Selling Your AE Firm: Wolverton’s Journey Through Ownership Transition

As a founder or owner of an architecture or engineering (AE) firm, you will eventually face the inevitable decision regarding ownership transition. When you reach this pivotal point, a landscape of options unfolds, each with its own implications for your firm’s future and your personal legacy. Among these strategic pathways, engaging with private equity (PE) often emerges, presenting a unique set of opportunities and considerations.

In an episode of AEC Unscripted: M&A Edition, I speak with Jay Wolverton, founding principal and former CEO of Wolverton & Associates, and Joe Macrina, former COO. Together, they share the story of their firm’s ownership transition, which led to being acquired by CHA Consulting, a PE-backed platform. While Jay and Joe’s path ultimately involved private equity, their journey through ownership transition and the broader options are highly relevant to firm owners. Understanding both Private Equity and Ownership Transition is critical for AE founders and owners contemplating their exit strategy.

Beyond the Legacy: Embracing a New Vision

For Jay Wolverton, who started his firm in his daughters’ playroom, the company was more than just a business – it was a legacy. While the idea of selling to an external entity, especially a PE-based firm, can be daunting, Jay’s experience reveals how this decision can present an exciting opportunity for new growth and expansion that might not have been possible independently.

Jay’s openness to embracing a “new challenge” after 30 years of leading Wolverton demonstrates how ownership transition can align with both personal and professional aspirations, unlocking potential within a larger, broader framework.

Control and Collaboration: Finding the Balance

A key concern for many founders is the loss of control. Joe Macrina, PE, pointed out that a transaction of this nature does involve a shift in ownership and decision-making. However, as Jay and Joe’s experience demonstrates, this shift doesn’t mean being left behind. Following the acquisition, both continued to play significant leadership roles within CHA, contributing to the firm’s growth and aligning with its mission as valued members of the larger platform.

Unlocking Future Value Creation

Private Equity firms typically follow a strategic investment horizon, which often includes future transactions involving their portfolio companies. For owners who retain equity in the acquired firm, this can create opportunities for future financial growth, often through subsequent liquidity events. Jay shared their experience of recapitalization, illustrating a potential benefit for sellers who align their long-term interests with the growth of the PE-backed platform. This structure can incentivize continued and shared success.

Strategic Alignment: Beyond the Bottom Line

While financial returns are a primary goal for PE firms, the acquisition of Wolverton by CHA was about so much more than just a transaction. Both Jay and Joe emphasized the importance of strategic alignment, ensuring that their firm’s vision and goals fit seamlessly within CHA’s larger framework. Successful private equity-backed acquisitions in the AEC industry often look beyond immediate profits, focusing more on the combined value and expertise they each bring to the larger organization, generating long-term value.

Key Considerations for AEC Founders Approaching PE:

• Understand the PE firm’s vision and strategy: How does your firm fit into their long-term goals?
• Assess cultural compatibility: A strong cultural fit between your firm and the acquisition platform can significantly support integration, team morale, and long-term success.
• Define your post-acquisition role and expectations: Open communication ensures a smooth transition and continued leadership.
• Evaluate financial implications and future opportunities: What is your potential for growth within the new platform?

Wolverton & Associates’ ownership transition journey offers a compelling case study for AE founders considering a sale to private equity. It demonstrates that while the emotional aspect of selling a legacy is significant, a well-considered partnership with PE can open up new growth opportunities, provide financial rewards, and allow founders to continue contributing their expertise within a larger, dynamic organization.

Listen to the Conversation

From AEC Unscripted: M&A Edition
Episode 10: Behind the Deal: An AE Founder’s Journey to Sell

Join Jay, Joe, and me as we discuss Wolverton’s firm ownership transition journey and how it led to a private equity-backed acquisition.