recession, which crushed the housing sector, building, all building products, appliances, home-related services, financial services, and automobile sales. It crushed, in other words, our whole advertising base. Renovation Nation was successful all the way up to the point when the Planet Green Network was taken down. The show would be successful today if Discovery had been able to tough it out.

My take on the architecture, engineering, environmental, and planning sector is that both individual practitioners and firms need to brand and present themselves as “core brands for core viewers” in much the same way we did in our various television series. In the Hot Firm workshop, we’ll dig into the specifics of how to build and articulate such a core brand, and the various media channels most effective to project it.

I recently went through this exercise myself. Check out stevethomasbuilders.com, and mainswildislands.com, a documentary film we’re shooting on the Wild Islands of Maine. I built these two websites in the last year to support these endeavors, and I found it a demanding exercise – and I’m supposed to be a professional! The hardest part was articulating the core value set for each “brand.” For Builders it came down to “Simplicity, Integrity, and Sustainability.” For Wild Islands, it was “Respect for the environment, Respect for the species, Preserve the wild islands.” So between now and September your homework is to think about the core values of your brand, that which defines you as an individual practitioner and as a firm.

The other thing to keep in mind is that brands build brands. So, if you’re wondering why you as the principal of a firm should encourage your employees to build their own brand, my argument is that their strongly articulated brands will help build the strength of your firm’s brand. Encouraging them to do so will only help you in the long run.

The workshop will be lively and fun, and we’ll get a lot of work done. See you in September. Cheers!

STEVE THOMAS helped catapult This Old House to the top of PBS’s list of the most-watched ongoing series of all time. He went on to highlight green renovation across America on Renovation Nation on Discovery’s Planet Green. He’s a popular speaker, video producer, writer, blogger, photographer, renovator, and branding consultant. He also consults on green, sustainable building, and renovation for clients all over the U.S. He can be reached at steve@stevethomashome.com.

STEVE THOMAS, from page 3

“If you think of your personal brand as a media offering which competes for eyeballs with all the other media offerings out there, then your brand will obey the laws pertaining to building and maintaining brands in the media.”

“If you’re wondering why you as the principal of a firm should encourage your employees to build their own brand, my argument is that their strongly articulated brands will help build the strength of your firm’s brand.”

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THE ZWEIG LETTER July 30, 2018, ISSUE 1258

People are understandably reluctant to leave the office and their clients to attend a conference, something that may at worst seem a waste of time, and at best, just

another annoyance. But each year, those who attend Zweig Group’s Hot Firm + A/E Industry Awards Conference give us feedback that’s more enthusiastic than it was the year before, and return home to their firms with fresh ideas, new friends, and renewed motivation to innovate and grow.

Come to the 2018 Hot Firm + A/E Industry Awards Conference in Dallas this September 20-21, and bring your colleagues with you!

O P I N I O N

While it is tempting to believe that all we need is right there on our phones and computers, the reality is that Hot Firm 2018 will have a value that can only be delivered by a live, face-to-face event.

1) An educational experience. Zweig Group has been creating, delivering, expanding, and evolving the most valuable and relevant educational content fo-cused on the AEC industry for decades. And during Hot Firm, it all comes together at the right time and the right environment. The industry’s best practices, sector experts and opinion leaders, innovative learn-ing tools in a more conducive and stimulating envi-ronment – we’ve developed an educational program that promises to surpass all others.

Some of the featured speakers include Christo-pher Parsons with Knowledge Architects, and Jay

Steinfeld, the CEO and founder of Blinds.com. This year we’re hosting a pre-conference workshop on Wednesday, September 19, about Building a Person-al Brand with special guest speaker Steve Thomas, of This Old House fame, and Zweig Group Principal and

Five good reasons

Melissa Swann

CONTINUING ED

See MELISSA SWANN, page 8

“While it is tempting to believe that all we need is right there on our phones and computers, the reality is that Hot Firm 2018 will have a value that can only be delivered by a live, face-to-face event.”

THE ZWEIG LETTER July 30, 2018, ISSUE 1258

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P R O F I L E

Conference call: Lessons learnedEach week, The Zweig Letter features commentary from top-flight leaders of AEC firms. Here is a compilation of how they handle, and move beyond, failure.

