NELSON, the Philadelphia-based interior design firm celebrating its 40th anniversary this year, has merged with two other firms, Cope Linder Architects and KA Architecture, to position itself as a full-service architectural and design outfit across multiple nonresidential building types.
The combinations became effective on June 1.
Founded in 1977, NELSON has steadily expanded for more than 15 years, primarily through acquisitions. In the past two years alone, it bought EHS Design and Marvin Stein Associates in Seattle, AAI in San Jose, and VeenendaalCave in Atlanta.
John “Ozzie” Nelson, Jr., NELSON’s Chairman and CEO, tells BD+C that his company’s marriages with Cope Linder and KA are the first of a series of mergers that NELSON plans to announce this year. Nelson says his company in 2017 would double its revenue to around $200 million and its workforce to “north of 1,200” from 625 at the start of the year.
Nelson and Ian Cope, AIA, LEED AP, Principal with Cope Linder Architects, had been talking, on and off, for 27 months about bringing their respective companies together. Cope says his firm had also been approached by two other suitors—including a Canada-based engineering firm—which it ultimately rebuked, he says, because it feared it might lose its identity with clients “who are concerned about all of this massive absorption of AEC firms” going on in the industry.
The addition of 50-year-old Cope Linder, also based in Philadelphia, makes NELSON that city’s third-largest studio, with more than 125 employees there. Cope Linder is best known for its work in the commercial, hospitality, gaming, and entertainment sectors. One of the first projects to be completed under the combined company will be the 51-story, 773,000-sf W and Element Hotel in Philadelphia, which opens next year.
Craig Wasserman, RA, Executive Vice President at KA Architecture, says his firm has been predominantly a core and shell builder and planner. It has tried to diversity on its own, “but it never worked out,” he explains. The merger with NELSON, on the other hand, “is the perfect compliment,” and allows KA to go to market as a full-service firm. “We’ve been telling our clients about this merger, and their reaction has been fantastic,” says Wasserman.
Cleveland-based KA Architecture—which was founded in 1960 and, prior to the merger, was into its third generation of ownership—has lent its design services to, among other projects, retail centers, mixed-used developments, and hospitality. Its merger with KA represents Nelson’s third location in the Midwest. The 1.3-million-sf Liberty Center in San Francisco will be the first major project completed under the new brand KA Architecture, A Nelson brand. (KA is the Executive Architect on this project.)
KA and Cope Linder are also forming a core-and-shell practice within NELSON, says Wasserman. Nelson states the combinations place NELSON more competitively into the high-rise architecture market.
The mergers also allow NELSON to launch a newly formed Hospitality Practice, and to beef up its Retail Practice.
Merging for the right reasons
Diversification is certainly one of the drivers behind NELSON’s acquisitive streak. For example, it is close to announcing another acquisition of a firm in New York that surveys and inspects buildings. Under Title 11, buildings over six stories high are required to be surveyed every five years. The firm NELSON would acquire already handles 800 of the 14,500 buildings in New York that fall under that regulation.
NELSON also runs a $13 million MEP engineering firm under a separate brand. But Nelson has never been a believer in combining architecture with other disciplines, such as engineering or building surveying, under one roof. He thinks the better solution to integrate vertically is to create holding companies to run those businesses separately, as it will the core-and-shell entity.
“Culture trumps everything else” when it comes to merging companies, says Nelson, speaking from experience. “It’s important for companies to look at the complete nature of coming together, and to be realistic.” He observes that, too often, smaller firms want to merge with larger firms just to take advantage of their marketing and sales clout without giving enough thought to how such a move might impact their employees and customers.
Nelson confirms that the managements of Cope Linder and KA are remaining with the company. He says NELSON looks for acquisition partners whose managements want to stay on with the combined firm.
When asked why so much AEC consolidation seems to be happening all of a sudden, Nelson says that relationships between firms and their clients don’t matter as much as they used to. “Everything has become a beauty competition,” and size, he says, has become a more important criterion to be considered for certain projects.
In the future, he says that NELSON will be looking to strengthen its position in Texas and the Washington, D.C. market.
Related Stories
| Aug 11, 2010
Construction unemployment rises to 17.1% as another 64,000 construction workers are laid off in September
The national unemployment rate for the construction industry rose to 17.1 percent as another 64,000 construction workers lost their jobs in September, according to an analysis of new employment data released today. With 80 percent of layoffs occurring in nonresidential construction, Ken Simonson, chief economist for the Associated General Contractors of America, said the decline in nonresidential construction has eclipsed housing’s problems.
| Aug 11, 2010
Billings at U.S. architecture firms exceeds $40 billion annually
In the three-year period leading up to the current recession, gross billings at U.S. architecture firms increased nearly $16 billion from 2005 and totaled $44.3 billion in 2008. This equates to 54 percent growth over the three-year period with annual growth of about 16 percent. These findings are from the American Institute of Architects (AIA) Business of Architecture: AIA Survey Report on Firm Characteristics.
| Aug 11, 2010
CHPS debuts high-performance building products database
The Collaborative for High Performance Schools (CHPS) made a new tool available to product manufacturers to help customers identify building products that contribute to sustainable, healthy, built environments. The tool is an online, searchable database where manufacturers can list products that have met certain environmental or health standards ranging from recycled content to materials that contribute to improved indoor air quality.
| Aug 11, 2010
ICC launches green construction code initiative for commercial buildings
The International Code Council has launched its International Green Construction Code (IGCC) initiative, which will aim to reduce energy usage and the carbon footprint of commercial buildings.Entitled “IGCC: Safe and Sustainable By the Book,” the initiative is committed to develop a model code focused on new and existing commercial buildings. It will focus on building design and performance.
| Aug 11, 2010
Green Building Initiative launches two certification programs for green building professionals
The Green Building Initiative® (GBI), one of the nation’s leading green building organizations and exclusive provider of the Green Globes green building certification in the United States, today announced the availability of two new personnel certification programs for green building practitioners: Green Globes Professional (GGP) and Green Globes Assessor (GGA).
| Aug 11, 2010
Potomac Valley Brick launches brick design competition with $10,000 grand prize
Potomac Valley Brick presents Brick-stainable: Re-Thinking Brick a design competition seeking integrative solutions for a building using clay masonry units (brick) as a primary material.
| Aug 11, 2010
Outdated office tower becomes Nashville’s newest boutique hotel
A 1960s office tower in Nashville, Tenn., has been converted into a 248-room, four-star boutique hotel. Designed by Earl Swensson Associates, with PowerStrip Studio as interior designer, the newly converted Hutton Hotel features 54 suites, two penthouse apartments, 13,600 sf of meeting space, and seven “cardio” rooms.