FMI Releases 2017 Ownership Transfer and Management Succession Study

FMI Corporation, the leading provider of management consulting and investment banking services to engineering and construction, infrastructure and the built environment, is pleased to announce the release of its 2017 Ownership Transfer and Management Succession report. The publication reveals new, emerging ownership trends and fresh insights on how companies are developing and preparing their future leaders.

“Owners should have a strong understanding of the salability of their firms as they begin considering transition options,” said Scott Duncan, director with FMI Capital Advisors, Inc. “While a minority of construction firms will ultimately sell in the third-party marketplace, the issues that drive successful external transitions are often very like those that drive successful internal transitions.”

Some of the report’s key findings include:

-Fewer firms have family members active in their businesses today than in 2013 (45% in 2017 versus 73% in 2013).
-Fewer firms say that the next generation will both own and run the business in the future (32% in 2017 versus 52% in 2013).
-ESOPs are resurging, increasing from 4% to 12% from 2013 to 2017, respectively.
-Fewer firms are planning a third-party sale (decrease from 17% in 2013 to 8% in 2017).
-47% of identified successors won’t be ready for leadership roles for another three to five years.

Looking Ahead

As the U.S. construction industry completes its sixth consecutive year of growth following the Great Recession, it also enters a period of demographic transition. Even when talent is abundant, the challenges of ownership transfer and leadership succession require focus and commitment. With the rampant talent shortages throughout the industry, however, the people issues facing leaders are exacerbated. Today’s firms are confronted with the challenge of both acquiring and developing talent while simultaneously transferring ownership to a new generation. Many firms have met
this challenge head-on, while others continue to defer the issue into later years. Unfortunately, for those who wait, the complexity and difficulty of ownership transfer and leadership succession only increase with time.

For most owners, there is no simple or concise solution to ownership transfer and leadership succession. In fact, it is much like a game of chess: It involves many moving parts and demands highly focused concentration to navigate successfully. Even the best plans must continually be re-evaluated and adjusted due to changes in the environment. Progressive leaders recognize the immense complexity of the challenge in front of them. It’s not simply a financial or
tax problem, organizational or family problem, or a bonding and banking problem. It’s a combination of all these elements. Each entity is different, and all the puzzle pieces must fit together. The sum of the parts is truly greater than any individual piece. Further, finding the right success combination varies greatly, depending upon the nuances, traits and goals of a given organization’s current and future owners.

Effective leaders with continuity mindsets understand that for the organization to succeed, they must make hard choices that may be unpopular in the short term. The winning formula for ownership transfer and leadership succession demands courage, humility and a long-term focus. Taking a proactive approach will help ensure that the right people are ready at the right time to both enter leadership roles and become the future owners of the business. Having the best talent in the most strategic positions—and the bench strength to fill those key roles when the time comes—
drives enduring organizations.

Access the 2017 FMI OTMS report here.

About FMI

For over 60 years, FMI has been the leading management consulting and investment banking firm dedicated exclusively to engineering and construction, infrastructure and the built environment.

FMI serves all sectors of the industry as a trusted advisor. More than six decades of context, connections and insights lead to transformational outcomes for clients and the industry.

FMI helps you build your foundation for tomorrow and optimize your business for today. Industry Focus. Powerful Results.

About FMI Capital Advisors

FMI Capital Advisors, a subsidiary of FMI Corporation, is a leading investment banking firm exclusively serving engineering and construction, infrastructure and the built environment. With over 600 completed transactions, our unique industry focus enables us to provide our clients with valuable insight and advice. Clients gain access to our unparalleled network of industry contacts and relationships, deep market knowledge