• Wed, May 17, 2023
  • What Question Should I Ask When Buying a Structural Engineering Firm?
  • Structural_engineer
  • When purchasing a structural engineering firm, it is important to ask relevant questions to assess the business's viability and growth prospects. Here are some key questions to ask:

    Financial Questions:

    • What is the historical revenue and profitability of the structural engineering firm? Can I review financial statements for the past few years?
    • Are there any outstanding debts, liabilities, or financial obligations that I should be aware of?
    • What are the major expenses associated with running the business, such as labor, materials, overhead costs, and insurance?
    • What is the current pricing structure for the services offered by the business? Are there any ongoing contracts or long-term projects that may affect revenue and cash flow?
    Operations Questions:
    • What are the key operational processes, procedures, and systems in place for running the structural engineering firm?
    • How is the workload distributed among employees and what is the skill level of the workforce?
    • What is the status of the equipment, tools, and software used by the business? Are there any maintenance or replacement needs?
    • What are the typical project timelines and how is the scheduling and project management handled?
    • Is the present staff size appropriate for work coming in?
    • How are additional engineers sourced?
    • Who are the main suppliers and vendors of the business?
    • What technology is used by the business?
    Customer and Market Questions:
    • Who are the major customers of the structural engineering firm? What is the customer retention rate?  What is the largest customer's percentage of revenue?
    • What is the competitive landscape in the local market and who are the main competitors?
    • What are the competitive advantages and disadvantages of the business?
    • What are the growth prospects for the business in the current market? Are there any opportunities for expanding services or entering new markets?
    • Are there any specific industry trends or changes in regulations that may impact the business in the future?
    Legal and Compliance Questions:
    • Are all necessary permits, licenses, certifications, and insurance coverage up-to-date and in compliance with local, state, and federal regulations?
    • Have there been any legal disputes, lawsuits, or claims against the business in the past? Are there any pending legal matters that I should be aware of?
    • Are there any warranties, guarantees, or ongoing service agreements with customers that I need to consider?
    Transition and Succession Questions:
    • What is the current owner's level of involvement after the sale? Will they be available for consultation or support during the transition period?
    • Are there any key employees whose departure may impact the business's operations or customer relationships?
    • Is there a plan in place for the transfer of ownership and management, including employee contracts, customer notifications, and any necessary legal or financial arrangements?
    Other Questions:
    • What is the reason for selling the business and how did the seller arrive at the asking price?
    • What is the ownership history of the business?
    • Can I review the business's current marketing and sales strategies as well as any past efforts?
    • Is there a business plan for the business?
    • What assets and inventory are included in the business sale?
    • Does the business rent or own the facilities?  What are the terms?
    • What is the time and distance of the restrictive covenant after the sale?
    • What is the expertise of the current staff and how does the firm stay up-to-date with new technologies and design techniques?
    It is important to tailor your questions to the specific circumstances of the structural engineering firm you are considering acquiring. Conducting a comprehensive due diligence process and seeking professional advice can also help you gather relevant information and make an informed decision.

    If you are considering selling or acquiring a structural engineering firm, contact:
    Eric J. Gall
    [email protected]

    Source: Conversation with ChatGPT on April 25, 2023