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T R E N D L I N E S W W W . T H E Z W E I G L E T T E R . C O M D e c e m b e r 3 1 , 2 0 1 8 , I s s u e 1 2 7 7

Base salary by region

An age-old question

A n age-old question that has plagued top managers in AEC firms for as long as I can remember is this: Should one design their organization and then look for the right people to fill specific roles on the chart, or should the organization be designed around the people the firm already has on board? There are pros and cons for each approach. Logically, the former makes sense. You need certain jobs filled and particular skill sets to fill them. Don’t settle. Look for the best person for the job, whether that person is inside or outside the company. Be determined to get exactly what you want, and don’t give up until you succeed in doing so. Work through all your positions this way and you’ll eventually have the organization you want and need. On the other hand, the latter approach makes sense, too. It’s an employee-driven job market. Good people, i.e., those with good attitudes, work ethic, and personalities that lend themselves to working as a part of a team, are very hard to find. And if you have people on board who have proved themselves in this way, you can’t cast them aside just because they don’t have something that one of your organizational “boxes” requires. It wouldn’t be smart. And maybe you can shift roles around so that 80 percent of something is filled by one person and 20 percent by another. I can see how one could take either side on this issue. I have taken each side at different times over the years, although I will admit that the older I get the more I tend to want

“Should one design their organization and then look for the right people to fill specific roles on the chart, or should the organization be designed around the people the firm already has on board?”

In Zweig Group’s 2019 salary surveys, the average base salaries of production staff employees in separate regions were compared to the overall average on a position-by-position basis, as well as to each area’s cost of living. The Pacific region requires a larger wage to support higher costs, while Mountain / South Central wages are lower to go along with lower costs. The Northeast region, however, is the least paid area despite having the second highest cost of living. OPEN FOR PARTICIPATION zweiggroup.com/survey-participation/

Mark Zweig

F I R M I N D E X Bennett & Pless. .....................................6 Burns & McDonnell. ................................4 HansonLA.............................................10 Harley Ellis Devereaux...........................10 O&S Associates Inc.. ..............................4 Smith Seckman Reid, Inc........................2

MORE COLUMNS xz GUEST SPEAKER: All four corners Page 3 xz GUEST SPEAKER: Discounts and stock values Page 9 xz GUEST SPEAKER: Grow your firm in 2019 Page 11

Conference call: Edward Gazzola See MARK ZWEIG, page 2

Page 6

T H E V O I C E O F R E A S O N F O R A E C F I R M S & M A N A G E M E N T C O N S U L TA N T S

TRANSACT IONS SSR ACQUIRES MEDICAL EQUIPMENT PLANNING FIRM SHR Smith Seckman Reid, Inc. , a leader among engineering firms in designing, consulting, and commissioning projects, is pleased to announce the acquisition of Strategic Hospital Resources, an Atlanta-based medical equipment planning firm. Smith Seckman Reid will immediately combine operations with Strategic Hospital Resources, a global furniture, fixtures, and equipment planning and clinical consulting firm incorporated in the United States in 2003 and in Canada in 2011. This acquisition will leverage opportunities to enhance service offerings to clients across the country. Debbie Heitzman, Strategic Hospital Resources’ former CEO, and all former Strategic Hospital Resources colleagues will remain, operating out of their Atlanta office. “We’ve long provided services to clients in the Atlanta region,” stated Steve Lane, Smith Seckman Reid’s CEO. “The acquisition of Strategic Hospital Resources is an opportunity to provide a higher value to our clients and to grow our presence in Atlanta.” “The acquisition of Strategic Hospital Resources is about better serving our healthcare clients across the country,” said Clay Seckman, SSR’s Healthcare Market Leader. “The joining of the historically siloed services of technology design and equipment planning represent both challenge and opportunity in streamlining not only communication and patient-focused delivery of care, but also the process required to plan, design, procure, install, and activate. With the addition of Strategic Hospital Resources’s expertise, we will be able to offer a full service solution and seamless experience

bringing technology, equipment, and clinical expertise together to our clients around the country.” Led by Principal Debbie Heitzman, the newly acquired medical equipment planning team assists hospitals, architects, and developers with medical equipment planning services throughout a project life cycle, including inventory, procurement, transition planning, and move management. Previously, Strategic Hospital Resources worked on new construction, renovation, and expansion projects ranging in size from 60,000 square feet to nearly 2 million square feet in the United States, Canada, and Australia. “Smith Seckman Reid has a compatible mission to Strategic Hospital Resources,” stated Heitzman. “Throughout our discussions, it became evident we have similar philosophies about business and our commitment to clients. This acquisition allows us to work together and provide a better product to the market place.” “Strategic Hospital Resources fits our mission to ‘make a difference for our clients,’” stated Lane. “This furthers our commitment to developing and providing solutions that help our clients solve their ongoing and ever-evolving needs.” Smith Seckman Reid, Inc. is an employee- owned corporation, headquartered in Nashville, Tennessee, focused on providing engineering, commissioning, and technology services across the United States and around the world. Smith Seckman Reid services are based on the in- depth experience and expertise of the firm’s engineers, consultants, and all of the firm’s staff.

