Acquisitions have always been a means to maximize value and create a sustainable competitive advantage for engineering and construction (E&C) firms. However, acquisitions of any size are a major undertaking for both the acquirer and the target. Substantial financial returns are required not only to create stockholder value, but also to justify the enormous investment of managerial time and effort that goes into a takeover. A handful of E&C firms have been active and masterful acquirers; putting these firms aside, acquisition results for the masses have been mixed. Often, the rationale is flawed, or the post-acquisition strategy ill-executed in cases where the strategic relationship does not last. Acquisition fever, failure to recognize the costs of an acquisition, or a flawed understanding of the target company has derailed many plans for expansion. Within the E&C industry, acquisitions are a vital driver of competition and growth among varied players. However, the post-acquisition strategy of each can differ significantly. At one end of the spectrum, the parent company allows the acquired firm to operate entirely as an independent subsidiary - we term these 'operators.' At the opposite end, the parent company works to fully integrate the culture and processes of the acquired firm into their own, effectively expanding the parent company - typically known as an 'integrator.' While either strategy will work, it is important to note that successful acquirers make a very conscious decision about where their strategy falls on the operator-integrator spectrum. They are successful acquirers because they have a defined acquisition integration strategy.Read More