JOHN HILTZ, PRESIDENT OF OHM ADVISORS I took over as president in January 2009 after serving as vice

president of operations for a number of years. Up until 2010, our firm had accumulated so many suc-cesses that I thought to myself, “This job is easy.” What I didn’t recognize was how much the stimu-lus dollars introduced by the Obama Administra-tion did for us. Once 2010 hit and the stimulus dol-lars were behind us, reality set in fast. While 2010 and 2011 were tough years and we were fortunate not to be hit nearly as hard as many other firms, I learned that the job is a lot tougher than you think. You need to be willing and able to make some tough, timely decisions, and you only succeed as a team. Many firms tried to cut their way to success. We were fortunate and pushed for growth during the worst of times. I think the decision to focus on maintaining our team during difficult times truly paid off.

MATT BURNS, PRESIDENT OF BURNS ENGINEERING Hold people accountable and make changes quickly. Also, part of moving ahead is having some failure.

MIKE COOPER, MANAGING PRINCIPAL AND PRESIDENT OF HED, INC. They say it can take years, sometimes decades, to build a strong relationship, based on trust and mutual respect, and only a single bad experience to tear that all down. Unfortunately, I know this to be true. On the flip side, I also know that all proj-ects will experience bumps in the road. It’s how we address and resolve those issues that can help strengthen relationships. We don’t run from is-sues, we solve them and keep moving forward.

RAMESH GUNDA, FOUNDER AND PRESIDENT OF GUNDA CORPORA-TION Delegation does not excuse you from respon-sibility.

AL BARKOULI, CHAIRMAN AND CEO OF DAVID EVANS AND ASSO-CIATES, INC. The biggest lesson is related to decision-

By The Zweig Letter Staff

“I’ve never termed any event in my life as a failure, but as an opportunity to learn what not to do the next time.”

© Copyright 2018. Zweig Group.

All rights reserved. THE ZWEIG LETTER July 30, 2018, ISSUE 1258

7making and the need to trust both the head and the gut. The “no” decisions are often harder and more important than the “yes” decisions. What we say “no” to defines us more than what we say “yes” to. There’s pressure to be all things to all people so “yes” is easier. I am now more trusting of my gut when it’s a close decision and more comfortable with a “no” decision.

NIC ANDREANI, PRESIDENT OF W&M ENVIRONMENTAL GROUP, LLC You must hold people accountable in their role and be prepared to act. Keeping someone in a role that doesn’t align with their strengths can create many issues, but most notably in team morale.

CHRISTINE FRANKLIN, PRESIDENT OF COMPREHENSIVE ENVIRONMENTAL, INC. I’ve never termed any event in my life as a failure, but as an opportunity to learn what not to do the next time. My biggest personal lesson is that I cannot succeed if I try to do everything myself. People are put in your life to help you achieve your goals and you are here to help them achieve theirs.

L. ANDREW WHITE, PRESIDENT AND CEO OF HRP ASSOCIATES, INC. Big, bold, rapid changes are exciting and sometimes needed, but well planned, steady change can often be more effective and sustainable.

CHAD RILEY, CEO OF THE THRASHER GROUP Being a new CEO, I am continually learning lessons. Over the past year, I’ve learned that the speed at which you have to assess and make deci-sions is incredibly fast. You can only effectively do that if you are in touch with what’s going on in the company. I’ve learned that when you see something veering off course – even the slightest bit – you need to check in, raise aware-ness, and take action to get it back on course.

ROGER HEERINGA, PRESIDENT AND COO OF DCI ENGINEERS I took over management in 2007, right before the recession. If there’s one thing I learned from that it was to learn how to be alert and nimble. You can’t be overly optimistic. Keep a clear eye on financial performance – things can change quickly.

BRIAN SULLIVAN, CEO OF SULLIVAN ENGINEERING Our biggest lessons have been in hiring: should’ve hired sooner and in a few in-stances should’ve taken more time to evaluate candidates in the interview process. Additionally, delegating has been an issue; more specifically recognizing that just because I don’t like doing certain tasks doesn’t mean that other people on our team also don’t like doing them.

ANDREW MCCUNE, PRESIDENT AND CEO OF WADE TRIM Go with your gut. Trust yourself when deciding on business partners or the direction of the company. Finding the right leadership for the company needs to align on many levels and the culture needs to align with strategic goals.

WILL SCHNIER, CEO OF BIG RED DOG ENGINEERING & CONSULTING Failure does happen. Nobody is perfect. When we don’t deliver on our value proposition or when we make a mistake or when

our PMs fail to communicate up to the client’s expectations, we own it as fast as we can. When we fail, we admit it and we address it and we learn from it. It doesn’t happen often, or we wouldn’t be growing the way we are. When failure does happen, it’s an opportunity to prove to the client what kind of mettle we have and where our ethical compass is pointed. Handled appropriately, it is a chance to strengthen a client relationship because many firms fail to own up to their fail-ures.

