In my practice as a consultant to
design professionals, I am frequently asked to assist in mergers or
acquisitions by buyers and sellers. We begin these assignments by developing
two different profiles: one used to describe the seller to prospective buyers, and the other to enumerate qualities
desired by the seller to target firms in the marketplace, including but not
limited to size, location, disciplines, and markets. Once firms are targeted, we communicate with them to
determine their interest in considering an
affiliation. If the initial description of the prospect prompts further
interest, we provide more detailed information after a
Confidentiality/Non-Disclosure Agreement has been signed. Assuming continuing
interest, one or the other or both usually want to
develop a comfort level regarding finances or cultural fit. For some, the most
important consideration is financial; for others, it is cultural fit. While
financials are fairly straightforward, cultural fit is more elusive.
Recently, we encountered some differences of opinion regarding what constitutes a
positive cultural fit. The difficulty in describing it, because it is
unspecific, prompted me to learn more about cultural fit and then share what I
learned. I spoke with a number of firm principals and
asked them to respond to a series of questions that frame this article. Those
contributors are listed at the end of this article.
What is culture in design firms?
The attitudes, beliefs, and behaviors of a firm’s leaders set
the tone and expectations of others in the firm: how
the firm operates, whether in teams, studios and/or in departments. Many firms
use the word “values,” sometimes “core values,” as a substitute for firm culture. Others use values to define firm culture,
although they are so interdependent as to suggest
that there really is no difference. For all, the dominant value set or core
values of the firm is an extension of the personal values of its founders and,
in subsequent generations, its leaders. Core values are fundamental beliefs and include things like honesty, integrity, and trust. When asked about culture,
many use professionalism, continual learning, life/work balance, diversity, and civic mission to define culture.
Others include people, spirit, relationships, organization, design, profitability, sustainability, and balance. In addition, in
considering a value spectrum that goes from practice-centered at one end
(valuing project quality more than financial performance) and business-centered
at the other (valuing financial performance more than
project quality), design firm leaders almost always operate in a way that represents the dominant
values of the leadership group as a whole. As Ray Bouley of Cooper Carry says: “A company culture is defined by its
ethics, beliefs, values, and behaviors, and how those are manifested by its employees.”
If that is culture, what is
The simple answer, in a merger or
acquisition, is when one firm’s attitudes, values, and beliefs fit with another firm’s
attitudes, values, and beliefs. In other words, the firms’ core values and cultures
are in sync.
The most important consideration
when integrating one firm into another is whether they will fit culturally,
whether firm A will readily and easily behave and operate in ways that are consistent with B, the firm they are joining. Cultural fit
is equally important for the seller and the buyer. A very important and
appropriate question for the buyer is, “Will they fit?” Or, conversely, will
there be constant struggle and disappointment between
the ins and the outs? The firm being considered should ask the same
question: “Will we be comfortable in the firm we
are considering joining?” Once the merger or acquisition is done, the cultural
fit is revealed in the behavior of individuals, which is
based on the understanding and respect for the firm’s culture and the leaders
who embody, practice, promote, and expect it.
Why is cultural fit important?
Solid cultural fit enhances many
aspects of daily life in a firm and for its employees: workplace effectiveness and productivity, employee satisfaction and
retention, competitive marketplace advantage, communications, and overall identity. Without it, a
firm will likely experience lower productivity and effectiveness, or employee dissatisfaction and departure. The firm will lose competitiveness and identity
in the marketplace. Without a clear understanding of the way things are done,
employees tend to do things their own way or the way their last employer did
them. Not only does this result in inefficient
project delivery, but it also leads to employee disenchantment and
dissatisfaction. Without a clear and understood set of values, differing
messages will be delivered to the marketplace for prospective clients and
prospective employees. Brand identity will fall by
How do you achieve cultural fit?
First and foremost, leadership
must articulate a clear set of firm values, its core beliefs, the things that
are really important to them in what they do professionally. Then leadership must live up to and articulate values to everyone in the firm. They must be walking, talking exemplars of their
beliefs. According to Ed Shriver, FAIA, at Strada, “The most important thing is management’s modeling the
culture. The staff will do what they see the leaders
doing. If the leadership is competitive, the staff will be competitive. If
leadership trusts one another, the staff will be trusting or they will stick out as ‘not a good fit.’” They must communicate. Dan Noble, FAIA, FACHA, LEED AP, at HKS added: “We constantly repeat and reinforce our vision
and values. We make sure we behave in a way that is supportive of our values
and hold people accountable if they aren’t.” Perkins and Will’s Phil Harrison, FAIA, LEED AP, agreed: “Communication is essential in creating a
community and culture.” Brad Perkins, FAIA, MRAIC, AICP, of Perkins Eastman, told me, “We spend
time with the current leaders and the next generation, talking through projects
and interests to work out a joint plan for going forward. We work hard to erase barriers and integrate teams as soon as
What should you look for when
considering which firms to bring into your firm?
