TZL 1584 (web)

WWW.ZWEIGGROUP.COM

May

2025,

Issue

1584

TRENDLINES

Increasing billing rates

15%

10%

How to create a stronger, more dynamic, and future-ready workplace – where everyone has the opportunity to thrive. Generationally speaking

I t’s a trope at this point for older generations generalizing about younger ones, especially in the workplace. These generalizations in pop-culture and the everyday office chatter have often been negative. While stereotypes are broad generalizations, they rarely capture the full reality of an individual. And they can be misleading – reinforced by confirmation bias in which we unconsciously notice behaviors that align with our assumptions while overlooking those that contradict them. Some common stereotype examples about younger generations include:

MORE ARTICLES n PHIL KEENEY: The clock is ticking Page 3 n MARK ZWEIG: Referrals Page 5 n HUGH SMITH: Building bridges before breaking ground Page 8 n MATT VERDERAMO: How to maintain a steady backlog Page 10 n JAMES GILMER: Maintaining proper licensure during M&A Page 12 According to Zweig Group’s 2025 Fee & Billing Report , many AEC firms have adjusted their billing rates over the past three years in response to rising expenses and shifting economic conditions. The data shows a median rate increase of 11 percent, with the lower quartile at 8 percent and the upper quartile at 15 percent. These adjustments reflect firms’ efforts to remain competitive, cover increasing operational costs, and maintain profitability in a changing market. Participate in a survey and save on a Zweig Group research publication.

Daryl Simons Jr.

“This generation is lazy and entitled.”

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■ “They don’t know what hard work is, and lack grit.”

“They need constant praise and validation.”

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“They have no loyalty to their employers.”

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“They don’t show up to work on time.”

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■ “They can’t handle criticism, and expect promotions without putting in the work.” But these judgments can absolutely cut the other direction as well, with negative stereotypes about older generations being equally pervasive:

“They’re stuck in their ways.”

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“They can’t keep up with technology.”

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■ “They’re not forward-thinking and don’t understand younger generations or their values.”

■ “They are too traditional or hierarchical in their leadership style.”

■ “They’re nearing retirement, so investing in them isn’t worthwhile.” If you found yourself nodding along to any of these statements, it might be worth reflecting a bit on potential biases, even if you have personal anecdotes that seem to reinforce them. While these thoughts and beliefs may feel harmless, they subtly shape our perceptions and interactions, often in ways we don’t even realize. THE HIDDEN COST OF STEREOTYPING IN THE WORKPLACE. Think about this, when we assume someone will behave a certain way based on their generation, does that change how we treat them?

See DARYL SIMONS JR., page 2

THE VOICE OF REASON FOR THE AEC INDUSTRY

Chad Clinehens | Publisher cclinehens@zweiggroup.com Sara Parkman | Senior Editor sparkman@zweiggroup.com Tel: 800-466-6275 Email: info@zweiggroup.com Online: zweiggroup.com/blogs/ news

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■ Millennials (born 1981-1996). Tech-savvy and adaptable, they entered the workforce during economic instability, struggling with student debt and job scarcity post-2008. Just as they gained career momentum, COVID-19 reshaped workplace dynamics again. As a result, they prioritize flexibility, workplace culture, and purpose-driven work. experienced disrupted education and an uncertain job market due to COVID-19. They value work-life balance, mental health, and inclusivity more than previous generations, challenging organizations to adapt to new workplace expectations while bringing fresh perspectives and social consciousness. BUILDING A WORKPLACE THAT WORKS FOR EVERYONE. It should be clear by this point that members of each generation bring something valuable to the table. The challenge for workplaces isn’t about favoring one over the other, but rather integrating strengths, addressing skill gaps, and fostering mentorship across generations. ■ Gen Z (born 1997-2012). True digital natives, they ■ Younger employees can benefit from the institutional knowledge, experience, and critical thinking of older colleagues. ■ Older employees can gain fresh perspectives, tech fluency, and innovative problem-solving techniques from younger generations. ■ Gen X and millennials often serve as the bridge – able to connect with both older and younger colleagues, creating an environment where knowledge flows in all directions. Rather than allowing generational stereotypes to create unnecessary friction, the workplace should encourage intergenerational collaboration through mentorship, training, and open dialogue. The reality is simple: Older generations have decades of skills and experience that remain incredibly valuable in AEC and beyond, even for those approaching retirement. Mentorship and advisory services will continue to be needed and valued. Younger generations aren’t going anywhere – they will soon be stepping into leadership roles, if they haven’t begun to do so already. By embracing mutual respect, continuous learning, and knowledge-sharing, organizations can create stronger, more dynamic, and future-ready workplaces – where everyone, regardless of age or background, has the opportunity to thrive. Daryl Simons Jr. is a talent consultant at Zweig Group. Connect with him at dsimons@zweiggroup.com.

