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Five Factors to Consider When Deciding Whether to Hire or Acquire

There are many benefits to acquiring a company, the most common including expanding into a new territory or market, gaining new clients or growing revenues and profits. An acquisition is like an investment – and like all investments, your top priority is a good return. For construction firms, a return is valued as a strategy to acquire top talent in an unstable job market where recruiting and retaining skilled workers remains a major challenge. As building activity increases, many construction companies may find relief in acquisitions where they gain access to a large network of skilled tenured employees.

If you are considering acquiring a firm, proper planning procedures are essential to a sound decision. Companies should consider the following factors when deciding whether an acquisition is right for them.

Specialized Employees

Depending on the positon, some employee groups will need more training and education than others. If you are hiring technical-based employees, plan to dedicate more resources here.

Effective Teams

Forming a productive, collaborative and cohesive team is a big component of completing multifaceted projects under tight deadlines. While obtaining a highly-skilled employee is important, they are only as valuable as their ability to resolve conflicts and address challenges as a member of the team.

Corporate Culture

An organization’s culture is a major factor in its ability to succeed in today’s competitive business environment. Organizations that align their defined values, beliefs and attitudes with employees are at a serious advantage. Research shows there is a positive correlation between culture and performance. As a part of your due diligence, assess whether the company’s existing culture aligns with the acquired group. In most circumstances, it is easier to align a corporate culture with hired individuals compared to an acquired group coming from an organization with its own culture.

Employee and Acquisition Market Dynamics

Due to the effects of the economy and the post-recession marketplace, many industries are desperate for talent to keep up with the high levels of demand. For example, during the recession of the late 2000’s many laid-off construction workers left the industry. Changing market dynamics, such as the declining unemployment rate, is something to consider as it can affect a firm’s ability to hire versus acquire.

Speed to Market

Is there a specific market opportunity that would require you to grow quickly? Understanding the opportunities, as well as threats, associated with an acquisition is vital.

Go even deeper with your due diligence by answering the following questions:

  • Are operations similar or at least complementary?
  • Do they have strong personnel in key positions?
  • What return on investment would you expect?

Assessing these factors will help you have a better idea if you should enter the acquisitions market. You will also be able to determine what threats could affect your industry and ways in which forces in various markets could affect your sustainability and margins. The professionals in our office can assist you in determining if an acquisition is the right move for you. Please call us today.