Construction Today - October 2009 - (Page 62)
SPECIAL FOCUS Civil Thinking about closing your doors in this tough economy? Not so fast. There might be other options. BY BROOKE INFUSINO BUSINESSIn This Section irms today encounter more unique situations and challenges than ever before. Add to this the current economic conditions and you’ve got the fixings for problems at a company. Many owners ask themselves, “How do I respond to these trends, and what strategies do I need to combat any negative impacts?” The answer for many can be found in consolidating or merging the business in order to survive. In most cases, owners spend a good portion of their career working to grow the value of the company. For some, a significant portion of their net worth is tied into the business. If companies can’t maintain the success of the business, one method of saving the financial integrity of a company is to sell it to a larger company or merge with another contractor. According to a new study released by FMI Corp.’s Investment Banking Group, significant changes are occurring in the ownership base of the construction industry. Many factors have led to the fact that there is more acquisition and merger activity in the construction industry today than in any other time in history. These include the aging of the industry’s ownership, interest by foreign investors in the U.S. market and overall globalization in the industry. In addition, the survey says, other trends in ownership and consolidation over the past few decades includes merger and acquisition activity that is high in volume, but yet the industry remains fragmented. Also, as a new generation of ownership enters the industry, ownership will look quite different than in the past. New ownership models will include broad-based employee ownership, public ownership and businesses owned by multi-national units. Managing such as construction, which tend to be cyclical. Sales prices, as one may guess, typically increase in good times and drop when the economy is in the doldrums, as it is today. However, if you’re thinking of selling, all hope is not lost in today’s market. Maximize Value Preparation and planning are key to maximize the value of the business. Any weakness that you can manage should be addressed before you begin the sales process. In the financial world, buyers will look at strengths and weaknesses in the business. Today, companies should focus on enhancing traits such as its plans to address the shifting markets and competition, technology that can improve operations, good working capital management, up-to-date equipment and facilities that can accommodate growth and a positive reputation. Commonly, private equity buyers can make good fits for owners to sell to. Private equity has grown in popularity as an investment vehicle in the last five years, although it remains to be seen whether or not it will continue its stronghold 64 Hensel Phelps: PHX Sky Train 69 Circle Construction 72 ECI 74 Everett, Wash. Public Works 76 IMCO 78 Mole Constructors 80 New Prince Concrete Construction 82 RN Rouse & Co. 84 Stanek Constructors Valuable Traits In an FMI Quarterly article authored by Scott Patten, a senior associate with FMI’s Investment Banking Group, he says firms can maximize their businesses value by emphasizing the following key traits: • Revenue and profitability growth • Plans to address shifting markets and competitive pressures • Technology and finance infrastructure • Customer diversification • Management depth • Good working capital management • Proprietary products or technologies • Brand awareness/name recognition • Up-to-date equipment and facilities Decisions, Decisions The most important decision for a company is whether or not it is indeed the right time to sell. Investigating market conditions is crucial. Companies will more than likely sell at a premium, if the years prior were strong, growth years. So, of course, it is more difficult to get the good sales price that many would expect if financials are slipping. With the volatile conditions in the marketplace in the past six months, many companies might think that now is not a good time to sell the business. The economy almost always influences industries CONSTRUCTION-TODAY.COM OCTOBER 2009
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