Mergers & Aquisitions

Over the years, Frank Stasiowski has conducted a number of seminars and workshops on Mergers & Acquisitions in Australia, which typically get firm leaders thinking about what they need to do to be ready for entering into a merger, selling their firm, and/or buying a firm.

Often firms wait until it is “too late”, especially where principals have constructed an “earnings club” to minimise tax, and then discover they have little or nothing to sell when they are ready to retire. Attending a PSMJ seminar on M&A gives you the basic understanding you need to be ready when the time comes.

Due diligence

One of the most important – and often overlooked – aspects of a successful merger or acquisition (including selling your firm) is due diligence. Most firm principals simply do not have the arms-length perspective and clear-eyed objectivity to be good at assessing the strengths and weaknesses of another firm they might buy, sell to, or merge with.

Charles Nelson has assisted a number of Australian firms, large and small, with the necessary due diligence to either confirm that the intended merger or acquisition is good, or harbours problems that must be resolved if a deal is to go ahead.

“As national director of VHB’s M&A program for the past 7 years, I have authorised the hiring of the PSMJ M&A Team on many occasions. The differentiating aspect of the PSMJ Team has been their ability to balance each aspect of the potential transaction and convey their observations, recommendations, and advice to all parties in an open and trusting manner.”

Michael J. Carragher, P.E.
Southeast Regional Manager, Vanasse Hangen Brustlin, Inc.

Valuations

A critical dimension of a successful sale/merger/acquisition is a valid valuation. PSMJ’s approach to valuing a business, developed over decades of working with firms world-wide, is uniquely suited to the design professions.

There is no single formula that can be used to accurately determine the value of a design, architectural or engineering firm. Having performed over 1,000 valuations worldwide during the past years, we have found that the best approach is to use a combination of some of the methods listed below.

  • Organizational Cash Flow
  • Earnings Plus Equity Adjustment
  • Discounted Cash Flow
  • Capitalized Earnings
  • Multiple of Book Value
  • Multiple of Earnings
  • Percentage of Gross Revenues
  • Value per Staff
  • Return on Investment
  • Return on Equity
  • Outside Acquisition Earnings
  • Acquisition Organizational Cash Flow
  • Public Market Valuations

Depending on the circumstances, we would select four or more of the most applicable methods, compare the outcomes, and derive a composite valuation.

This valuation would then be tested against seven risk factors, which could move the valuation up or down: Market Risk, Team Risk, Product Risk, Strategy Risk, Operations Risk, and Entrepreneurial Risk.

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