DARYL SIMONS JR., from page 1

■ Do we hesitate to assign them opportunities, even if it means allowing room for failure? ■ Are we unconsciously judging the quality of their work differently based on their generation? ■ Are we less likely to consider them for leadership or growth opportunities? ■ Do our non-verbal reactions – tone, facial expressions, body language – reflect these biases? Think about how it feels when you enter a room and have a sense that someone there doesn’t like you – even if they haven’t said a word. That discomfort is real, and generational biases can create similar tension in the workplace, leading to division, resentment, and missed opportunities for collaboration. Beyond personal interactions, these biases influence how we build teams, assign responsibilities, and promote talent – potentially holding back individuals and limiting the organization’s growth. A MORE THOUGHTFUL APPROACH: UNDERSTANDING THE VALUE AND STRUGGLES OF EACH GENERATION. Rather than intentionally or unintentionally dismissing one another based on pre-conceived notions of our perceived generational differences, it’s important to consider the context in which each generation grew up, the challenges they navigated, the skills they honed, and the unique strengths they bring to the workplace. While these are still broad generalizations (albeit positive) and not indicative of every individual within that respective generation, recognizing these factors allows us to move beyond negative stereotypes and foster a more inclusive and collaborative environment, and deepening our understanding of the unique qualities an individual brings with them. For example: ■ Baby boomers (born 1946-1964). Grew up without personal computers, mastering in-person communication, problem- solving, and hands-on expertise. Many strive to stay relevant in a rapidly evolving workplace, adapting to technology while ensuring their experience and insights remain valued. ■ Gen X (born 1965-1980). The first to bridge the analog and digital worlds, blending traditional business acumen with tech adaptability. Often mentors to younger employees, they balance leadership with pragmatism but can be overlooked for promotions, caught between experienced boomers and tech-savvy millennials.

THE ZWEIG LETTER MAY 5, 2025, ISSUE 1584

OPINION

The clock is ticking

Government contractors must act now to secure CMMC compliance – or risk losing valuable federal contracts.

F or government contractors in the architecture, engineering, and construction industry, cybersecurity compliance is no longer an option; it’s a requirement. The Department of Defense’s (DoD) Cybersecurity Maturity Model Certification (CMMC) 2.0 framework is set to take effect on October 1, 2025, and failing to meet its standards could mean losing valuable federal contracts.

Phil Keeney

If your firm handles Controlled Unclassified Information (CUI) as part of government projects, compliance with CMMC 2.0 Level 2 and NIST 800-171 is mandatory. With the deadline fast approaching, now is the time to assess your cybersecurity posture and take the necessary steps to ensure compliance. Waiting until the last minute will put you at risk. WHAT IS CMMC 2.0 AND WHY DOES IT MATTER? CMMC 2.0 is the DoD’s response to growing cybersecurity threats, designed to protect sensitive government data across the defense industrial base. This updated framework simplifies compliance by consolidating security requirements into three levels, with Level 2 aligning directly with NIST 800-171, a set of security controls that all contractors handling CUI must follow.

