> Find out how A/E firm leaders make sure employees don't feel blindsided or marginalized by M&A activities.

Few moments in business are as exhilarating- or as terrifying- as a merger or acquisition. As an A/E firm leader, you're not only leveraging your firm's monetary value or line of services- you're making a deal that could seriously affect the lives of your existing and soon-to-be employees. So how do you make sure employees know that they're still Number 1? How do you ensure that an M&A deal does not erode employees' loyalty in your firm?

Outline the upsides early on

Stephen Wagner, senior vice president of the infrastructure group at 7,500-person worldwide consulting and engineering firm Tetra Tech, Inc. (Pasadena, CA), says that, during two acquisitions in early 2006, the firm eased employees into the transaction.

"Both companies were ones that we had known well from previously working on projects together, and several employees in both companies knew each other," Wagner says. "We found that employees in both groups were excited about the acquisition because it created new opportunities for career advancement, and new projects, and services that we could bring to our clients."

Firm leaders kept spirits high by emphasizing that message on both sides of the acquisitions, and by keeping employees in the loop as much as possible.

"It was made known to all employees of both groups well in advance that an acquisition was pending," Wagner says, although, "because of confidentiality agreements, the name and other specific information could not be communicated to employees" until the acquisition was publicly announced. "Tell them all you can as soon as you can, so that any surprises and uncertainty are mitigated as much as possible."

Keep changes to a minimum

In both cases, Tetra Tech assumed the acquired companies' office leases and kept the groups in their existing locations to lend more consistency to the transaction.

The biggest challenge came in integrating the staffs and projects of the acquired companies into existing business systems without disrupting productivity or comfort level.

"Changes like payroll procedures, employee benefits, and project management tracking and reporting are all challenging for employees merging into a new company," Wagner says. "It is also challenging for the acquiring company's staff to deal with all the details of integrating the employees, their projects, and their clients' needs."

At Tetra Tech, firm leaders met with each employee to understand his or her specific concerns and needs. The firm also held company meetings and social events to provide a forum for all employees to get to know one another, Wagner says. "We did our best to structure projects and other business activities so that teams involving employees from each group began working on projects together early and often."

Advises Wagner, "Remember, without keeping the staff, projects, and expertise of the acquired company mostly intact, you may have significantly eroded the investment you have just made."

Put in face time

Chuck Hollingsworth, president and CEO of Engineering & Environmental Consultants, Inc. (Tucson, AZ), a 130-person engineering and environmental services firm, says that the 20-year-old firm has had four M&A deals and recommends being cautious of divulging details of the transaction too early.

"You really want to make sure you have an agreement among the owners before you announce anything, because there have been a lot of other potential M&A deals that haven't worked out," Hollingsworth says. "You don't go tell everyone you're going to do this and then have it not happen."

Once he is reasonably sure that a deal will go through, he says, "I try to let everyone know the facts as soon as possible. At that point, it's a matter of convincing them that this is a better situation for everyone."

This includes emphasizing what new services the company can now offer and the increased opportunities for career growth that stem from the deal.

In order to make employees feel good about an M&A deal, Hollingsworth says he puts in a lot of face time and acquaints (or re-acquaints) himself with firm members, their roles, and their projects.

Hollingsworth credits the firm's HR manager for keeping employees happy throughout the most recent acquisition this summer. "She interviewed everyone individually, getting to know them, what they were like, and what their capabilities are, and answered a lot of questions about benefits, pay, and everything else that comes with essentially moving to a new company," he says.

Review best practices for both firms

Jim Dennell, president of Beringer Ciaccio Dennell Mabrey (BCDM) (Omaha, NE), a 69-person firm offering architecture, engineering, interiors, landscape architecture, and construction management services, says the firm has done two mergers- in 2004 and this summer- and believes in telling staff early to encourage loyalty and buy in.

On the first merger, "we told staff even before we signed a letter of intent to merge," Dennell says. "Once the key stockholders were thinking about it, we brought employees across the company into the process to evaluate that."

Acknowledges Dennell, "Quite frankly, maybe it was naïve, but both (firms) came from a very family-based culture and pretty much everything was on the table, to a point where people could understand and knew that they were all going to have to live with it."

One positive outcome was that the first merger created a forum to improve the firm's best practices and empowered staff with opportunities to create out-of-the-box ideas.

"Especially on the first one, we reviewed best practices, both to get to know each other and to glean the best of both and create a hybrid. It was not a case of one dominating the other, but objectively determining what works best," Dennell says.

The firm organized social gatherings in Omaha- "We had been working jointly on projects for a few years, so it wasn't like, 'Who are you guys?'" Dennell says- and just added video conferencing capabilities, which "makes you really feel that you're part of the office and really helps, especially in a merger, for face time and personality."

Somewhat by design and somewhat by necessity, BCDM was able to share resources on projects with the firms early on. "Although it was an expense, we brought people (from the other offices) here for a period of time to get familiar." There was no drop-off as far as efficiency, and everybody began to feel connected, he says.

Dennell recommends that dealmakers really take the time to delineate their expectations at the front end of the transaction.

"For every hour you spend on that prior to finalization, you save 10 on the other end," Dennell says.- RACHEL LEBEAUX (rlebeaux@zweigwhite.com)

For more information on managing employees, check out ZweigWhite's Leadership Nuts & Bolts: 330 Action Items for Managers of A/E/P Environmental Consulting Firms at www.zweigwhite.com/bookstore or call (800) 466-6275.

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