We were proud sponsors of the OAA Annual Conference, Architecture Matters, in Toronto May 11 - 13, 2016. We provided a Lunch & Learn on firm ownership and growth strategies, as well as a presentation and panel discussion on Maintaining Financial Sustainability While Growing Your Firm.
Lunch & Learn session - Firm ownership and growth strategies
We kicked off our Lunch & Learn with a short presentation outlining Shimmerman Penn's capabilities and experience, introducing those who might not know Shimmerman Penn to our entrepreneurial outlook and our dedication to gaining a full understanding of our clients' businesses. Our Architecture, Engineering and Design (AED) group has been serving the industry for 20+ years, and in fact we assisted the OAA in drafting proposed changes to the Architects Act (Ontario) in 2010.
Following the short presentation, Shimmerman Penn partners and managers sat at tables with participants to facilitate engaging roundtable discussions, primarily about succession planning, staff retention and ownership transition.
At one table there was a lot of discussion on succession planning. Nearly all of the participants were at the stage in their career when they were starting to think about retirement and how they can pass their business on to the next generation. The group discussed options for bringing in key employees as minority owners so they can be groomed to take over the business in the next 5-10 years, and how to help the employees finance the buy-in.
Other topics of discussion included:
- Benchmarking metrics such as the net fee multiplier ratio, the overhead ratio and the contract backlog. Attendees were interested to know the best ways to utilize these benchmarks and we provided them some industry averages we had compiled from our AED client base so they could compare their firms ratios vs. the industry.
- Ownership structures - The use of holding companies to defer and minimize taxes.
- How to value a firm. We discussed current trends on how to value a firm considering Goodwill and Book Value components.
The discussion topics at our Lunch & Learn session foreshadowed the topics in our formal presentation, and many conference attendees who attended our Lunch and Learn did in fact attend our Conference session the next day.
Presentation and Panel Discussion: Maintaining Financial Stability While Growing Your Firm
At our formal conference presentation, Amir Fathollahzadeh, Elaine Pantel and Mike Wynen discussed the elements of a successful architecture firm, including:
- different ownership structures and the business and tax implications of these;
- understanding the value of your firm, including current trends in valuations including book value and goodwill;
- effective compensation strategies, including performance criteria and goals, as well as components of remuneration; and
- key industry financial benchmarks and metrics, such as net fee multiplier, overhead rate, contract backlog, and hit ratio or proposal win rate.
The presenters told the over 100 attendees that this presentation was just scratching the surface of these complex topics, and to refer to the wealth of information on the USB key that was provided to each attendee. We plan to share some of this information here in our newsletters over the next few months, so watch this space!
Next a prestigious panel was introduced, including:
- Susan Ruptash: Managing Principal, Quadrangle Architects
- Maureen O'Shaughnessy: Principal, CS&P Architects
- Brent Whitby: Partner, Kirkor Architects and Planners
- Kelly Gilbride: Partner, Stevens Burgess Architects
- Lind Nyman: Director, Parkin Architects
The panel discussed a whole host of issues, such as what succession planning is like in practice, the different issues that arise during transition and how founders and senior owners can facilitate that, what qualities the panelists look for in a young leader, how to become a leader and how developing a management style takes time.
The last question asked of all the panelists was how they would define success. Senior owners who are transitioning ownership said being able to let go and knowing the firm will continue to thrive was their definition of success, while young leaders mentioned that success would be that they are able to step in to the leadership roles with confidence. A cohesive culture where people are happy to work was crucial to many of the panelists.
The feedback from the presentation was overwhelmingly positive, with one attendee commenting: "Best course I have ever been to at the OAA hands down. Thoughtfully presented, great content and current to the issues facing architects today! Thanks!"