1200 North College Ave. Fayetteville, AR 72703 Mark Zweig | Publisher mzweig@zweiggroup.com Richard Massey | Managing Editor rmassey@zweiggroup.com Christina Zweig | Contributing Editor christinaz@zweiggroup.com Sara Parkman | Editor and Designer sparkman@zweiggroup.com Liisa Andreassen | Correspondent landreassen@zweiggroup.com

MARK ZWEIG, from page 1

to design the organization’s roles around the people rather than vice-versa. Either way, however, you can’t ignore the facts of what you need versus what you have people-wise, and whether your firm is growing and profitable. Because if it isn’t doing both of those things, something is wrong with what you’re doing. You don’t have “grandma’s recipe” and need to do something different. Growth and profitability are the two tests of management decision making, the results of which cannot be ignored. It’s been said that entrepreneurial companies must provide two income streams for their owners – what the owners get out of it every week in the form of salary, bonuses, and profit distributions, and the longer-term value owners can cash in on upon exit. If you don’t see both of these returns, you are a small business owner, not an entrepreneur. So where do you stack up on this issue? Strict role definitions, with the best you can find filling those roles, or working around your people trying to keep all of them on-board, regardless of their backgrounds and skills? And are you happy with your numbers for growth and profitability? If not, maybe this is one area for you to do a little self-examination. MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

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

Email: info@zweiggroup.com Online: thezweigletter.com Twitter: twitter.com/zweigletter Facebook: facebook.com/thezweigletter 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 thezweigletter.com/subscribe © Copyright 2018, Zweig Group. All rights reserved.

THE ZWEIG LETTER December 31, 2018, ISSUE 1277

O P I N I O N

All four corners

Do you want to lead a firm where people come and stay, and where employees are always striving for improvement?

O ne of the best parts of my job is working with the winners and other top firms in our Best Firms to Work For award. Seeing what they are doing that works, and how they continually try to improve, has been a great tool for me as I continue to learn and grow in this industry. These firms are never satisfied and are always looking for ways to improve, something we all should be doing.

Kyle Ahern GUEST SPEAKER

continuously improving the workplace. First it takes input from your employees to know what they like and what they want to see changed. Second, it takes communication from management to let them know that you are listening to what they are saying, and that you are laying out your vision to implement the changes that employees want to see. When a change might not be in the best interest of the company, “Being a Best Firm to Work For improves the lives of your employees, attracts new employees, and shows your clients you care about the people who work for you.”

Here is a look at the four areas where the Best Firms are outpacing the rest of the field, and how they are achieving those results: 1)Training/mentoring. This is something most employees rank as very important to them. It can help in recruiting new employees, retaining key employees, and showing that your firm is invested in their future by providing training, mentorship, or both. These can be formal or informal: Lunch-and- learns, corporate universities or formalized training programs, coaching or mentoring on the path an employee wants to take, or giving incentives for reaching benchmarks. All of these are examples of what the top firms are doing in an area that employ- ees really appreciate. 2)Communication. The top firms focus on commu- nicating with their employees to make sure they are

See KYLE AHERN, page 4

THE ZWEIG LETTER December 31, 2018, ISSUE 1277

BUSINESS NEWS BURNS&MCDONNELLMOVESTONO. 1ASNATION’S LARGEST COMMISSIONING FIRM ON ANNUAL COMMISSIONING GIANTS RANKING Burns & McDonnell has moved to the top spot as the industry’s largest commissioning services firm on the annual 2018 Commissioning Giants survey conducted by Consulting-Specifying Engineer magazine. Burns & McDonnell reported commissioning revenue of $31.4 million, up from $25.1 million the prior year. The rapid growth is the result of Burns & McDonnell’s commitment to expand commissioning services on a national scale, nearly doubling its geographic footprint over the past year. Today, more than 140 commissioning professionals work in 23 offices throughout the country, up from 14 offices a year earlier. In addition to the commitment of resources, Burns & McDonnell also recently achieved formal designation as a certified commissioning firm by the Building Commissioning Association. “We’re excited by the movement up the rankings because it means that more and more owners, developers, utility providers and energy service companies are seeing what commissioning can do to save them money, reduce energy consumption, enhance resiliency and deliver successful projects,” says David Meyers, national manager of commissioning for Burns & McDonnell. Burns & McDonnell specializes in delivering a wide range of commissioning, retro- commissioning, and monitoring-based commissioning services for facilities, campus installations, and mega-scale programs throughout the country. Currently the Burns & McDonnell commissioning group is working on seven large building programs, each with a construction value in excess of $1 billion. The firm has provided commissioning services on a wide range of industrial, commercial, federal,