The first step is meeting with the
key people in the firm under consideration for acquisition. They will be considering you at the same time. They have their own culture
that governs their practice. You have to determine whether what you observe
suggests the likelihood of a cultural fit. Peter Devereaux, FAIA, at Harley Ellis Devereaux, talked about his firm’s approach: “Initially, we want to know that the firm’s owners and key staff members
will embrace our mission, vision, and core values, not just with lip service, but as evidenced by their
actions in relation to how they run their practice. That process begins with conversations, and continues through intensive due diligence in which we look closely
at how contracts are negotiated, projects are set up, how teams function, how
documents are prepared, and how staff are acknowledged and rewarded.” Tim
Dufault, FAIA, LEED AP, at Cuningham Group, continued: “The leadership must align with our core values. Without this alignment,
we know the long-term relationship won’t work. We also look for firm leaders
who are looking to grow and develop their people. We bring other companies into the organization with a focus on growth – not just market or economic growth, but also opportunities for younger
people to grow into leadership positions across the entire platform.”
How do you integrate your newly
The work should start well before integration. Have conversations with staff, share
your strategic plan, discuss your culture, and describe your process for inclusion. After the
newly acquired firm is integrated, institute steps to facilitate a smooth
blending of cultures. Reassure others that not
everything needs to be done by everyone at the same time. Clear and constant
communication is key – it is the most important thing to do not only at the beginning, but at all times going forward. Other actions include
staff sharing/swaps, social gatherings, cross-office project collaborations, assigning
a buddy with a similar role,
focused training for fitting in with existing teams for ongoing projects, peer
group meetings, and social activities to help break the ice and create friendship bonds more quickly. And always, always, constant and clear
communication, both top down and bottom up. Pete Giovenco, P.E., of Bergmann, stressed: “We
communicate reasonable expectations.”
Dan Noble shared this 10-step
integration plan to follow acquisition:
1. Begin a cross-functional communication plan.
2. Move into integration of people, processes, and technology.
3. Share the business case for acquisition and boost employee morale by communicating with all employees about
the benefits of integration and the importance of
4. Clearly articulate a unified vision of the future.
5. Executive presence at acquired company – ask a lot of questions to get to know
acquired company and their people on a more intimate basis.
6. Introduce the Integration Team.
7. Begin a deep analysis of all operations.
8. Share and interpret operational organization charts.
9. Begin conversations with acquired clients.
10. Review all client contracts.
What I haven’t mentioned are
finances: financial condition, valuation,
expectations on both sides, elements of the deal, and future compensation, to mention a few. In considering
mergers or acquisitions, both cultural fit and financial conditions must be
addressed. As I stated earlier, some firms prefer
one, some prefer the other. Both take time. In the final analysis, it doesn’t
matter where you begin as long as both the cultural and financial issues are
raised and addressed to the point that both parties’ concerns are resolved at
least enough to inform a decision to keep moving
forward – or to stop.
Larry Barr, FAIA, Principal, Quinn Evans Architects
Ray Bouley, Chief Growth Officer, Cooper Carry
Richard Dattner, FAIA, Principal, Dattner Architects
Carl J. Davis, CEO, Array Architects
J. Peter Devereaux, FAIA, CEO, Harley Ellis Devereaux
Timothy Dufault, FAIA, LEED AP, President & CEO, Cuningham Group
Pietro (Pete) Giovenco, P.E., President & CEO, Bergmann, P.C.
Phil Harrison, FAIA, LEED AP, President & CEO, Perkins and Will
Dan Noble, FAIA, FACHA, LEED AP, President & CEO, HKS, Inc.
L. Braford Perkins, FAIA, MRAIC, AICP, Chairman, Perkins Eastman
Shriver, FAIA, Principal, Strada, LLC
Peter Piven, FAIA, is the principal of Peter Piven
Management Consultants, the firm he founded in December 2009. Piven has
helped architects and other design professionals improve their practices in the
areas of strategic planning, marketing, partnering, financial management,
valuation, and, especially, ownership and leadership transition.
He is the
author of Architect’s
Essentials of Ownership Transition, with William Mandel, and of Architect’s
Essentials of Starting a Design Firm and Architect’s
Essentials of Starting, Assessing and Transitioning a Design Firm, with
Bradford Perkins, FAIA.