ANTHONY BARTOLOMEO, PRESIDENT AND CEO OF PENNONI We react as a team. We evaluate the situation from beginning to end and guide each other to a desirable and more productive out-come by recreating the steps we took to achieve success next time around. Following our communication roadmap and prioritizing debriefing, our employees come together and walk away with a positive, hopeful, and action-oriented plan.

MICK GRONEWOLD, PRINCIPAL AND CHAIRMAN OF THE BOARD AT FEHR GRA-HAM Failure is a necessary experience to grow at the pace Fehr Graham wants to grow. We work hard to create an en-vironment in which failure is a positive – an opportunity to learn or solve another problem. A lot of effort goes into making sure that our failures are exposed internally and fixed before the deliverable leaves our office out of respect to our clients. In the end, this is very much a human business and, as such, mistakes and missteps will happen no matter how good our process is or gets. My colleagues are confident enough in their abilities to come together and deliver when we experience a failure with one of our initiatives. The team quickly regroups, formulates a strategy to address it, and moves forward. When that failure involves a client, we own it and work diligently to make it right. If you spend time in our office, I know you will hear this phrase, “If you ain’t fall-ing down, you aren’t really skiing!”

SEPIDEH SAIDI, PRESIDENT AND CEO OF SEPI ENGINEERING & CONSTRUCTION, INC. It has to do with retention and recruitment. My great-est disappointment was in hiring key people who were not right for their jobs. It didn’t take me much time to figure out the fit was poor, but it took me too long to make a change. This created negativity and impacted others.

MIKE KULKA, CEO AND PRINCIPAL OF PM ENVIRONMENTAL, INC. We try to avoid failures through strategic planning, but they can be inevitable. For the worst case scenarios, we have developed quick action plans. However, in the event that there is a real or perceived breakdown in a process, we jump into solution mode, stop for a moment and understand the problem, and then find where the weak point was. In some cases, we may need to retool the process; that’s fine. We certainly don’t dwell on failure. We learn from it and move on.

“When failure does happen, it’s an opportunity to prove to the client what kind of mettle we have and where our ethical compass is pointed. Handled appropriately, it is a chance to strengthen a client relationship because many firms fail to own up to their failures.”

“Big, bold, rapid changes are exciting and sometimes needed, but well planned, steady change can often be more effective and sustainable.”

© Copyright 2018. Zweig Group.

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Marketing Director Christina Zweig Niehues. The break-out and small-group sessions will include a panel on alternatives to ownership transition, innovative technology applications, and developing your social media skills, just to name a few. Of course, the formal agenda reflects only a portion of the educa-tion that occurs at Hot Firm. Opportunities to learn from one another abound throughout the course of the event.

2) A networking experience. Indeed, there is nothing more valuable than human connections, and this conference is all about meeting people, interacting with, learning from, and sharing what we know with our peers. Over the 20 years of its existence, Hot Firm has refined the perfect mix of structure and spontaneity, work and play. The 2018 agenda has never been richer in content, but it’s equally conducive to the social intermingling that reminds us that we aren’t alone in this industry or on this earth, but rather exist to live, work, and co-create with others. New to this year’s event is the option to purchase a VIP Table for Eight. What better way to network than alongside co-workers who have contributed to your suc-cess?

3) A business-building experience. Despite all the talk about disruption and innovation, it is easier than ever to be mired in the status quo. That all changes at Hot Firm, where attend-ees are exposed to the strategies and tactics that have led to the extraordinary success of conference award-winners across all categories of marketing, culture, and business growth. In addition to the unique opportunity to glean from the indus-try’s best, attendees are introduced to new resources, tools, suppliers and vendors that can transform and stimulate growth in profitability and client satisfaction.

4) A fun experience. All work and no play makes the AEC in-dustry a dull place! Dallas abounds with opportunities for first-class sports and entertainment, such as our VIP Con-cierge Guest Program. Or save your seat on the party bus Friday to our pre-awards outing at Top Golf. Along with lots of serious topics to be tackled, Hot Firm is a great party. It’s remarkable how good food and drink not only elevates the mood – which we all need once in a while just for its own sake – but opens us up to new ways to elevate our business.

