Why the Family Office Model Was the Right Fit for Delawie
When Frank Ternasky and Mike Asaro, Principals at the San Diego-based architecture firm Delawie, first considered an external sale, their initial stance was firm: “No Private Equity.”
Like many AEC leaders, they feared the traditional “strip and flip” mentality often associated with PE firms…a model they felt would prioritize short-term margins over their 60-year design legacy and the “nimble” culture of their 60-person team. However, their journey led them to a different kind of partner: Hennick & Company, a family office.
In our latest episode of AEC Unscripted: M&A Edition, Frank and Mike share how this partnership and their own history as strategic buyers reshaped their firm’s future.
From Buyer to Seller: The Ultimate Preparation
One of the most compelling aspects of the Delawie story is their pivot from acquirer to acquisition. Only three years prior to their own sale, Delawie was actively acquiring other firms. This experience provided them with a rare “buyer’s eye” during their own due diligence.
“We realized… how much of a disaster a lot of people’s books are,” Frank noted. Because they knew exactly what buyers looked for, they were ready for the deep dive. As Mike famously told the auditors, “You’re trying to find where we’re hiding the pea, but we’re not hiding the pea.” This financial transparency avoided “repricing” and built immediate trust with their eventual partner.
The Power of the Pause
Perhaps the most courageous moment in the Delawie story was hitting the “pause button.” In the middle of negotiations, Delawie’s performance began to outpace its historical trajectory. Rather than settling for an outdated valuation, the firm made the strategic decision to go “dormant” for a year.
This break allowed the business performance to catch up to its potential, eventually leading to an unsolicited offer from Hennick that reflected the firm’s significantly increased worth. It’s a powerful lesson for AEC owners: Don’t let the momentum of a deal blind you to the reality of your firm’s growth.
The Family Office Difference
While Private Equity often operates on a 3-to-7-year exit timeline, a Family Office is typically focused on long-term wealth preservation and permanent capital. For Delawie, this was the “Third Way” they didn’t know existed.
Longevity Over “the Flip”
Hennick & Company approached the deal with a “long-run” mindset. Their partnership with the global platform Leo A Daly provided Delawie with more resources without the “heavy hand” of a forced, immediate integration.
The “Beer Test” for culture
Cultural alignment wasn’t just a buzzword; it was a literal test. The leadership teams focused on whether they could sit down and have a conversation about something other than the deal. If you can’t pass the “beer test,” the financial synergies won’t matter.
Integration as a best practice
Drawing on the experiences of senior leaders who had seen “heavy-handed” integrations at industry giants, the partnership opted for a “best practices” conversation rather than a forced transition. This approach protects the firm’s most valuable asset: its people.
Hear the Full Story
The Delawie transition is a masterclass in strategic patience. To hear the full, unscripted conversation—including the specific details of the “unsolicited offer” and the first 100 days of integration—explore the resources below.
Listen to the Episode: Flipping the Script
Compare the Models: Family Office vs. Private Equity
If you are curious about the technical mechanics behind private equity and family office, don’t miss our conversation with Ira Starr and Chris Cook. We explored why “patient capital” is often the preferred choice for legacy-minded AEC firms.
Start Your Transition Conversation
Are you facing a leadership gap or considering your firm’s next strategic move? Our M&A advisory team specializes in helping firms identify the right transition path—whether internal or external.