For AEC firms working on federal contracts, achieving compliance means more than just meeting regulations, it’s about safeguarding your business, protecting sensitive project data, and maintaining your eligibility to bid on government work. THE ROLE OF THE SPRS SCORE IN COMPLIANCE. A crucial component of meeting CMMC 2.0 and NIST 800-171 standards is your Supplier Performance Risk System (SPRS) score. The SPRS score is a numerical representation of your organization’s adherence to NIST 800-171 controls. Before pursuing DoD contracts, contractors must submit their SPRS score, which the government uses to evaluate cybersecurity readiness.

See PHIL KEENEY, page 4

THE ZWEIG LETTER MAY 5, 2025, ISSUE 1584

■ WHAT STEPS SHOULD YOU TAKE TODAY? You can start today by: ■ Conducting a readiness assessment. Identify gaps between your current cybersecurity posture and CMMC 2.0/NIST 800-171 requirements. Then, develop a plan of action and milestones (POAM) to address deficiencies. ■ Strengthening your security controls. Implement multi- factor authentication, endpoint detection and response, and zero trust architecture. Secure your network with continuous monitoring and managed detection response. ■ Developing and maintain compliance documentation. Create or update your system security plan; establish incident response and data protection policies, and ensure your SPRS score reflects your latest compliance efforts. ■ Training your team. Conduct cybersecurity awareness training to ensure employees understand their role in protecting sensitive information, implement phishing simulations and security workshops to reinforce best practices. ■ Engaging with compliance experts. If you’re unsure where to start, working with specialists who understand government contracting cybersecurity requirements can help streamline your path to compliance. NEXT STEPS. The October 1, 2025 deadline is closer than you think. Firms that take action now will not only secure their compliance but will also gain a competitive edge in government contracting. If you’re uncertain about your firm’s cybersecurity standing or need guidance on the next steps, schedule a CMMC/NIST readiness assessment today. Our team specializes in helping AEC firms navigate cybersecurity mandates and can provide the support you need to meet compliance with confidence. SECURE YOUR CONTRACTS. PROTECT YOUR BUSINESS. ACT NOW. Contact SN to learn more and take our brief quiz to assess your CMMC readiness. Phil Keeney is managing director of Technology at Stambaugh Ness.

PHIL KEENEY, from page 3

■ Higher scores provide a competitive advantage. A strong SPRS score demonstrates your commitment to cybersecurity and makes your firm a more attractive partner for government projects. ■ Low scores can jeopardize contract eligibility. A poor SPRS score can disqualify your business from contract awards, even before CMMC 2.0 is fully implemented. ■ Regular updates are required. Firms must reassess and update their SPRS score as they implement security improvements, ensuring continuous compliance. THE RISKS OF NON-COMPLIANCE. The consequences of failing to meet CMMC 2.0 standards are severe: ■ Lost contracts. If you’re not compliant, you may be disqualified from bidding on federal projects. ■ Financial impact. Remediation costs can skyrocket if you wait until the last minute to address gaps. ■ Reputation damage. A data breach or non-compliance finding can erode trust with government agencies and partners. WHY YOU NEED TO ACT NOW. Many firms mistakenly believe they can wait to start their compliance journey. However, achieving CMMC 2.0 compliance is a multi-step process that takes time. Here’s why early action is crucial: ■ Assessments and remediation take time. Conducting a gap analysis, addressing deficiencies, and implementing new security controls can take six to 12 months or more. ■ Third-party certification will be required. Unlike previous self-attestation models, CMMC Level 2 requires an independent third-party assessment. Certification bodies will be in high demand as the deadline nears. ■ Federal contracts may require compliance before the deadline. Some contracts may start including CMMC requirements before October 2025, so waiting could mean missing out on lucrative opportunities.

THE ZWEIG LETTER MAY 5, 2025, ISSUE 1584

FROM THE FOUNDER

Referrals

If you want more “word of mouth” advertising, assess how your firm measures up against these six critical factors.

B ecause I have been involved in this industry for so long – as a manager, owner, board member, consultant, plus had my own locally-oriented design/build/development/ contracting firm – I regularly get asked by friends and acquaintances for referrals to engineering, architecture, planning, surveying, and environmental consulting firms. It probably happens a couple times a month.

