Practice Management

 View Only

Clouds

Quick Links

Who we are

The Practice Management Knowledge Community (PMKC) identifies and develops information on the business of architecture for use by the profession to maintain and improve the quality of the professional and business environment.  The PMKC initiates programs, provides content and serves as a resource to other knowledge communities, and acts as experts on AIA Institute programs and policies that pertain to a wide variety of business practices and trends.

    

AIA Practice Management Digest – September 2016

By David B. Richards FAIA posted 09-07-2016 01:36 PM

  

Ownership Transition

 

Letter from the Editor

By David Brent Richards, FAIA

 

The PM Digest seeks to provide a range of varied opinions and points of view on a topic of interest to those managing practices.  This quarter we have considered Ownership Transition.  As the baby boomer generation moves into retirement age, many firm owners are looking to transition out of their role in the firm and into retirement.  Setting the stage for successful transition can be a long and challenging process. 

Articles in this issue of the PM Digest consider several aspects of Ownership Transition. Timothy Hawk, FAIA of WSA Studio shares his personal experience in the challenges of becoming the owner of an existing firm; Hugh Hochberg of the Coxe Group Inc. speaks to the need to identify, develop and retain future leaders and to institute a transition plan early; J. Tim Griffin, P.E., MBA, LEED AP a PSMJ consultant provides insight on ownership transition from the Millennial’s point of view;

 Stephen Epstein, a strategic advisor with Strogoff Consulting, Inc. shares ideas related to designing an effective leadership development program; Brad Wilson, Senior M&A Consultant with PSMJ Resources considers the challenges of internal transition after the 2008 economic downturn; David S Choen, Esp, ASA provides an overview of value in a shareholder transition and John Bierly, AIA and Clark Davis, FAIA both of the Cameron MacAllister Group discuss three alternates for ownership transition including an ESOP.

 

Features

Addressing relevance
By Timothy C. Hawk, FAIA, President WSA

Transitioning a firm is challenging, and only one thing can ensure success. Our firm was established at its conception with a vision for a specific practice methodology. Mr. Wandel and Mr. Schnell established a firm rooted in respect for participants, design context, and the professional obligation of the architect. For thirty-five years they continually worked to implement that mission, and those of us who help it endure share that same passion. We have committed ourselves to a practice model which elevates our day-to-day work.

Leadership and ownership transition
By Hugh Hochberg, The Coxe Group

Of the many strategic and operational things that get owners’ attention, high on the list is evolution of ownership.  However, addressing it as an ownership issue dramatically understates and m isrepresents the challenge and the opportunity.  The real issue for most firms is expansion of leadership and ownership, followed by transition (in the context not just change, but also divesting of ownership.)

How to get your millennials to buy into firm ownership
By J. Tim Griffin, MBA, PE, LEED AP, Consultant, PSMJ Resources

While current baby boomers are looking to retire, few Gen Xers are ready to take over the reins. Because there’s not a lot of them, trying to transfer your firm to Gen Xers is going to be difficult. And if you are planning ten years down the road, you are thinking the following generation, i.e. millennials. In fact, front-edge millennials are now just coming into the heart of their careers where they can really push a business forward. And so the question arises, how do millennials view A/E firm ownership? What are their reactions when approached with such offer?

Designing an effective leadership development program
By Stephen Epstein, strategic advisor with Strogoff Consulting, Inc

Leadership is a hot topic and for good reasons.   Due to rapidly shifting demographics and an expanding economy, firms that provide architectural, engineering and other professional design services are struggling to fill a growing leadership vacuum.  The good news is that an effective leadership development program can help firms fill this vacuum while creating tremendous opportunities for baby boomers, Gen X’ers and millennials.

The challenge of internal transition in today’s A/E arena
By Brad Wilson, Senior M&A Consultant, PSMJ Resources 

If you are a firm leader looking to retire, ownership transition is probably forefront in your mind. Looking at internal sales of stock ownership, processes, and partnership agreements, however, much has changed since the 2008 downturn. Generational forces at work in today’s architecture firm present a major challenge to effective ownership transition. Thus, as a firm leader, you must do more than consider new or revised terms in your buy-sell agreements. To be successful, you need to start grooming your successors long before you decide to take your exit.

Staying independent: transitioning to the next generation?
By David S. Cohen, Esq., ASA

Anecdotally, merely about one in three founder(s) are able to transition their ownership to the second generation and only one in ten make it to their third generation.  The remaining nine firms either decide to close up shop or find an external transition plan by becoming a part of another firm through mergers and acquisitions. So how do you create a firm ownership transition program that would facilitate you to be one of the 33% and then one of the 10% to stay independent? The following is what we are hearing at seminars, conferences, and from our clients about where the challenges are and how to resolve these items to create a successful ownership transition program.

Choosing the best ownership transition strategy
By Clark Davis, FAIA, and John Bierly, AIA, Principal Consultants, Cameron MacAllister Group

Architecture is an intensely personal profession. Most practices are formed around individuals or partners who share a common passion for their work. Many practices don’t survive beyond their first-generation leaders, because the founders haven’t taken steps to create sustainable firms. 

What is your firm’s life expectancy?  Are you committed to a future beyond your current generation of ownership?   If so, what are you doing about it?

 

Contribute to the Digest

Intellectual Property Rights will be discussed in the next issue of the Practice Management Digest. If you would like to share an article on this topic, please contact David Richards at drichards@rossetti.com or Seth Anderson at sanderson@ascentarch.com. We welcome comments on this issue and ideas for future issues.

 

Best Practices

AIA Best Practices are a compendium of relevant knowledge gained from experience that is immediately applicable to a task at hand. The articles are distilled to their essentials, packed with usable information, linked to related resources and kept relevant and up-to-date by inviting feedback from practicing professionals. 

A new AIA Best Practice is available: But Words Will Never Hurt Me, by Thomas S. Townes, AIA, FSMPS, CPSM, Director Business Development at Clark Nexsen and Andrew J. Carlowicz, Jr. of Hoagland, Longo, Moran, Dunst & Doukas LLP Attorneys at Law.

As Architects, we are guided to focus our attention on the right details and the completeness of our overall design package. As marketers our goal is to promote the abilities and talents of our firms. It is necessary to differentiate ourselves from other firms with the ultimate intent to win a client or a project. But at what cost? While we may believe that our liability lies only with our performance or standard of care, we must be careful not to cross the line with what we promise the client, even in the words we choose in marketing our firm or pursuing a particular project.

Read But Words Will Never Hurt Me »

 

News and Events

The Practice Management Knowledge Community is sponsoring a mini-MBA course in association with the AIA South Atlantic Region at their Conference on September 29, 2016 in Savannah, Georgia.

The 2016 Mini-MBA Program will tackle tough issues that mid-career architects are facing or will soon be facing.  Industry leaders will break down the basics of business and management. The afternoon will move quickly with Speakers, Workshops and Panel Discussions. Topics covered include: career planning, thriving in middle-management, leading better meetings, networking, firm succession strategies, managing teams, and successful influencing leadership.  This program will add to—not repeat—material covered at past Mini-MBA programs.  Participants will also leave with resources to delve further into the areas they need to propel their individual careers forward.  Keynote addresses will be presented by Mark LePage of EntreArchitect and Marica McKeel of MM Studio, NYC.

Learn more »

0 comments
615 views