mission-critical, and unique, one-of-a-kind projects for facilities totaling millions of square feet. Commissioning is increasingly part of programming, design, and construction of highly complex facilities, including early stages as a strategy to better manage project budgets and reduce project risk. Services include MEP coordination and startup management, facility condition assessment, energy model verification, energy audits, measurement and verification and building enclosure commissioning. Burns & McDonnell is an employee-owned, Kansas City-based firm with more than 6,000 engineers, architects, construction professionals, scientists, and consultants. Ranked as the No. 1 firm in both Power and Electrical Transmission and Distribution by ENR , and now the No. 1 firm in Commissioning, Burns & McDonnell has more than 50 offices across the country and throughout the world. O&S ASSOCIATES COMMISSIONS WORLD’S FIRST PARKSMART GOLD CERTIFIED PARKING STRUCTURE O&S Associates Inc. , an engineering and architecture firm, recently served as the commissioning agent for the Gold 1 Garage in Pittsburgh. This is the first Parksmart Gold project of its kind in the world to achieve the highest level of certification. With an engineering team comprised of staff from multiple offices including New Jersey, Ohio, and Philadelphia, O&S inspected and evaluated the garage using an official scorecard point system. Grading was based on meeting specific standards for management, programs, technology and structure design, and innovation. For a new construction project to receive the Gold standard, it must achieve 160-plus points out of a maximum 248 points available.

Parksmart, a voluntary, consensus-driven certification, is the only rating system advancing sustainable mobility and positive impact through smarter, best practice parking structure design and operation. Administered by Green Business Certification Inc., Parksmart complements LEED and other certifications. Parksmart certification recognizes parking structures designed to: ❚ ❚ Reduce their environmental impact ❚ ❚ Increase energy efficiency and performance ❚ ❚ Manage parking spaces efficiently ❚ ❚ Encourage alternative mobility options ❚ ❚ Strengthen community relationships O&Swas honored to be a part of this prestigious project, helping the Stadium Authority achieve this distinguished designation for its Gold 1 Garage. “O&S has been an innovator both as a parking consultant as well as a commissioning agent for MEP projects,” said William Payne, vice president of O&S. “We couldn’t be more excited to leverage both strengths for our important client.” This is the second project managed by O&S in the past few years to receive special distinction. O&S was closely involved in the extensive modernization and energy upgrade of Tremco Inc. headquarters in Beachwood, Ohio. The building received LEED Gold certification from the U.S. Green Building Council which is difficult to achieve for an existing structure. O&S Associates Inc. is a full-service multidisciplinary consulting engineering and architecture firm specializing in the assessment and repair design of exterior walls, roofs, mechanical systems and parking, as well as other building consulting needs such as capital reserve studies and expert witness services.

KYLE AHERN, from page

4)Compensation. The top firms received outstanding marks for salary, bonuses, and benefits. They are making sure they are competitive locally, regionally, and nationally. Keeping their compensation competitive with, if not better than, their com- petition is great for recruiting new talent and keeps estab- lished people from wondering if there is something better out there. They are pointing out everything that is included in the compensation, not just base salary. They educate their em- ployees, new and current, on the total compensation package. Benchmarking your firm against the best is a great way to improve your own firm. Take steps to improve your training/mentoring, communication, flexibility, and overall compensation. Being a Best Firm to Work For improves the lives of your employees, attracts new employees, and shows your clients you care about the people who work for you. KYLE AHERN is awards manager at Zweig Group. Contact him at kahern@zweiggroup.com.

communicating the reasons with the employees is another great tool rather than just ignoring the requests. Open com- munication goes a long way for the Best Firms. “Benchmarking your firm against the best is a great way to improve your own firm. Take steps to improve your training/ mentoring, communication, flexibility, and overall compensation.” 3)Flexibility. Being flexible enough to change your policies also helps. The top firms are flexible enough to improve their healthcare benefits or their maternity and paternity leave pol- icies because that makes their firms better. With a changing workforce that has changing wants and needs, it’s important for firms to be flexible enough to continuously improve, mak- ing their firm stand out as a great place for people to work.

