You Survived. Time to Thrive.

Presented by

Mark GoodalePrincipal

Morrissey Goodale LLC

OUR CAUSE— WHY WE EXIST

To help AEC firms build more successful businesses

HOW WE HELP OUR CLIENTS

What you know you don’t know What you don’t know you don’t know

WHAT WE DO FOR OUR CLIENTS

Strategy M&A Valuation/OT Visibility/Corporate Message/Branding Executive Coaching M&A Update, AEC Dashboard, Report Card

Macro-Trends State of the Consulting Engineering Industry

Market Sector Trends 2012 Business Success Factors

What We’ll Cover

Q4 11 US GDP growth = 3% (11 was 1.7%) Projected Q1 12 GDP growth = 2.5% US unemployment down to 8.2% (PA is at 7.6%) 2012 construction growth 2-8% growth

2012— A Slow Thaw

Better than even chance we will avoid another recession in 2012

Corporate profits are strong, more cash than 08 Banking system is healthier than 2-3 years ago Commercial and industrial loans on the rise Low interest rates Pockets of growth (shale plays, light

manufacturing)

Cautious Optimism

Financial performance is recovering Markets are stabilizing Competition is fierce Leadership getting second wind Recruiting and retention will take center stage soon Industry consolidation continues

State of the Industry— A Mixed Bag

Year-to-date deal count in the United States to 44, down 17% from the 53 domestic deals tracked through the same period in 2011.  Beyond the U.S., the total global deal count is now 77, down 26% from the 104 global deals tracked through the same period last year.

Industry Consolidation Cooling Slightly

Activity by State

For total deals by state, PA (16) trails only CA (46), TX (33), VA (20), FL (19) and NY (18) in total sales from 2010-2012.  It also ranks 6th highest in terms of sales as a percentage of current ACEC membership.     

Pennsylvania Active in M&A

Recent Pennsylvania Buyers

Recent Pennsylvania Sellers

Deal Multiples

Recovering Markets

Time to Thrive

Get back to business fundamentals Identify the hard and soft issues Think holistically, not in a vacuum

The Hard Stuff Organization structure, resource sharing Incentive compensation Market focus Winning work Quality control Recruiting and retention Ownership transition

The Soft Stuff Communication Dealing with personalities Leadership Maintaining client focus

It’s All Interconnected Take a deep breath! Stop the bus and back it up to your firm’s core purpose

Confirm Purpose and Direction Punch List

Defined in terms of client needs Clearly states the key beliefs, values, and

priorities that leaders and staff are committed to and that influence the decisions they make

Outlines the firm’s philosophy on its social/community responsibilities

WhyHowWhat

They don’t buy what you do, they buy why you do it

What are You and Your Team Building?

Growth? Culture? Services & Markets?

What’s Getting in the Way? The Soft Stuff Communication Dealing with personalities Leadership Maintaining client focus

Get the Team Healthy

Take Inventory S&W’s are internal O&T’s are external SWOT is great, but only a laundry list Too often it stops there

Mix & Match

Strengths (S)

1. Large firm with deep expertise

2. Strong leader/ideals 3. Established brand name 4. Clear org structure

Weaknesses (W)

1. Size becoming unmanageable

2. Bottleneck at top of firm 3. Newer staff not sharing

leadership’s ideals 4. Finances: revenues

falling, costs climbing

Opportunities (O)

1. Water/WW sector hot 2. Buyer’s market for

acquisitions 3. Larger firms looking to

acquire market share 4. Clients will pay for top

service in select markets

SO

1. Create Build/Own/Operate business model (S1, O1)

2. Create strategtic alliances with larger consulting firms (S1, S3, O1, O3)

WO

1. Sell to a larger firm (W1, W3, O3)

2. Flatten org structure, adopt LEAN project delivery (W2, O4)

Threats (T)

1. Client demand for our core service is down

2. Clients finding substitutes for some of the industry services we provide

3. Competition getting stronger

4. Key staff being recruited

ST

1. Acquire our toughest competitor (S1, T3)

2. Divest our weaker divisions and invest in W/WW (S1, T1)

WT

1. Downsize the operation (W1, W4, T1)

2. Selective recruiting for key individuals who reflect core ideals and values (W3, T4)

Making and Securing Reliable Promises Elements of a Promise

Clear customer Clear performer Clear conditions of satisfaction Finish line Takes place in the future

Making and Securing Reliable Promises Elements of Reliability

Conditions of satisfaction are understood and acceptable to the performer

The performer has the competency or access to the competency

The performer knows how long it will take The performer has the time to do it The performer has allocated capacity to the task

Mark GoodalePrincipalphone: 508.650.0040email: mgoodale@morrisseygoodale.comweb: www.morrisseygoodale.com