"For the first six months, we spent most of the time talking about our similarities and our differences, trying to determine whether our companies and our leadership were compatible," Livingood says. "Frankly, sorting out the business is far easier than sorting out the people, the culture and the leadership issues."

It helped that Martin-Harris had a strong reputation and a solid project portfolio, Livingood says. To gain a foothold in the Nevada market, Livingood approached Frank Martin, Martin-Harris founder and president, who was open to the idea of selling as part of his legacy plan. Both parties sought legal advice as needed, but the deal was largely negotiated by Livingood and Martin. "We developed a good relationship with each other and didn't feel it necessary to involve outsider advisers or consultants," Livingood says. Months after finalizing the deal, he says the companies continue to run independently while integrating best practices and finding efficiencies in their operations. "It has been a relatively smooth transaction and transition," he adds.

Big-D and Martin-Harris may be the exception to the rule. For many companies, the merger and acquisition process is not easy or straightforward.

"Aggressive due diligence" is critical for buyers, especially where contract assignment is concerned, says Edward "Trip" Frizell, chair of the business services division at Kansas City, Mo.-based law firm Polsinelli.

"Depending on the deal, the buyer may assume all the contractual obligations and rights from the seller," he says. "In most situations, there's not a clean break on contracts, and some work will still need to be done."

That's because many contracts are for a fixed sum, where the buyer must assess the cost of completing the work. Frizell recommends that buyers have their attorneys look carefully at the backlog of contracts, and for those in progress, consult with the seller's project managers to determine how to finish the work.

"I've had some clients who have not looked closely enough at the backlog of contracts and then after the deal was done, lost money on completing the work. Those losses could have been factored into the negotiations, had they known," Frizell adds.

He also cautions buyers to be mindful of union relationships. "In some cases, the union may need to consent to the purchase, and often that opens up contract negotiations that can be costly and complicated. Pension liability alone could be millions and should be considered in the purchase price," he says.

Due diligence is also critical to limiting risk and liability exposures, says Karen Keniff, senior vice president in the Baltimore office of Zurich Financial Services. "The buyer needs to make sure that their private consultant or in-house team looks as far back in loss history as possible so there are no surprises," Keniff says. "As soon as practical, once the sale is publicly available for discussion, they should involve their insurance carrier, who can help determine exposures and gaps in coverage that need to be addressed."

She says that from a claims perspective, the parent company must understand the "legacy claims and claims philosophy" of the company being acquired and differences in how the firms manage claims.

Failing to adequately assess a company before the purchase can have significant financial consequences, says Kathleen Kelly, senior account executive at Zurich North America's Seattle office.

"With the acquisition, the parent company is picking up the new company's liabilities and old exposures, which will be a factor in determining premiums." Buyers also need to address disparities in risk management practices promptly and get everyone on the same page, she adds.

"The parent company needs to have a strong risk management program in place and a plan for pushing that program down to the new entity," she says.