THE ZWEIG LETTER December 31, 2018, ISSUE 1277

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THE ZWEIG LETTER December 31, 2018, ISSUE 1277

P R O F I L E

Conference call: Edward Gazzola CEO & president of Bennett & Pless (Best Firm #11 Structural for 2018), a 50-person firm based in Atlanta, GA.

By LIISA ANDREASSEN Correspondent

“R OI for investment in our business is far higher than any other investment vehicles typically available to our potential principals,” says Gazzola. “We have set up an associate program to get them used to the idea that they need to be a top performer, have an impact, and be willing to invest and receive ROI based on the performance of the business.” A CONVERSATION WITH EDWARD GAZZOLA. The Zweig Letter: When did you have the most fun run- ning your firm, and what were the hallmarks of that time in your professional life? Edward Gazzola: Now and in my first year. I was fortu- nate to be able to transition the ownership of this prom- inent 50-year-old business five years ago. There were 10 staff members, two offices, one market, and two clients to- taling 50 percent of revenue. The economy was still soft at the time. Currently, we have 50 staff, five offices, multiple markets, and no client that is responsible for more than 10

percent of revenue. We have given raises and bonuses every year. Currently, we have a very strong management team that can run the business without me, so I have the freedom to be strategic and focus on the areas having the most im- pact on the success of the business. I liked year one because I was able to set the strategic direction and have quick suc- cess. It was like a fast-growing startup with a 50-year histo- ry – that was fun. But it’s been great currently as we look to have another record year but without my being involved in the day to day running of the business. “Principals are chosen based on impact on the business. This could be revenue generated or produced, but there are other factors also.”

TZL: Do you tie compensation to performance for your top leaders?

THE ZWEIG LETTER Decem

EG: Yes – our top leaders each have a bo- nus based on the performance of their business unit. TZL: Do you share base salary or bonus amounts with your entire staff? EG: No – they are aware of ranges, but not specifics. However, our business leaders are. “We’ve done a poor job as an industry of providing proper compensation for the value we deliver relative to other professional services firms. We need to elevate the value of our services so we can elevate wages.” TZL: What actions do you take to ad- dress a geographic office or specific disci- pline in the event of non-performance? EG: We confront issues head on. We have a conversation and set actions for the in- dividual and their manager to address the non-performance issue. If it persists we repeat and prepare an action plan. If it per- sists again, we arrange for them to leave the firm. TZL: Have you ever closed an under-per- forming office? If so, tell us about it. EG: No, we’ve been fortunate in that re- gard. We have however terminated clients who have not aligned with our culture. TZL: How many years of experience – or large enough book of business – is enough to become a principal in your firm? Are you naming principals in their 20s or 30s? EG: Principals are chosen based on impact on the business. This could be revenue generated or produced, but there are other factors also. As long as the person is a top- performing employee and has a big im- pact on the business, he/she can be eligi- ble to be a principal – no matter their age. While we don’t currently have anyone in their 20s, we do have an associate in their 30s. TZL: Internal transition is expensive. How do you “sell” this investment op- portunity to your next generation of principals? How do you prepare them for the next step?

EG: ROI for investment in our business is far higher than any other investment vehicles typically available to our poten- tial principals. We have set up an associ- ate program to get them used to the idea that they need to be a top performer, have an impact, and be willing to invest and re- ceive ROI based on the performance of the business, that is independent of their role as an employee. TZL: How do you promote young and new leaders as the firm grows? EG: Primarily, we give them small incre- mental increases in responsibility. We ask them to lead task forces and take on special corporate activities. They attend conferences and seminars on leadership. Right now, we’re focused on internal pro- motions and not really looking externally for leaders. TZL: With technology reducing the time it takes to complete design work, how do you get the AEC industry to start pricing on value instead of hours? EG: Five years ago we shifted from time based to fixed fee. Now, we segregate pric- ing from budget when we submit propos- als and the pricing is based on value to our client, not what it costs for us to do the work. TZL: If the worker shortage continues, do you see wages increasing to encour- age more talent to enter the AEC space, or will technology be used to counter the reduced work force? EG: Both. We’re hoping to increase sala- ries. We’ve done a poor job as an industry of providing proper compensation for the value we deliver relative to other profes- sional services firms. We need to elevate the value of our services so we can elevate wages. Technology will continue to reduce our efforts, however those savings should not be passed on to our clients and should be used as a means to increase wages/prof- itability for our profession. TZL: Engineers love being engineers, but See CONFERENCE CALL, page 8 “We’re open about the firm’s financial performance and the key metrics that drive our business; they’re shared and discussed with everyone.”

