Engineering Firms

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December 15, 2023

by a searcher from University of Tennessee - Knoxville in El Dorado Hills, CA, USA

Has anyone purchased engineering firms and if so how have they been for you? Any tips or warnings?

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Reply by a searcher
from Purdue University in Indiana, USA
I just sold one that I founded, so I will offer some tips from the perspective of running one. At it's core, you are talking about a service business that is reliant upon the skillsets of individual practitioners. Great processes do a lot, but you still have to keep expensive and knowledgeable talent on hand and involved in training new hires. That training process is long and expensive. Hiring good engineers is tough. They are not cheap and there is a lot of competition. The cost of that knowledge walking out the door is high. With that in mind, I would suggest:

1) Identify key talent and making a concerted effort to keep them around (if for no other reason than training and mentoring new hires).

2) Start recruiting new talent early in their college careers via internships and co-ops.

3) Formalize a process which forces engagement between inexperienced and experienced engineers.

4) Engineers are curious creatures. Working on interesting projects can be more valuable (to them) than money, so letting them tinker or take on projects that are slightly out of the norm can help retain them.

The engineering industry varies widely and your milage may vary. Good luck!
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Reply by a searcher
from Columbia University in Fairfax, VA, USA
They can be solid businesses, but licensing is the biggest issue. Every State has their own set of requirements for different engineering trades. For some trades, it's required that the principal owner hold the license, while for some others, any employee can hold the license. In some unique cases, you can sub-contract the license requirement. But net-net, not planning to get licensed yourself will generally introduce risk - e.g., key man risk, growth risk, etc.
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