Mark Zweig

Here are the things I consider every time before I make a referral: 1. Specialization. I don’t want to refer anyone to

using a municipal-oriented civil engineer on a site development project. His solution to a tricky site problem was not even remotely on target and cost me a lot of money for unnecessary improvements. I could give dozens more examples. 2. Responsiveness. Nothing is more frustrating than service providers who don’t return phone calls and emails. I have been burned so many times on this issue. I may know a design professional or firm that I think would do an outstanding job for the client, but my experience with them is that they are slow to respond so I cannot make the

a client who doesn’t have a specialization in working with clients like them. It doesn’t matter if we are talking AEC firms or physicians, you don’t go to providers who haven’t had extensive experience in solving that specific problem, or serving that type of client and doing that type of project. I know there are architects out there who honestly believe they can do anything, but this is absolutely fundamental for me. I don’t want anyone learning at my expense. Plus, I have had way too many problems myself with non- specialized providers. One of the worst cases was

See MARK ZWEIG, page 6

THE ZWEIG LETTER MAY 5, 2025, ISSUE 1584

5. Budget compliance history. Some firms are good at this and some routinely ignore the budget. And I am not talking about the budgets for engineering, planning, or design services. I’m talking about the total project budget. I distinctly remember years ago hiring an architect friend of mine who had a firm specialized in doing tenant office improvement projects for an office project with a strict buildout budget. When the numbers from contractors came back he had absolutely no idea how to make changes to get us where we needed to be. His plan would have cost us 2.5 times our budget to implement. We instead had to work with a contractor ourselves and ended up doing the whole thing for less than our buildout allowance. Needless to say, that was the last time I referred him to anyone. 6. History of growth and financial success as a business. Growth and profitability in an AEC firm tells me one thing: They are good at doing what they do and their clients like them! That’s important to know. Contrast this with a firm on the decline that isn’t making money. What does that tell you? Something is amiss. Every AEC firm out there has owners who want “word of mouth” advertising. That’s just another way of saying “referrals.” I have to believe that I am not much different than anyone else who gives referrals. So maybe it’s time that you should do an honest assessment of how your firm stacks up on my six factors above! Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

MARK ZWEIG, from page 5

referral. Some providers have burned me more than once because I keep hoping they will act differently and want to give them another chance. But I always regret it in the end. Inevitably, I will hear back from the person who asked me for help that they gave up trying to work with the provider I sent them to. That makes me look bad and I don’t like that! 3. Service orientation. Some firms have it and some don’t. It’s an attitude expressed by their people. Either they genuinely want to help their clients or they see their clients only as a necessary evil for them to do what THEY (the AEC firm) wants to do. With a high degree of service orientation, you know the provider cares about their clients and wants to make them happy. I have to feel that is the case to make a referral. And maybe it’s only a small project but the client still needs help. A good firm will see that small job as a chance to demonstrate their capability. 4. Sensitivity to client wants and needs. Often, AEC firm principals have to be good listeners and sharp observers to identify the real wants and needs of their clients. This takes an understanding of people and human behavior that all design professionals do not necessarily have, but those who do generally end up with happier clients. I don’t want to refer anyone I don’t have 100 percent confidence in that they will listen to and ultimately make my potential client happy.

THE ZWEIG LETTER MAY 5, 2025, ISSUE 1584

OPINION

Community outreach and engagement are foundational to the success of any project. Building bridges before breaking ground

I n today’s ever-evolving urban landscape, large-scale projects – whether infrastructure, development, or public works – must prioritize community outreach and engagement. We live in an era where community trust and collaboration are more influential than ever, therefore the success of any project can depend on one critical factor: meaningful community outreach and engagement.