YEAR FOUNDED: 1964 HEADQUARTERS: Atlanta, GA OFFICES: 5 offices in 4 states and an alliance with a specialty structural engineering firm in Munich, Germany. NO. OF EMPLOYEES: 50 EDWARD GAZZOLA: He is an internationally recognized executive who has led engineering businesses in three countries over the past 20 years. SERVICES: ❚ ❚ Technical facilities ❚ ❚ Building structures ❚ ❚ Wireless infrastructure ❚ ❚ Consulting services THEIR NICHE: The firm has developed a reputation for being industry leaders in the niche markets in which we have chosen to practice, rather than evolving into a traditional large generalist structural engineering firm. As a result of this focus, the firm has developed specialized skills and attracted highly experienced engineers, which has resulted in its being called upon to execute more complex structural engineering projects. WORK ENVIRONMENT: The company’s career page states: “A place to learn, lead, and laugh.”

mber 31, 2018, ISSUE 1277

Bennett & Pless company picnic.

CONFERENCE CALL, from page 7

EG: We have annual career development sessions that are tailored to each individual’s long-term career objectives and then have actionable plans to advance them toward those career goals. (We’ve only had one employee voluntarily leave in five years.) The two key retention vehicles are: 1) Monthly learning sessions where our senior engineers share their knowledge. 2) A head of ‘Team Experience’ who is focused on ensuring our team members enjoy their experience here. “The tax cuts will be positive. We have not adjusted salaries and bonuses as a result of tax cuts as of yet, but expect to as they have impact.” TZL: How are the tariffs impacting your business and that of your clients? EG: They do not appear to be impacting our business. That said, we had a manufacturer we work for that sources their steel from China and they said they’re looking to leave the U.S. and sell into Canada and South America. We suspect that we’ll see an uptick in business from other clients who source locally so expect it will have a neutral impact on us. TZL: How are the tax cuts impacting your business? Have salaries and bonuses increased? EG: The tax cuts will be positive. We have not adjusted sala- ries and bonuses as a result of tax cuts as of yet, but expect to as they have impact. We all also benefit at the personal tax level. We share profits with staff, shareholders, and re- tain earnings as needed to ensure the business is successful in the long-term, so as profits increase it is shared amongst these categories.

what are you doing to instill a business culture in your firm? EG: We’re open about the firm’s financial performance and the key metrics that drive our business; they’re shared and discussed with everyone. We also share information on top clients from a volume as well as from a profitability perspec- tive. At the project level, we create heightened awareness of budget and business impact. At the proposal and “add ser- vice” level, we use it as an opportunity to explain the need to price appropriately and highlight its impact on business. At the manager level, we’ve created personal P&L statements, so it’s like they’re running their own small business within a business. This also serves to enhance their financial savvy. TZL: The seller-doer model is very successful, but with growth you need to adapt to new models. What is your program? EG: We have some seller-doers, but mainly rely on dedicated BD staff who are not engineers, but skilled at sales. Clients like to meet the CEO; I’m active. We provide some coaching to our PMs to allow them to be effective at enhancing ex- isting relationships. We’ve also developed account plans for our top 15 clients and have categorized our clients into ap- propriate categories so our effort is properly allocated. “We have a very strong management team that can run the business without me, so I have the freedom to be strategic and focus on the areas having the most impact on the success of the business.”

TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?

THE ZWEIG LETTER December 31, 2018, ISSUE 1277

O P I N I O N

Discounts and stock values

There are multiple considerations to be made when valuing a privately-held company and the assessment of the many moving parts.

T he valuation of privately-held firms, including those in the AEC industry, will usually involve discounting to arrive at a concluded value of the subject interest. For those of you who have been through the valuation process in the past, you are at least familiar with the terminology; for those of you who have not, I thought a primer might be in order.

Tracey Eaves GUEST SPEAKER

❚ ❚ Asset approach. Under an asset approach, no indi- vidual shareholder owns the corporation’s assets at the individual level; shareholders with a majority po- sition and voting control have the ability to control the corporation and the accumulation or disposition of the assets. Therefore, the control shareholders have access to the equity in the assets and asset- based methodologies produce values at the control level. ❚ ❚ Income approach. Depending upon the appraiser’s decision as to the level of normalizing adjustments to the financial statements, income approach meth- odologies can produce a value indication at the con- trol or minority interest level. If “control” normal- izing adjustments are made, the value indication is at the control level. The opposite is true if the only normalizing adjustments made are those applicable to what a minority interest holder could affect.