5) A peak experience. Abraham Maslow and other psycholo-gists characterize these “moments of highest fulfillment and self-actualization” as the most important events in our lives, and Hot Firm aspires to nothing less. When we step back and consider all the contributions the AEC industry has made to the quality of human life on the planet, we at Zweig Group embrace our responsibility to reflect that meaning in powerful words, images and experiences. Hot Firm will launch a series of new initiatives designed to elevate the stature and image of this fabulous industry; a campaign that not only informs and communicates, but also inspires and motivates. It has never been a better or more exhilarating time for our profession, and we pledge to use our unique standing as the industry’s leading educational resource to deliver an experience of inte-gration and joy.

Find out all the details regarding this year’s Hot Firm + A/E Industry Awards Conference at hotfirm.com.

MELISSA SWANN is the events manager at Zweig Group. She can be reached at mswann@zweiggroup.com.

MELISSA SWANN, from page 5

“At Hot Firm, attendees are exposed to the strategies and tactics that have led to the extraordinary success of conference award-winners across all categories of marketing, culture, and business growth.”

“It has never been a better or more exhilarating time for our profession, and we pledge to use our unique standing as the industry’s leading educational resource to deliver an experience of integration and joy.”

BUSINESS NEWSTRILOGY BY SHEA HOMES EARNS COVETED GOLD NUGGET HONORS Judges for the 2018 Gold Nugget Awards have named two Trilogy by Shea Homes communities as Award of Merit winners in its annual competition, which honors architectural design and planning excellence among entries throughout the United States and internationally.Shea Homes earned its Merit honors for Trilogy at Verde River’s Resort Club, Verde River Golf & Social Club, which was acknowledged for Best Recreational Use Facility. In addition, the leading active adult builder was also recognized with renowned architectural firm, Bassenian Lagoni, for the Ventana and Albariño home designs at Trilogy at Monarch Dunes for Best Single Family Detached Home, 1,500 to 2,499 square feet and 2,500 to 2,999 square feet, respectively. “We designed the homes at Monarch Dunes to ensure that each plan delivers the lifestyle buyers want in an outstanding

community setting,” said Bassenian Lagoni Principal Hans Anderle. “From expansive great rooms and gourmet kitchens to luxurious master suites and spacious outdoor rooms, Monarch Dunes’ homes help set a new design standard in active adult communities.”This is the second consecutive year Shea Homes has earned the coveted Merit honors for its Trilogy branded clubs earning the Grand Award at the 2017 PCBC Awards for Best Recreational Use Facility, for the resort club at Wickenburg Ranch, A Trilogy Resort Community.Now in its 55th year, Gold Nugget Awards is the largest and most prestigious competition of its kind in the nation. Winners this year were chosen from more than 700 entries from around the world. Chosen from the elite pool of Merit Award winners, the 2018 Grand Awards will be announced on June 28 as a feature highlight of PCBC, the nation’s largest

regional conference and trade show for the real estate development field.“Whether it’s a resort club or new floorplan, our vision is to deliver a design that is both functional and visually striking to a homeowner,” said Jeff McQueen, president of Trilogy by Shea Homes. “As a leading 55 plus and active adult builder brand, our mission is to enrich the lives of those who choose to live in our Trilogy communities. At its core, that would not be possible without the innovative and pristine design of the spaces we create for them.”Verde River Golf & Social Club is the signature resort club within Trilogy at Verde River located just east of North Scottsdale. The club comprises approximately 30,000 square feet of indoor and covered amenity space. Trilogy at Monarch Dunes, located in the Central Coast, California, is a premier golf resort community in the area.

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THE ZWEIG LETTER July 30, 2018, ISSUE 1258

Over the past few years, the AEC industry has become a highly acquisitive one. For owners looking to sell their business, it can be hard to know what exactly

prospective buyers find attractive and unattractive. So how do we set ourselves apart from the pack and stand out as an enticing investment?

Sound management, market verticals, and company culture – what buyers are looking for within the AEC industry.

O P I N I O N

In my work as an M&A consultant with Zweig Group, I’ve seen countless owners struggle to pin down what will make their business valuable to potential buyers. Through research, experience, and interviewing experts in the industry, here are a few universal value drivers I’ve found:

1) Management. David Ettenger, from Bow River Capital, a private equity firm focused on investing in the lower middle market, says, “Management is key. Bow River likes to truly partner with management, aligned both financially and strategically. With the AEC industry being a service-based business, so many of the relationships lie with management. We find a strong team helps provide a core for growth.”