Hugh Smith

The engagement must be meaningful – often organizations and institutions treat it as an afterthought, a mere box to check. Successful projects prioritize building trust and lasting relationships with the community long before any ground is broken. THE IMPORTANCE OF COMMUNITY OUTREACH AND ENGAGEMENT. Community outreach and engagement refer to the process of involving community members in the planning, decision- making, and implementation of projects that affect their lives. It’s not just about informing the public; it’s about creating a two-way dialogue where community members feel heard, valued, and empowered. The process begins by answering a few key questions. What are the demographic compositions of the neighborhood? What cultural factors (languages, cultural celebrations, areas of cultural

significance) exist in the community? Are there any community concerns that the project might solve or exacerbate? Next is identifying key stakeholders. These may include influential residents, business owners, faith- based organizations, schools, and advocacy groups. Are there any stakeholders who support your project? Are there any who oppose it and why? Learning about and engaging with these diverse groups ensures that outreach reaches all corners of the community. And just as importantly, it shows that you are ready and willing to listen. Why does this matter? Well, community engagement builds trust and credibility. When people feel seen and heard, they are more likely to support the project and less likely to resist change. It also helps identify potential challenges and opportunities early on, saving time and resources by preventing molehills

THE ZWEIG LETTER MAY 5, 2025, ISSUE 1584

from becoming mountains. Most importantly, it ensures that the project aligns with the community’s needs and values, leading to outcomes that are sustainable and beneficial for all. Consider the example of the High Line in New York City. A grassroots effort by local residents to transform an abandoned railway into a public park became a well-known urban renewal project. By engaging with and listening to the community from the very early stages, the project gained widespread support and today stands as a model for inclusive urban planning. PRINCIPLES OF EFFECTIVE COMMUNITY ENGAGEMENT. It is impossible for outreach and engagement to be successful by using a cookie cutter approach. For example, a strategy which worked in one community may not necessarily work in another. A successful engagement plan is driven by a thorough knowledge of the community, meticulous planning, and a sense of empathy. Some principles to guide the process are: 1. Inclusivity. It should be a priority that all voices, especially those of marginalized or underrepresented groups, are heard. A knowledge of the stakeholders and targeted outreach efforts can help to ensure that project communications reach everyone in the project area. 2. Transparency. There can be no trust without transparency. Openly sharing information with messages that are clear, accurate, and timely regarding the project’s goals, timelines, delays, and potential impacts will help to build and sustain public trust. 3. Communication. Communication should be a two-way street. Sharing information is important but listening may be even more so. Engagement is a dialogue, never a monologue. Architecture, engineering, planning, and construction can be filled with acronyms and jargon. Communicating in plain language is key for connecting with stakeholders. 4. Cultural sensitivity. This is where a deep knowledge of the community comes in handy. Respecting the community’s customs, values, and traditions will go a long way in building trust and fostering goodwill. For example, planning around holidays and festivals, providing convenient times for participation, and translating materials into commonly spoken languages are all ways to increase engagement. 5. Project benefits. Too often project advocates focus on the challenges they face and not enough on the reasons for the project and the benefits the completed project will bring to the community. Good community outreach will not only outline the challenges the project faces but also how it will serve the community in the long run. BUILDING BRIDGES. Building and sustaining trust with a community is an ongoing process. Below are several strategies to begin and sustain meaningful engagement: 1. Early involvement. Focus on messaging early. Once the spread of misinformation occurs, it is hard to reverse misconceptions. Early communication and a commitment to gathering community input shows the community their input is valued and can shape the project’s direction. Leading with truth and transparency early on also helps to

quell the inevitable rumors. Keep messaging simple and repetitive. 2. Listen. It might be your project, but it’s their community. Listen when they speak. Whether in town halls, community board meetings, or on social media, people are not shy about making their opinions known. Being knowledgeable about the community’s opinions will make it easier to develop messaging and provide feedback. Once you understand the community’s priorities, follow through and incorporate them into your project to maintain trust. 3. Partnerships. Collaborate with local leaders, organizations, and stakeholders who have established trust within the community. Establish ongoing relationships with local tenant associations, major religious congregations, affordable housing, and economic development groups well before construction starts. Distribute a designated email address to which stakeholders can submit questions and suggestions. 4. Education. Is your project highly technical? If so, give presentations with graphics and easy to understand language to people at community meetings, schools, and other neighborhood events. Explaining the technical side of a project is often enjoyable for the layperson and keeps the community informed and involved. COMMUNITY OUTREACH CHALLENGES AND HOW TO OVERCOME THEM. Performing community outreach can be challenging. Distrust of government agencies and institutions, bad experiences in the past, resistance to change, and lack of resources and time can all hamper outreach efforts. With the right approach, however, these challenges may be overcome by keeping the following in mind: ■ Trust isn’t built overnight; it takes time. Genuine and consistent engagement is the foundation of trust. ■ Be honest. Always acknowledge potential project challenges. If possible, work with the community to find solutions. ■ Technology is your friend. Using things like social media, virtual town halls, and online surveys allows the project to reach a wider audience and makes participation more accessible. Community outreach and engagement are not mere boxes to check, they are the foundations of trust and collaboration and contribute to the success of any project. When communities are engaged from the start, the results are transformative. Before beginning your next project, ask yourself: Have you built the bridges that will carry the project and the community forward? The answer could make all the difference. Hugh Smith is a senior associate and director of community outreach at TYLin. Contact him at hugh.smith@tylin.com.