To place a value conclusion on a privately-held business interest, we must determine the level at which the valuation will be done – a control interest basis or a minority interest basis. An owner of a 51 percent or more interest is considered a “control” owner and a holder of 49 percent or less is considered a “minority” owner. In the context of fair market value, the levels of these two types of owners are significantly different. It would be easy to assume that the value of a minority interest in a privately-held firm is equivalent to the pro-rata value of a 100 percent interest, but that is not the case. Issues of control and marketability at the minority interest level must be taken into account. The various approaches and methodologies used in valuation will drive whether or not discounts are applicable to the subject interest in an appraisal.

See TRACEY EAVES, page 10

THE ZWEIG LETTER December 31, 2018, ISSUE 1277

BUSINESS NEWS HARLEY ELLIS DEVEREAUX CELEBRATES COMPLETION OF CIRCA RESIDENCES IN LOS ANGELES Harley Ellis Devereaux , a national architecture and engineering firm, is pleased to announce the substantial completion of the CIRCA residential towers in Los Angeles’ LA Live district. Totaling 2 million square feet on 2.7 acres at 12th Street between Figueroa and Flower, Circa includes 648 luxury rental units in two 35-story towers set on a 100-foot podium, along with 48,000 square feet of prime, ground-level retail and 2,000 parking spaces. The podium houses a two-acre amenity deck and 18,000 square feet of visually exciting LED displays along Figueroa Street to achieve an urban synergy of entertainment and residential activity that rivals New York City’s Times Square. In addition to the LED displays, there is a 12,500-square-foot static display facing Flower Street and at the crown of the towers. HED, working for a client partnership led by the Hankey Investment Company, Jamison Services, Inc. and Falcon California Investments, was responsible for the complete architectural and urban design of the project. In addition, for the shared amenity spaces HED also handled the interior design and FF&E. “The initial client goal focused on maximizing

the property’s leasable square footage, and since the northern edge was an ‘S-curved’ street, we chose a foundational curve concept for the project in response to this goal,” said Daniel Benjamin, HED’s principal leader on the project. “This curvilinear structure established a design concept for the project that was also well-aligned with the neighboring Staples Center, and of course it also makes for expansive view opportunities for the tenant, some with 180-degree fields of view.” Anchored by STAPLES Center, LA Live and the Los Angeles Convention Center, the development achieves an urban synergy of entertainment and residential activity. The project also represents the first residential option within the boundaries of the official LA Live District, an important milestone in the success of the 10-year-old development plan. “CIRCA has redefined what it means to play, work and live in the South Park area,” said Scott Dobbins, president of Hankey Investment Company, one of four investment entities that own 1200 Circa LLC. “The circular design sets it apart from any other structure. From the circular pool to the curves in the twin towers, which maximize the view corridors for each residential unit, this complex will provide a lifestyle that is unparalleled in the downtown Los Angeles area.”

Circa’s 648 rental units were created with luxury and European high-end finishes. The residential units begin above the 100-foot high amenity deck on the eighth floor, rising to three penthouse levels, topping out at 400 feet on the 35th floor. Units range from 600 to 4,000 square feet in the penthouses, with rents expected to range from $3,000 per month to $24,000 per month. HansonLA served as the interior architectural firm. An expansive amenity level, atop the eight- story podium, features a resort pool, a 75- foot lap pool, private cabanas, outdoor fire pits, spas, a clubhouse, two indoor-outdoor bar spaces, dog parks, a business center, an outdoor yoga and Pilates area, and more. All outdoor amenity spaces were designed in collaboration with LRM Landscape Architecture. Founded in 1908, HED seeks creative solutions that have a positive impact for its clients, the community, and the world. HED has earned a reputation for excellence in all facets of architecture, including design, consulting, engineering and planning services. The firm serves clients in a broad range of market sectors including workplace, housing, mixed use, science and technology, healthcare, higher education and pre-K-12 and community education from offices in six U.S. locations.