2) Market verticals. A great end market is something buyers also consider. “If we get the market vertical right, a lot of the risk factors go out the window,” Ettenger says. “For example, anything healthcare

right now seems to be growing and selling at high multiples, but energy service firms not so much.”

3) Understand the buyer’s culture and strategy. The AEC space is highly acquisitive. In that type of environment, a buyer has to state their strategy, in simple terms, and focus only on firms that fit their culture. Ryan Thorpe, from RTC Partners, says, “When a buyer doesn’t do this, their people don’t work well together, culture withers, and productivity

An attractive seller

Noah Hunt

M&A

See NOAH HUNT, page 12

“In my work as an M&A consultant with Zweig Group, I’ve seen countless owners struggle to pin down what will make their business valuable to potential buyers.”

This is an exclusive event for top leaders to discuss the highest level issues facing CEOs and the C-suite of today’s AEC �rm. This two-day event includes educational and networking sessions in an upscale setting, and is part of Zweig Group’s new Experience Education series.

The November 7-9 event will explore the roots of Kentucky bourbon and how these family owned distilleries have grown to serve a worldwide boom while maintaining the culture and character of their businesses. Bourbon lovers or just lovers of the outdoors will enjoy the trip as we travel the Kentucky countryside to some of the most well known distilleries. During our tour of these historic and architectural sites, we will learn the roots of businesses, how these organizations have scaled operations to meet worldwide demand, and how their marketing, sales, and management strategies have built strong brands and rich cultures. We will couple this experience and knowledge with the most pressing issues and ideas in AEC �rms today. With attendees in control of the subject matter, we will conduct roundtable discussions on a variety of topics that will hit right at the heart of what is needed to e�ect change in your organization.

The program is led by industry experts with extensive experience working with and leading AEC �rms. The two-day agenda covers areas of discussion determined by those in attendance. It’s presented in a guided discussion format to encourage discussion among all attendees.

Follow the link for more details, the agenda, information on the presenters, and venue.

zweiggroup.com/seminars/ceo-roundtable/

CEO ROUNDTABLE BOURBON EXPERIENCENovember 7-9 Louisville, KY

11

THE ZWEIG LETTER July 30, 2018, ISSUE 1258

We are in desperate need of leadership throughout all levels of our organizations in order to elevate the industry and continue to adapt to the

rapid transformation that is partially driven by ever-expanding technological advancements.

The development of high moral and ethical standards is the most important thing you can do as a leader, and it will transform your team for the good.

O P I N I O N

In our experience with ownership transition, mergers and acquisitions, or strategic planning, there is a lack of leadership development that will lead to a gradual decline in the overall excellence of our profession. That is why it is important that we encourage everyone at every level of the organization to think of themselves as leaders and hold themselves accountable. It will lead to an environment of safety, innovation, and experimentation required not only to achieve excellence, but to inspire the next generation of engineers to enter the profession.

In every species there exist inherent dominance hierarchies based on repetitive interactions developed in response to competition for limited resources. These hierarchies prevent aggression that could injure or kill one or both animals. Good neurological examples of this can be observed in

species that have long preceded humans, such as lobsters, which have been around for some 360 million to 480 million years.

These hierarchies within human society are largely based around competence and arise naturally within our organizations. The problem – and you’ll see this reported frequently by CEOs – is that we

Limbic leadership

Phil Keil

See PHIL KEIL, page 12

“We encourage everyone at every level of the organization to think of themselves as leaders and hold themselves accountable. It will lead to an environment of safety, innovation, and experimentation.”

This is an exclusive event for top leaders to discuss the highest level issues facing CEOs and the C-suite of today’s AEC �rm. This two-day event includes educational and networking sessions in an upscale setting, and is part of Zweig Group’s new Experience Education series.

The November 7-9 event will explore the roots of Kentucky bourbon and how these family owned distilleries have grown to serve a worldwide boom while maintaining the culture and character of their businesses. Bourbon lovers or just lovers of the outdoors will enjoy the trip as we travel the Kentucky countryside to some of the most well known distilleries. During our tour of these historic and architectural sites, we will learn the roots of businesses, how these organizations have scaled operations to meet worldwide demand, and how their marketing, sales, and management strategies have built strong brands and rich cultures. We will couple this experience and knowledge with the most pressing issues and ideas in AEC �rms today. With attendees in control of the subject matter, we will conduct roundtable discussions on a variety of topics that will hit right at the heart of what is needed to e�ect change in your organization.

The program is led by industry experts with extensive experience working with and leading AEC �rms. The two-day agenda covers areas of discussion determined by those in attendance. It’s presented in a guided discussion format to encourage discussion among all attendees.

