10-Minutes with Randy Larson of PBS&J
Randy Larson has been with PBS&J of Tampa for more than 21 years. Currently, he serves as president of PBS&J Constructors, and executive vice president of the recently acquired Peter R. Brown Construction, previously based in Clearwater, Fla. Larson also acts as chairman of the combined boards of both companies.
Employee-owned PBSJ Corp. of Tampa, parent company of the engineering, architecture and sciences company PBS&J, PBS&J Constructors and PBS&J International, acquired construction manager Peter R. Brown Construction of Clearwater late last year for $16 million, according to Securities and Exchange Commission filings.
What was the motivation for this transaction?
Larson: More and more owners are not wanting to hire (separate) designers, agent construction managers and contractors. What appears to us is owners are going toward design-build or total integrated services, meaning design-build-finance. And they would prefer to work with design-builders that are one entity.
That’s not to say there are not some exceptional design-build teams. We participate in those, teaming up with a contractor and pulling together a joint venture to go after a project. But that total integrated delivery to design and construct is a powerful tool for going after work.
Will the merger put you at a disadvantage in forming those joint venture partnerships?
Larson: If everything remained the same, yes it would. But our attempt is to grow our business, so we become a more attractive partner in bigger joint ventures. If we have a construct capability and a design capability, now instead of going after $50 million jobs, we will go after the $100 million, $150 million and $200 million jobs. Other contractors and entities like us would come together, share in the surety obligations to win these jobs. It positions us for growth.
How do the companies complement each other?
Larson: We did not want to limit our construct capability to a single discipline. We wanted to build a construct capability in the firm that was able to leverage every bit of design capacity in PBS&J, the engineering company. That would mean architectural, civil, whatever we were capable of designing, we wanted the capacity to construct.
Within PBS&J Constructors, we had a civil construct capability, doing roads and bridges, and a federal practice based in Atlanta, doing work pretty exclusively for the federal government on military bases. Neither of those two work types was Peter Brown doing. The two companies complemented one another. In fact, we found synergies to move people back and forth to make it even better. We’ve added a federal component to Peter Brown and a stronger civil component.
Does it give you a different geographic mix?
Larson: Yes, they have an office in Georgia, in Tallahassee, Fla., and in the Destin, Fla., area. What they gave us is a footprint that matched ours, which makes bringing the integrated delivery more efficient. For them to be located in places we were not would not have been the right thing for us. We needed to be in the same general areas to leverage the design capability.
How did you decide to acquire this particular company?
Larson: We went through an exhaustive search that was very strategic for us. We embarked on this path almost a year-and-a-half ago. We utilized outside investment bankers and consultants to narrow the search. We made exhaustive efforts on developing an acquisition profile of the type of company we were looking for. We wanted somebody generally selected based on qualifications and not low bid. Our interest is not to be in the low-bid marketplace. We are going to stay pretty close to the design-build/CM-at-risk environment. That will keep us out of some markets, and that’s fine.
We looked at 61 companies, and used FMI as one of our consultants. We long listed 12 companies and contacted those 12. We learned there were four interested in furthering the conversations, met with some of those four two or three times. The one we ended up settling on was only 12 mi from our corporate office in Tampa. We had no clue they were looking to sell until we had gone through this process.
Why did they want to sell?
Larson: It has to do with ownership transition and succession. That’s what we found refreshing about the three principals of Peter Brown. They find themselves at a time in their lives where they need to transition it. They respected and owed a great deal of debt to their employees and wanted to find a way for their legacy to live on. They wanted to work a few more years, but recognized to transition something like this will take five to 10 years.
PBSJ Corp. is an employee-owned company and a powerful attractant to someone like Peter Brown. Some of the proceeds of the sale that went to the three owners of Peter Brown were translated into shares of PBSJ Corp. stock for all of the Peter Brown employees.
This was well thought-out, with long hours of integration planning to make sure this was the right company.
Did Peter Brown have similar philosophies?
Larson: If the culture doesn’t work, it can be the best financial deal, but it will fail. Culture is a major part of the report card when we are evaluating an acquisition. Peter Brown’s culture matched ours to a T. They are huge civic-minded people, deeply involved in the community.
Are you looking to acquire other companies?
Larson: Yes we are, but we will make this one work first. We closed December 31, so we’ve only been into this one month. But it’s been an incredible experience.We will be looking to move into other parts of the country where PBS&J has offices to leverage that design capability in those areas. If it’s through acquisition, we will strongly look at that. Peter Brown would be the acquiring company. We think we have Florida covered. We’re looking at Texas and the Carolinas.