TRACEY EAVES, from page 9

contrasted by a small market existing for closely-held shares that are economically impaired due to the lack of access to an active market for those shares. Empirical evidence exists in studies of discounts on sales of restricted shares of pub- licly traded companies and discounts on sales of closely-held shares compared to prices of subsequent IPO offerings of the same company’s shares. In all, the studies result in a range of discounts from about 10 percent to more than 35 percent. As with the DLOC, multiple factors can have an impact on the appropriate discount for a subject interest. Factors include transfer rights, dividends or the lack thereof, the prospect of selling the firm, the existence of a market for the block of shares being valued, put rights, the existence of a buy-sell agreement, stability of earnings, etc. “Every decision made within a firm, from financial to corporate governance, will have an implication on a final value conclusion.” There are multiple considerations to be made when valuing a privately-held company and the assessment of the many moving parts. What shareholders should take away from this brief discussion is that every decision made within a firm, from financial to corporate governance, will have an implication on a final value conclusion. TRACEY EAVES, MBA, CBA, CVA, BCA, CMEA is a member of the valuation consulting team at Zweig Group. She has been valuing privately held company interests for more than 18 years. Contact Tracey at teaves@zweiggroup.com or directly at 505.258.8821.

❚ ❚ Market approach. The transaction data used in a market ap- proach methodology will have a direct correlation to the level of value produced. In a majority of our engagements, we use privately-held company transaction data, which is representa- tive of a control interest. With a brief review of the approaches and the levels of value produced, let’s get to the discounts: ❚ ❚ Discount for lack of control. A discount for a minority in- terest is taken from a control level value indication to account for the lack of control associated with a minority shareholder. Studies suggest the size of the minority interest discount are based upon control premium studies, resulting in average implied discounts of about 23 percent in today’s environ- ment. To properly develop an appropriate discount for a subject interest, an appraiser should consider several factors that could increase or decrease the discount. Factors include non-voting interests, extreme lack of consideration of minor- ity shareholders, an interest insufficient to stop corporate action or elect a director, the existence of put rights and the presence of enough minority owners sufficient to block cer- tain actions or have meaningful input on elections of direc- tors. ❚ ❚ Discount for lack of marketability. A discount for a lack of marketability is meant to account for the lack of liquid- ity (or marketability) of stock that is not traded on a public exchange. A market of readily willing buyers and sellers exists for publicly traded stocks, the market is able to consummate transactions in a short period of time and proceeds are usu- ally available within a few business days. The public market is

THE ZWEIG LETTER December 31, 2018, ISSUE 1277

O P I N I O N

Grow your firm in 2019

L ooking to grow the firm? Or maybe you have tried it before with no luck? Over the years, I have had the privilege of working alongside and helping many successful owners of AEC firms. Raise your fees to reflect value, prioritize lead generation, and delegate everything that is outside your zone of genius.

What I have seen winning owners do to win projects in these scenarios is to increase their fees. You heard right. They dive deep into the client’s problems, see how they can enhance their basic ser- vice offering to bring more value to the client, and then communicate it with a laser sharp message to their ideal project client. When the client is intrigued by the value added, the price becomes a non-issue. It’s the “Well, that price makes sense” ef- fect. As price-driven firms race to the bottom, the value- “To grow your firm you must learn to enhance your service offerings and position them in a way that your targeted ‘perfect’ client sees the value add. Then raise the price!”

It always amazes me to see how two people can receive the same input of information and return two totally different outcomes. Sometimes it’s less about the tactics and more about the person. Here is what I’ve observed about winning firm owners and what they do differently when running their firms and scaling them: ❚ ❚ Pricing. AEC services have been commoditized. Surprise! Well, probably not. And that begs the ques- tion: How hard is it to grow a firm when your clients expect you to compete on price? Even more tragic is that the other firms – your com- petition – are playing along and lowering their prices to beat you out on new projects. It’s a mess. So, how can you deal with it and come out on top? It comes down to how you position yourself and your services. The word you are going to want to remember here is value. It’s not the same as more. It’s more services. It’s more of you.

Ivan Lares GUEST SPEAKER

See IVAN LARES, page 12

THE ZWEIG LETTER December 31, 2018, ISSUE 1277

BUSINESS NEWS WHAT ONCE WAS OLD IS NEW AGAIN: ADTEK ENGINEERS MOVES TO NEW OFFICE IN FREDERICK, MARYLAND ADTEK Engineers, Inc. , founded in 1987, which specializes in offering broad- spectrum civil engineering, structural base building design, and specialty engineering services, has moved to its new offices at 150 South East Street, Suite 201 in the Carroll Creek Linear Park area in the city of Frederick, Maryland. The firm had occupied a smaller office on Monocacy Boulevard since October 2004. Located in the former Monocacy Valley Cannery built in 1904, ADTEK’s new 6,050-square-foot space is on two levels in the building. The firm provided specialty, cold- formed steel design for the two additions on the building’s sides and for elements of the renovation. ADTEK’s structural engineers also designed the structural steel plate floor reinforcement to support the spiral staircase