Follow the link for more details, the agenda, information on the presenters, and venue.

zweiggroup.com/seminars/ceo-roundtable/

CEO ROUNDTABLE BOURBON EXPERIENCENovember 7-9 Louisville, KY

© Copyright 2018. Zweig Group.

All rights reserved. THE ZWEIG LETTER July 30, 2018, ISSUE 1258

12

tend to develop an imposter syndrome, most noticeably in mid- to lower-tier employees within a firm. Imposter syndrome is a psychological pattern in which people doubt their accomplishments and have a persistent, often internalized fear of being exposed as a “fraud” when taking on a leadership role.

There are a few simple things that you can do today in order to be seen as a stronger leader, no matter what role you currently fill. The same neurological and psychiatric functions that influence dominance hierarchies can work in your favor to influence behavior and motivate others. Things like standing up straight, dressing well, and continuous learning are simple ways to begin. Take some time for self-discovery and perhaps consider a personality test to help you determine what your individual strengths and weaknesses are. That will set you up well for the more difficult task of developing the necessary skills that will make you a better leader.

The conventional wisdom is that potential leaders need to focus on different skills within different stages of their career development within an organization, and for good reason. Strategic perspective is also important, and without it, you might have a hard time getting promoted into the highest ranks of any firm. But there is one skill in particular that is fundamental to every level of leadership, one that will not dramatically change as you move up the hierarchy. That skill is the development of high moral and ethical standards. This is more important than anything else you can do and requires serious self-reflection.

When combined with communicating clear expectations, great ethics can create a safe and trusting environment for your people. In a safe environment, employees can access the brain’s higher capacity for social engagement, innovation, creativity, and ambition. The neuroscience is clear. If an employee doesn’t feel safe, what gets activated is the brain’s fight-or-flight response, where the amygdala registers a threat to our safety. Arteries harden and thicken to handle an increased blood flow to our extremities. In this state, we lose access to the social engagement system of the limbic system and the executive functions of the prefrontal cortex, inhibiting creativity and the drive for excellence. Utilizing this perspective, making people feel safe should be the number one priority for any true leader.

Other competencies that are frequently cited by leaders as having the greatest impact on success include:

z Inspires and motivates others

z Solves problems and analyzes issues

z Drives for results

z Collaborates and promotes teamwork

z Builds relationships

z Develops others

z Has the flexibility to change opinions

z Takes initiative

z Champions change

z Practices self-development

Leadership – leadership based on high moral and ethical standards – is a constant process of learning and evolving. Start with this list, perhaps identify a leader you admire and consider a role model, and continue to develop leaders within your organization. If you clearly communicate the expectation that every person within your firm is to perceive themselves as a leader, you will truly see transformational change for the betterment of your organization.

PHIL KEIL is director of strategy consulting at Zweig Group. He can be reached at pkeil@zweiggroup.com.

PHIL KEIL, from page 11

suffers. Similarly, a seller must know the buyer well enough to believe their business and people are better off as part of the acquiring company. They must like and respect the new folks.” Sellers should find out if the buyers know what they are do-ing. How many firms have they acquired and how have things turned out? Try to speak to the previous firms if you can.

Here are a few bonus nuggets of wisdom from Clay Fox, also of Bow River Capital:

1) How does an owner attract a strategic buyer? “When we buy a company, we always have the exit down the road in mind. It is hard to gauge what a strategic company will want, but most of the time they are buying assets and location. If you have a market position they want and are segmented in a way to provide value to them, then they will potentially look to buy. A financial buyer, like a private equity firm, can help position your company for a strategic sale if you are not quite ready today.”

2) What are some of your firm’s acquisition objectives? “Bow River’s ultimate goal is to make a return on our investment. In doing so, we look to grow the company substantially while in our control, both organically and through additional acqui-sitions. Management of the company is left in the hands of the experts, and we will provide advice where needed.”

NOAH HUNT is a consultant with Zweig Group’s M&A services. Contact him at nhunt@zweiggroup.com or at 479.856.6244.

NOAH HUNT, from page 9

“The AEC space is highly acquisitive. In that type of environment, a buyer has to state their strategy, in simple terms, and focus only on firms that fit their culture.”

“Identify a leader you admire and consider a role model, and continue to develop leaders within your organization. If you clearly communicate the expectation that every person within your firm is to perceive themselves as a leader, you will truly see transformational change for the betterment of your organization.”