THE ZWEIG LETTER MAY 5, 2025, ISSUE 1584

OPINION

How to maintain a steady backlog

I f you want to grow your business, getting your backlog right couldn’t be much more important. A strong backlog gives you the ability to plan ahead – whether that’s for hiring needs, manpower needs, key strategic investments, or general cashflows for things like trucks or raises. These four steps will earn your business a steady backlog, empowering you to chase your strategic goals.

Matt Verderamo

Backlog is a measurement of how much work you have booked that you have not yet billed for. So, for example, the day you sign a $3 million contract, you add $3 million to your backlog. After your first billing – let’s say it’s for $100K – your backlog on that project is now (you guessed it) $2.9 million. To get your total backlog, add up the remaining billings on all of your projects. Since backlog is a key indicator of future billings, and therefore future profits and cash flows, there are many reasons you should be making every effort to maintain a steady backlog. Based on my time as a VP of estimating and sales at a specialty contractor, and my time spent with tens of top construction contractors around the country, here are the top four considerations you should make to ensure you are using this information to best guide your business:

1. What gets measured gets built. The first step of maintaining a steady backlog is as simple as setting a target backlog based on your business’s strategic goals, measuring backlog on your financial reports, and distributing up-to-date backlog data to your estimating team at least monthly, but preferably weekly. As it goes with most things, people won’t focus on it if it’s not measured and in their face. The more you talk about and measure backlog, the better chance you have at achieving your goals. 2. Backlog is a lagging indicator. While you must measure your backlog, it’s important to realize that it is a lagging indicator. This means that whether backlog is low or high doesn’t tell us much – other than that we either do or don’t need work. What it doesn’t tell us are things like:

THE ZWEIG LETTER MAY 5, 2025, ISSUE 1584

ON THE MOVE MOSELEY ARCHITECTS WELCOMES NEW HIGHER EDUCATION SECTOR LEADER Moseley Architects has announced David Prevette as its new higher education sector leader. He follows the firm’s president, Jeff Hyder, who assumed the role in 2015. “We are very excited to have David join us,” said Jeff. “Clients and colleagues will all benefit from his experience and market-specific expertise.” Prevette joins the firm with nearly 25 years of campus planning, design, and construction experience, routinely

serving as a primary point of contact. His proven track record in design and leadership, along with his passion for impactful outcomes, drew him to this opportunity. Prevette approaches his work with an understanding of long-term outcomes and a meticulous eye for detail. With a focus on improving the student experience, he strives to create built environments that benefit human connection above all else. “Our profession gets to serve this generation and future generations,” said

Prevette. “One of my greatest hopes is that design will help students find a sense of community and belonging.” As a leader, he prioritizes collaboration and communication. He believes encouragement, trust, and perseverance are vital. Prevette commits to continual growth and innovation. “This role is about ensuring others have what they need to succeed,” Prevette said. “I hope I can keep our high level of success and continue the legacy that Jeff and so many others have established.”

