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ON THE MOVE PFLUGER HIRES TERRY HOYLE TO LAUNCH DALLAS- FORT WORTH OFFICE Terry Hoyle, AIA, LEED AP, has joined Pfluger Architects as director of the firm’s new Dallas-Fort Worth office. A graduate of Louisiana Tech University, Hoyle has been an architect serving the Dallas-Fort Worth educational communities since 1990. His experience and passion for educational architecture make him a perfect fit for Pfluger, a firm that has worked with K-12 and higher education clients since 1973. “Terry has led teams that have created exceptional designs and has established himself as an innovator and creative problem solver,” said Brad Pfluger, president, and CEO of Pfluger Architects. “He is already proving to be a valued team member.” Pfluger’s focus on sustainable design principles and practices dovetails with Hoyle’s background. He led the team that designed the

first net-zero elementary school in Texas. He has also published articles on sustainable design and green building practices. Hoyle has a passion for outdoor pursuits- particularly hiking, skiing, and white-water rafting. He and his wife, a residential contractor, live in Dallas and have one son, a sophomore at SMU. Founded in Austin, Texas in 1973, Pfluger Architects plans and designs educational facilities that engage and inspire. With offices in Austin, Dallas, Houston and San Antonio, Pfluger has completed more than 450 projects totaling more than $1 billion in the last five years alone. Pfluger is committed to the responsible use and management of energy and natural resources by recommending locally sourced products and efficient building systems that meet client needs and budgets.

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Another contrast between the M&A world of late 2019 and the recession is the negotiation parameters around purchase price. Using 10 years of median data from 2005 to 2015, the average purchase price that firms expected to receive for their firm was exactly 70 percent of net service revenue; compared to an actual price paid average of 53 percent over the same 10-year period. Revenue has fallen so far to the wayside in negotiations over the last 12 months that I almost pine for a conversation about free cash flow, working capital, and – how could I forget – liquidity ratios (the “three sisters” of underwriting). In 2005, our Valuation Survey provided a median value of 4.49x EBITDA when the valuation was conducted for the express purpose of a potential or actual sale or merger; the upper quartile was 5.70x. In 2011, the median was 4.24x and the upper quartile was 5.2x. The record backlog and confidence in outlook meant that we were hearing ranges as high as 7.5x for middle market AEC transactions until very recently. I think that the focus on EBITDA may give way somewhat to a return to top-line revenue based net service revenue as a “governor” of the purchase price and we could see a return down to a limit of approximately 100 percent of net service revenue, which would align with our data trends and historic market highs and lows. The stability of future revenue and ability to draw upon the existing client base will become an opportunity as profit decreases and as backlog is seen as more erratic, meaning the opportunity is for a buyer to “out manage” the sell-side owners by adding processes and efficiencies. Last year, we saw plenty of firms with 30 percent profit margins on the market – a business model based on acquiring firms achieving additional symbioses with that kind of profit margin wasn’t logical, so the goal of acquirers was to preserve the highly profitable operations by supporting revenue growth. The conversation has started to shift again, and I think during this interim period, at least, before the bounce-back that many folks much smarter than I am predict, we might hear net service revenue boundary conditions dusted off and put back into offers in the near term. This article does not purport to due justice to the myriad ways COVID-19 has changed the way we negotiate. The disruption extends from the courting process to the cost of capital to integration planning to kids shrieking in the background during an intense negotiation session. It’s a reality both surreal and fundamentally human. This is an odd time to take on the risk of the market by buying or selling – tell me what you’re seeing! JAMIE CLAIRE KISER is managing principal and director of advisory services at Zweig Group. Contact her at


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