Is the one stop shop really the answer?

So it has been a while since my last post (I've been a busy chap!), so why not start with a controversial subject!

So it is now  week and half ago that it was announced that WSP is to buy Sweett Group. This announcement came as the ink was still drying on the paperwork for RPS to acquire DBK. Until recently it's been fairly quiet on the "Big Engineering Consultancy buying the specialist QS/PM outfit" front but maybe this will kick off a new run of acquisitions.

I do have to question the merit of such acquisitions though. Now to be clear the two mentioned deals are very different. The guys at DBK have a great story to tell, they have successfully steered the business to significant growth in recent years and consequently the main shareholders have undoubtedly secured themselves life changing sums on the sale to RPS, and frankly well done to them. They took the risk and the stress of growing a small business into something another business wanted to acquire and they will now reap the rewards. The sale of Sweett Group is an entirely more corporate affair though. The trials and tribulations faced by Sweett Group has been played out in the press so whilst I do not profess to know the ins and outs of the circumstances of the sale, it would be reasonable to speculate that this was another fire sale (i.e. They had to sell), not dissimilar to where Davis Langdon and Northcroft found themselves for different reasons. The rise and fall of Sweett Group's share price certainly intimates as much. It will of course be dressed up with similar rhetoric to other "mergers" that have happened in this space but I am not convinced.

The main point of the article though is whether it is sensible business. I would hazard a guess that less than 20% of Davis Langdon staff employed at the time of the acquisition by Aecom still remain in the business and the bulk of those I suspect have their own personally driven reasons for staying (two obvious ones being some were paid very well to fill the management void or simply because the location of some regional offices works well for home life). That's a high percentage compared to the number of original Northcroft staff still at Capita! Whilst the acquisition of ECH by Arcadis was managed much better, I can see a similar pattern about to start there too. Hence how much do these larger businesses really retain the human capital of the businesses they acquire?

I also look at the market and it strikes me that whether large or small, many of the independent QS/PM outfits are having an absolute field day at the moment securing work because of their independence and clear message to market. In contrast these large one stop shops seem to be losing market share; certainly in the QS and PM markets.

Lastly, let's not forget the employees in all this. Whilst undoubtedly change may present opportunity in some of these larger businesses, my experience is that for majority of staff of the company being acquired, you are simply further down the pecking order and have a less clear path to the top. For a more detailed explanation of this I would suggest reading my previous article; 

Are you at the core of your business?

If one or both of these articles has made you think about your career and you like a confidential chat then please do drop me a line.

This article was written by Paul Micallef; MD of Pegasus Search & Selection who has over 18 years experience in the Project Management and Cost Management Consultancy sector and has personally helped over 800 professionals secure a new position in these disciplines. If you would like a confidential discussion with Paul about your next career move, or are looking to recruit people for your team, please contact him;

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