Stantec, one of the industryâs largest architecture/engineering firms, has signed a letter of intent to acquire Chicago-based VOA Associates, a top-10 architectural firm with eight offices and 280 employees in the U.S., Brazil, and China.
Based in Edmonton, Alberta, Stantec operates from over 250 offices worldwide. Its 15,000 employees include 3,800 who work in its building design practice, which the acquisition of VOA is expected to bolster.
âVOA strengthens our collective ability to grow our building practice in U.S. markets,â said Bob Gomes, PE, Stantecâs President and CEO. âTheir talented staff has produced an impressive portfolio of workplace, healing, leisure, learning, civic, and entertainment venues.â
Stantec is acquiring VOAâs stock, but it did not disclose the terms of the agreement. If the parties complete this deal in late March, as planned, it would be Stantecâs 13th acquisition since January 2014. Recent transactions include its July 2015 purchase of certain assets and liabilities of VI Engineering, a 30-person firm, and the August 2015 acquisition of Irvine, Calif.-based, 60-person VA Consulting, a community development, transportation, and water-engineering firm.
In its financial report for the quarter ended September 30, 2015, Stantec reiterated its goal to be a top-10 global design firm, and to grow its business at a compound average rate of 15% per year. Through the first nine months of 2015, Stantecâs gross revenue increased by 15.1% to 2.167 billion Canadian dollars (US$1.55 billion), and its net income rose by 3.7% to C$131.1 million.
âJoining Stantec expands horizons and opportunities for our staff and clients,â says Michael Toolis, AIA, LEED AP, VOAâs Chairman and CEO. âBoth firms share a commitment to design, a global growth strategy, and market diversity.â
Stanis Smith, SVP with Stantec, tells BD+C that VOAâs leadership âwill absolutelyâ stay on post merger. Stantecâs operations are divided into four groups, and VOA will be folded into its Buildings Group, whose management structure will be altered to accommodate this integration. Â
Smith says the two firms had been discussing this merger for several months. âWhat we saw is a complimentary fit, with no redundancies. Itâs a marriage that make sense in both directions.â Smith adds that during those talks, Stantec and VOA officials identified a number of project opportunities that they could pursue jointly.
Smith says Stantec looks at acquisitions âas a way of getting better, not just bigger. Growth is not the design, but the outcome. You wouldnât believe the number of inquiries we get, but weâre very selective in our acquisitions, where weâre looking for complimentary skills, geographies, or both.â
Toolis tells BD+C that VOA had considered private equity and international AEC firms as possible suitors. By choosing to join forces with Stantec, VOA âis ready to take another stepâ by âgaining access to [Stantecâs] size, portfolio, and talent.â
Toolis notes, too, that by acquiring VOA, Stantec will be doubling the size of its New York office, and significantly increasing its presence in Chicago, where VOA employs 140 people and Stantec 50. VOA is active in Orlando, where Stantec didnât have an office, and is big in the entertainment and defense sectors, which hadnât been as prominent for Stantec.
âWe filled some gaps, and they strengthened our bench,â says Toolis.
The Stantec-VOA agreement comes at a time when consolidation (or rumblings about potential deals) within the AEC industry appears to be gaining momentum. Earlier this month, for example, London-based GB Fitzsimon, a cost and project consultant, announced it would merge with Cumming, a Los Angeles-based international project management and construction services firm.
A survey conducted last year by Zweig Group found that 42% of the architecture and planning firms polled were considering acquisitions, compared to 30% in 2012; and that 68% of the firms polled include a merger or acquisition in their strategic plans for the next five years.
VOA has been in business 46 years and is currently a decent-sized companyâit generated more than $70 million in architecture revenue in 2014. But Toolis says his firm acknowledged that size matters at this moment in its history.
âBefore the Internet, we depended primarily on our relationships," says Toolis. "But now that weâre at a certain level, weâre spending more on our website and social media, which gets expensive. And gets harder and harder to compete.â
Toolis says that on practically every job it bids, VOA goes against the largest firms in the world. Becoming part of Stantec âgives us a lot more firepower.â And while the VOA brand will disappear, Toolis says his companyâs relationships with clients âdonât necessarily depend on our name.â
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