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2020 PRINCIPALS, PARTNERS & OWNERS SURVEY REPORT This eye- opening report covers ownership, stock appreciation, buy/sell agreements, non-compete agreements, voting rights, roles, responsibilities, perks, compensation, and more. This report has data on the following: ❚ ❚ Principal compensation, benefits, and perks ❚ ❚ Common issues and challenges related to running an AEC firm ❚ ❚ Qualifications, job requirements, and demographics of principals, partners, & owners in the industry ❚ ❚ Employment agreements, non-competes, and stock buyback provisions Visit to learn more.

Driving Financial Results Webinar


Solid financial management is crucial to the success of any company, and firms in the AEC industry are no exception. This short course provides an overview of business financial management – specifically tailored to our industry – to help firm leaders make informed decisions that drive results.

CHAD CLINEHENS, from page 1 considering ownership, they must understand the many trade-offs that come with ownership, including: ❚ ❚ 46 percent of principals have signed a non-compete agreement. This means that if you leave the firm under certain circumstances, you may not be able to take a job where there is a perception of competition. ❚ ❚ 46 percent of principals have signed a personal guarantee for some or all of their firm’s debts. This means that your personal assets are at risk if the company experiences financial stress. Many aspiring owners do not understand the risk this introduces into their personal lives. ❚ ❚ 30 percent of owners have their stock value tied to how they leave the firm. This means that a portion of your investment in the firm could be reduced if you leave the firm or have certain life circumstances that require liquidation. Typical conditions include leaving to compete, divorce, death, and retirement. ❚ ❚ Owners are needed to keep the firm going. Bringing in new owners is more than a retention tool, it is an essential financial instrument to transition the firm from one generation to the next. It is critical to maintain the capitalization of the firm, meaning that as shareholders sell back, someone needs to be there to buy the stock. To make sure that is the case, you need to create a strong internal market for the stock. The stock has to appreciate, pay annual returns to the owners, and be reasonably liquid in case the shareholder needs to sell it. To create these benefits above, you must have the type of business partners that have the ability to generate business success. ❚ ❚ Experience can be overrated. Using experience as a major qualifier for ownership can cause firms to overlook great candidates. Of those firms that use experience to select owners, the average career experience is 11.7 years, and of those that have minimums on experience in the firm, the average is 6.4 years. We work in a number of firms where we can identify younger staff who would be far better owners than older more experienced staff. Again, it goes back to viewing ownership through the business partner lens. There are aspiring leaders in your firm, some possibly very young, who have tremendous energy and business savvy to put to work for your firm. Empowering them with ownership puts jet fuel on their careers and their contribution to your company. New challenges, like COVID-19, really put our firms and ownership teams to the test. Firms should consider an evolved view of ownership through the business partner lens. In the short-term, it comes down to who can we count on to weather this storm with us. During this pandemic, we need strong and determined partners to lock arms with us and make the hard decisions and take the necessary risks to ensure survival. In the longer-term, creating an ownership team that is best suited to drive performance and value offers a tremendous competitive advantage. All of this requires a strong leader at the top of the company and a lot of discussion amongst the current principal group to come to a consensus on what types of characteristics an owner of your firm should exemplify. Break out of the spreadsheet mentality and build an ownership team that drives value and performance with grit and a long-term mentality. CHAD CLINEHENS is Zweig Group’s president and CEO. Contact him at


1200 North College Ave. Fayetteville, AR 72703 Chad Clinehens | Publisher Sara Parkman | Senior Editor & Designer Christina Zweig | Contributing Editor Liisa Andreassen | Correspondent

Tel: 800-466-6275 Fax: 800-842-1560

Email: Online: Twitter: Facebook: Published continuously since 1992 by Zweig Group, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/year) $250 for one-year print subscription; free electronic subscription at © Copyright 2020, Zweig Group. All rights reserved.

© Copyright 2020. Zweig Group. All rights reserved.


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