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NEW FROM ZWEIG GROUP
2020 PRINCIPALS, PARTNERS & OWNERS SURVEY REPORT This is a comprehensive study of owners and top managers of U.S. AEC firms. This report covers ownership, stock appreciation, buy/sell agreements, non-compete agreements, voting rights, roles, responsibilities, perks, compensation, and more. The 2020 Principals, Partners & Owners Survey 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, and owners in the industry ❚ ❚ Employment agreements, non-competes, and stock buyback provisions ❚ ❚ How principals manage time and break down the work day Key features include: ❚ ❚ Compensation: The report has comparative data on salaries, bonuses, owner distributions, total compensation, and perks by firm type, region, size, growth rate, and firm profit, and by the principal’s title, the percentage of ownership, age, and gender. ❚ ❚ Perks: What’s normal and what’s excessive in the area of “perks” for principals? Get statistics on every kind of perk – including vacations, cellular phones, country club memberships, tax preparation, and auto allowances. ❚ ❚ Roles & responsibilities: Data on how many hours principals typically work per week, their chargeability, time spent on different tasks, vacation, and more. We also asked principals how they felt about their fellow owners and board of directors. Click here to learn more.
WILL SWEARINGEN, from page 1
On Wall Street, stock buybacks are usually met with open arms and signal a positive forward-looking trajectory. It rewards shareholders and gives the company the opportunity to raise capital sometime in the future by reselling those shares. But in a privately held design firm, the buyers are finite. If you have a few owners who are looking to exit over a staggered 10-year period, a redemption of one or more owners’ stock may make it more difficult for other owners to exit in the future. The “stock market” in a privately held firm is not an expansive exchange where you can pick and choose your options from a long list. You have to be very focused on your goals and the initiatives that will get you to those goals. A large redemption by a firm can stunt growth efforts as capital that should be used to expand services, markets, and capabilities now has to be used to pay out exiting shareholders. Zweig Group has found over the years that the most successful companies are ones where new owners have had to contribute some kind of capital of their own. Zweig Group’s 2020 Principals, Partners & Owners Survey Report found that in fast growth firms almost 70 percent of owners contributed their own capital or borrowed money to buy-in. In slow growth firms this number was 44 percent, stable firms 18 percent, and in declining firms just over 15 percent borrowed money to invest. Where outside capital was used to finance a portion or all of the investment, firms were able to grow and provide more opportunity for their staff. This seems to be a pretty clear distinction as it pertains to “what it means to be an owner” in these high growth firms. If you are looking at your potential transition and are not sure how it will unfold, you need to first identify your pool of buyers and begin getting them involved in business planning and overall firm management. Develop trust and the proper skill sets in these individuals. This will help create a more viable transition plan by bringing other motivated professionals into the fold. In other instances, a redemption, with no intent to re-sell the shares, makes sense as an exit strategy. In others, it complicates the exit for other partners and can become an issue. Though there is a lot to think about and properly unpack in a transition planning effort, don’t let the concept of treasury stock cloud your strategy. WILL SWEARINGEN is director of ownership transition advisory services at Zweig Group. He can be reached at wswearingen@zweiggroup.com.
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THE ZWEIG LETTER OCTOBER 5, 2020, ISSUE 1362
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