Are we bidding enough work to maintain/grow our backlog? Are we having enough sales meetings to maintain/ grow our backlog? Do we have enough clients to support our growth goals? Are we doing enough business development with new potential clients? And many more. So, while backlog should serve as a target for the team to drive toward, it’s critical to create a set of leading indicators that will ensure you are doing the things you need to be doing in order to maintain a steady backlog. A super simple process for creating leading indicators for backlog is as follows: Calculate your win rate. Use your win rate to create bidding and sales goals. For example, if your win rate is 10 percent, and your target backlog is $35 million, then you would need to bid $350 million. It also means you need to win $35 million. Then, break that $350 million down by estimator and create an individual bidding goal for each, and break the $35 million down by estimator and create an individual sales goal for each. Every week, meet as an estimating team and review the amount each person bid/won the previous week and compare it against your goal. Disclaimer: Sometimes, projects will fall so that you don’t have anything bidding from one week to the next. Therefore, you should track weekly bidding and sales goals as an accountability tool, but ultimately you should measure failure/success for meeting goals

based on monthly bidding and sales totals. Four weeks is enough time for the data to settle.

3. Consider your sales cycle to determine when you need to book work. If you’re a mechanical contractor, it may take eight to 12 months from the time you bid a project to when you are onsite and substantially billing. Therefore, this type of contractor would be said to have about an eight to 12 month sales cycle, and needs to book their backlog about eight to 12 months in advance. For example, if you targeted $100 million in revenue in 2025, and your sales cycle is eight to 12 months, that would mean that by January 1, 2025, you would’ve wanted to have about an $80 million to $100 million backlog. Because if you didn’t, any work you win in 2025 will likely start in 2026 and not contribute to your 2025 goals. If you’re a smaller contractor with a shorter sales cycle – say two to three months – and have a target revenue of $35 million, you would only need to have about an $8 million backlog on January 1, 2025 – or about 25 percent of the goal. Again, because that’s what you should be billing in the next two to three months to hit your goal. 4. Separate your backlog. While all backlog is great, if, today, you win a mega project that doesn’t start until 2026, you may meet your backlog target, but it doesn’t mean you have work for 2025! So, I always recommend separating your backlog for the next 12 months from your backlog that falls more than 12 months out. That way, you are still tracking both important numbers, but making decisions based on the right information today. GETTING IT RIGHT. This stuff is so fun and so meaningful for running a successful company. Follow the steps laid out here, and I promise you will be shocked by the results you get in the form of a steady backlog that gives you the ability to chase your strategic goals. Hope you give it a shot, and as always, if you need any help, shoot me an email at mverderamo@ wellbuiltconsulting.com any time. Matt Verderamo, MS is a consultant at Well Built Construction Consulting. Connect with him on LinkedIn.

THE ZWEIG LETTER MAY 5, 2025, ISSUE 1584

OPINION

Proactively addressing these regulatory considerations ensures your firm remains in good standing, competitive, and positioned for long-term success. Maintaining proper licensure during M&A

M ergers and acquisitions in the architecture, engineering, and construction verticals can significantly impact a firm’s licensing requirements and ability to operate. Before entering into a transaction, management must consider key factors and ask strategic questions to ensure compliance. Management should consider leaning on professional advisers to help navigate these complexities and ensure ongoing regulatory obligations are met.

James Gilmer

KEY CONSIDERATIONS BEFORE AN M&A TRANSACTION. All firms must manage various interrelated state-specific licensing and entity registration requirements. M&A transactions introduce added complexity due to changes in personnel, structure, and company name. After a transaction, firms often face multiple registrations, renewals, and updates across different agencies within a short timeframe to maintain good standing. Each transaction presents unique challenges, but there are fundamental considerations for both the selling and acquiring firms. Management should proactively address questions such as, “How will our licensing needs change as we expand through M&A?,” and “What systems, personnel, and vendors

are required to complete the transaction and scale effectively?” CONSIDERATIONS FOR THE SELLING FIRM. The selling firm’s management should ensure: ■ All entities are properly registered and in good standing in every state where they operate. ■ All firm and professional licenses are active and in good standing. The firm is current with all tax obligations. Addressing these factors beforehand can streamline due diligence, reduce correction costs, and preserve the firm’s reputation during negotiations. ■