that the firm wanted in its suite of offices. Jeff Klaiman, PE, structural engineering principal, said: “We were pleased to be involved in the building’s transformation. It is important to us that we could showcase our professional and technical expertise in the renovation and in the office spaces in which we are now working.” The Cannery project is a model of adaptive reuse as a professional services building featuring original architectural elements and natural sunlight. According to Bert Anderson, owner and developer, “The custom office build-out for ADTEK retains exposed brick walls and original heavy timber post and beam structural elements in a historic 19th century industrial building. Of interest in the ADTEK suite are the original heavy timber king post roof trusses in the area to be used by the firm’s structural and civil engineering departments.” The city of Frederick has been home to ADTEK

Engineers for more than 14 years. The firm looks forward to continuing its success as a vibrant local business and will continue to be a strong community patron. ADTEK is proud to maintain its presence at the “Gateway of Frederick.” ADTEK Engineers, Inc. is a consulting firm with more than 50 design professionals firm-wide. ADTEK has offices in Virginia, Maryland, and Michigan, and offers broad- spectrum civil engineering, structural base building design, and specialty engineering services. ADTEK’s design team embraces the application of sustainable design concepts, and is committed to understanding the environmental consequences of their design and implementing conservation oriented technologies and materials. ADTEK has LEED AP professionals on staff, and has completed many LEED certified projects at Silver, Gold, and Platinum levels.

IVAN LARES, from page 11

the owner, you built your firm because you are good at many things, one of which is being an entrepreneur. But there’s something else, something that you are better at than anyone you know. It’s of high-impact to your firm. It’s the reason you are where you are today. As the leader of the firm, my guess is that your strong suit is strategy. As the firm grows, leverage, outsource, and delegate everything that is outside your zone of genius. You will see a positive impact that will enable growth. “Mindset, personal trainers, and even counselling are important to keep a clear mind and a strong mindset. As you begin to nurture the thought of scaling up to seven-figure growth, figure out how you will invest to make that goal a reality.” ❚ ❚ Not investing in growth. Growth costs money. It’s the rea- son I have had the opportunity to work with successful AEC owners in the first place. They invested their money in me so I could help them grow. A growth-driven mindset is necessary to understand that some key investments must be made in order to reach the next level. Growth-driven owners invest in programs and mentors, and they install processes critical for growth. They also invest in agencies or personnel to execute day-to-day marketing and sales activities. Mindset, personal trainers, and even counselling are important to keep a clear mind and a strong mindset. As you begin to nurture the thought of scaling up to seven- figure growth, figure out how you will invest to make that goal a reality. IVAN LARES helps owners at architecture firms scale their firms by implementing The AEC Method and has personally helped his clients sell more than $30 million worth of architectural and design services. He is the founder of Sea Level Media and the creator of The AEC Method. He can be reached at ivanlares@sealevelmedia.com.

driven winners are piercing through with higher prices and better projects. So, to grow your firm you must learn to enhance your service offerings and position them in a way that your targeted “per- fect” client sees the value add. Then raise the price! ❚ ❚ Prioritize lead generation. Let’s picture a steady flow of project opportunities continuously in the pipeline. For suc- cessful firm owners, this is not imaginary. It’s a requirement. And as the firm grows, so does the team. Backlog is one way to calculate how long the cash will last, but it’s not a way to measure growth. Lead generation is! You need to have a pro- cess that consistently generates new leads every month. Without a reliable attraction system in place you never know where your next work is going to come from. Things are un- predictable. Growing the firm is hard. When a strong attrac- tion system is in place, you are relevant to high-value clients from the moment they first come into contact with you until they become a client. Prioritize lead-generation and set a foundation for growth. ❚ ❚ Overcome the hamster-wheel mentality. “Hustle mode” is literally trapping thousands of firm owners and, to be frank, this is not a pattern I’ve seen in winning firm owners. When you spend too many years justifying 60-hour weeks, not having real processes in place, over-delivering on projects, and thinking that “what I do this month will impact me this month,” you end up with the wrong kind of mindset – the hamster-wheel mentality. All successful businesses, including AEC firms, are built on processes. When you prioritize strategy and process, you are cultivating a freedom mentality. This is the type of mindset you will need to grow and prosper. Winning owners focus heavily on learning and installing pro- cesses that will buy them freedom. Then, they focus on hiring and training the best people to do the job. This is the leverage mentality. Get out of the hamster wheel and start using leverage. ❚ ❚ Outsource and delegate. What is your zone of genius? As

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