Construction Today - October 2009 - (Page 13)
INDUSTRY TRENDS STRATEGIZE TO CAPITALIZE How can you approach strategic acquisitions during economic downturns? BY MARK ROBERTSON V alues are falling and the need for liquidity is forcing the sale of businesses and assets at near fire-sale prices. Couple this with a seized-up credit market, and we have an environment where cash is king and a well-capitalized business might be wellpositioned to accelerate its growth strategy or buy market share at a significant discount. Financial guru Warren Buffet sums up this strategic viewpoint as, “Be fearful when others are greedy; be greedy when others are fearful.” The question is: Are you able to take advantage of this financial crisis and better position your own business for long-term success? Buy What Fits Any potential transaction also needs to be analyzed for the components of value in the target business. A strategic analysis (i.e., comparing the unique assets of the target company to your overall strategic plan) will guide you in determining what is really of value to you as the buyer. Examine all the different scenarios, including the following: • Acquiring key desirable assets (i.e., manufacturing plant, inventory or a customer list); • Acquiring only specific assets and assuming specific liabilities (i.e., acquiring the operating assets and assume liabilities related to retaining customers, key vendors and/or key employees); or • At times, it might be better to let the business fail and then hire the key employees on the open market. A successful transaction can be achieved in a number of ways from a merger to a purchase of the entire business or only desired assets, to an acquisition out of bankruptcy. There might be many ways to achieve the same goal, but some structures might prove more advantageous than others. Create a Strategic Plan During uncertain times, it is as important as ever to have a solid strategic plan as a road map for your business. Before you jump into the market and start buying any business or asset that seems to be a great deal, it is important to know how the transaction is going to further your strategic plan. A potential transaction should be analyzed not only for the overall value, but also for how well the acquisition achieves the desired goals of the buyer. Only Fools Rush In Although the target company might look like a bargain, it is imperative to conduct a complete due diligence process to understand the risks inherent in the transaction. Even in down markets, a truly solid business does not become distressed without cause. A bargain purchase price is not such a bargain when it comes with potential problems or liabilities. Mark Robertson is a practice leader in transaction and lender support Services with Blackman Kallick in Chicago. He can be reached at 312-9803263 or via email at mrobertson@ blackmankallick.com. The question is: Are you able to take advantage of this financial crisis and better position your own business for long-term success? OCTOBER 2009 CONSTRUCTION-TODAY.COM
Table of Contents for the Digital Edition of Construction Today - October 2009
Construction Today - October 2009
Regional Spotlight: Southwest
Ledcor Construction Hawaii LLC
C.H. GUERNSEY & Co.
First Gulf Development Corp.: Meadowvale Corporate Centre
Jacobsen Construction: Workers Compensation Fund Headquarters
Novak Construction Co.
Affordable Concepts Inc.
HBD Construction Inc.: Edwardsville Crossing
Ledcor Construction: Napa, Calif.
Mared Mechanical Contractors Corp.
Myers & Chapman Inc.
Summit Contractors Group Inc.
Wilcox Construction Inc.
Special Focus: Mergers & Acquisitions
Hensel Phelps: Phoenix Sky Harbor Intl. Airport Sky Train
Circle Construction LLC
Electrical Contractors Inc.
Everett, Wash., Department of Public Works
Imco General Construction Inc.: Arlington WWTP
New Prince Concrete Construction
R.N. Rouse & Co. Inc.
Stanek Constructors Inc.
Fort Lewis: New Barracks, Army Growth Complex and Support Battalion
Torcon Inc.: Brookhaven National Laboratory’s National Synchrotron Light Source II
Bovis Lend Lease: FBI Denver HQ
Stuart Olson: University of Lethbridge Markin Hall
Bird Construction Co.: Shearwater Helicopter Base
Carbon Constructors Inc.
Consultants & Builders Inc.
Emerick Construction Co.: Rock Creek Middle School
Broadmoor/Boh Brothers Construction Co.: U.S. Coast Guard Integrated Support Command
Cahill Contractors Inc.: The Oakland Museum of California Phase 1
Flintco Inc.: Germantown Women & Children’s Pavilion
Gamma Construction Co.
Kreizenbeck Constructors: BSU Student Union
Pizzagalli Construction Co.: FAHC Radiation Oncology
Robins & Morton: Lincoln Hospital
Steele & Freeman Inc.
Tenderloin Neighborhood Development Corp. (TNDC)
W.G. Yates & Sons Construction: Armed Forces Retirement Village
BBL Construction Services LLC: The Glen at Sugar Hill Apartments
Chelsea Investment Corp.
Affirmed Housing Group
Westland Construction Inc.: Bridges at Citifront
Product Showcase: Plumbing Equipment
Hunzinger Construction Co.: Johnson Controls Headquarters
B.L. Harbert International LLC: S.O.F. 5th Special Forces Battalion Operations Complex
Duke Construction: Monarch Beverage Co. Headquarters
Irish Construction Co.
TMU LLC (Triune)
Last Look: Consultants & Builders Inc.
Construction Today - October 2009