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CONSIDERATIONS FOR THE ACQUIRING FIRM. The acquiring firm must verify that the target firm has met the above licensing and compliance obligations. Additional steps will depend on the firm’s post-transaction goals. Management should assess the current situation and develop a structured change control plan. Start by understanding: ■ Firm licensing considerations. When considering firm licensing during M&A, the acquiring firm must first determine where they and the target firm are currently licensed. This will allow them to identify any gaps in licensure and determine if additional licenses will be required in new jurisdictions or for new specialties. ■ Professional licensing and personnel considerations. When an M&A deal occurs, the acquiring firm must consider where its professionals and the target firm’s professionals are currently licensed. It is important to identify responsible license holders (qualifiers) at the target firm and determine if they will remain with the company after the acquisition. This will inform any required updates with licensing boards. Additionally, the acquiring firm must determine whether any individuals need to obtain new licenses, complete continuing education requirements, or pass exams as a result of the M&A. These changes to qualifiers must often be reported to licensing boards within 10 days, so it is essential to act quickly to avoid penalties. ■ Entity and secretary of state considerations. When considering the impact of an M&A on entity and secretary of state requirements, the acquiring firm must determine the fate of the acquired entities, whether they will be dissolved or remain active. Additionally, it’s crucial to ensure that the new ownership structure aligns with state-specific entity requirements. This may necessitate the formation of new entities or the registration of existing entities as foreign entities in different states. Finally, the acquiring firm must address any required legal updates, such as changes to the name, address, registered agent, or management team. ■ Rebranding and legal name changes. Many acquiring firms opt to change the name of the target firm or undertake a full rebranding. However, firm naming requirements vary by state and are often regulated by statute. We recommend researching these requirements before making any naming decision. MAINTAINING REGULATORY REQUIREMENTS AND ORGANIC GROWTH. Of course, few firms grow entirely through M&A. Some natural, aka organic, growth is expected. In addition to the above, the firm faces a core set of ongoing responsibilities, for example:

Maintaining firm and professional licenses.

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■ Acquiring new licenses when expanding into additional states or hiring new professionals. ■ Meeting ongoing secretary of state obligations, such as registered agent designations and annual report filings. After an acquisition, any new licenses, entities, and regulatory requirements become part of the firm’s overall regulatory portfolio. Establishing a robust program to maintain them helps firms meet these requirements efficiently, ensuring operational continuity and long-term success. “Your firm’s licensing requirements will evolve over time, particularly as it grows through M&A. Proactively addressing these regulatory considerations ensures your firm remains in good standing, competitive, and positioned for long-term success.” TAKING THE NEXT STEPS. Your firm’s licensing requirements will evolve over time, particularly as it grows through M&A. Proactively addressing these regulatory considerations ensures your firm remains in good standing, competitive, and positioned for long-term success. By taking these steps early, you can mitigate risks, control costs, and protect your firm’s reputation. Zweig Group and Harbor Compliance offer a comprehensive solution for AEC firms navigating mergers and acquisitions. Zweig Group provides expert guidance through every stage of the M&A process, from strategic planning to post-merger integration, ensuring firms make informed and successful growth decisions. Meanwhile, Harbor Compliance manages the complex regulatory requirements that come with acquisitions, including business licensing, tax registrations, and entity management. For guidance planning or undergoing your next transaction, contact the experts at Zweig Group. To discuss how you can outsource the management of your licensing and related registration needs, visit this page. James Gilmer is strategic partnerships manager at Harbor Compliance. Contact him at jgilmer@harborcompliance.com.

ZWEIG GROUP’S MERGERS & ACQUISITIONS CONSULTING SERVICES Whether you’re on the buy- or sell-side of a deal, Zweig Group’s full-scale Mergers & Acquisitions consulting team can help you find and evaluate candidates and then structure the transaction – managing the complicated process from conception to the closing table. We approach each project as a cross-functional team with different expertise working toward a common goal. With an extensive network that spans North America, we blend industry and sector knowledge with experience across the M&A lifecycle to help you capture value for shareholders. Click here to learn more!

THE ZWEIG LETTER MAY 5, 2025, ISSUE 1584

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