Clients have reacted with a mixture of scepticism and anger to Aecomās Ā£204m takeover of Davis Langdon, with one senior figure labelling the move āunfortunateā and a āpityā
Their concerns centre on DLās loss of independence and fears that service levels will drop once it is part of the Ā£3.8bn-turnover US multidisciplinary consultant.
Peter Rogers (pictured), director of Stanhope, said: āThe deal is rather unfortunate. Davis Langdon would not be my favourite choice now. Iām a great believer in individuals and I like to have personal relationships inside the companies I work with. Thatās possible with smaller organisations but tends not to be with very large ones. The deal marks a worrying trend towards bigger and bigger organisations. Whatās happened is a pity.ā
Gary Wingrove, head of construction programme management at BT, where DL is an approved consultant, said he was ānot a fan ofā the principle of larger consultants taking over smaller, ones because the buyer was likely to cut costs at the smaller firm, lowering service standards.
He said: āIf a business was doing well, it wouldnāt get taken over, so the firm buying it is bound to come in and make money-saving changes.ā
Rob Smith, senior partner at DL, has robustly countered such fears, He said the deal was ātransformationalā, and outlined the benefits it would bring, including stronger procurement channels and more combined technical know-how.
Tony Jacob, head of construction at John Lewis Partnership, meanwhile, appeared to withhold judgment: āWe will work with DL and see what transpires. The key thing weāve asked for is continuity of service. Weāve asked them to keep staff motivated and focused on their work. If they lose their service ethos they have lost what drives them.ā
But some rivals welcome dealā¦
Tony Williams, chairman of consultant Watts, said the merger was an excellent deal for Davis Langdon and as a result other consultants could sell for a higher price. āDLās price tag is 75% of its sales [based on Aecomās figure of $430m, or Ā£274m, for the 2009 calendar year]. Iād expect 100% in a bull market and 50% in a bear market. Weāre not in a bear market but conditions are pretty difficult, so this is a good deal for DL.ā
In fact, he argues that it is a better deal than American engineer URSā purchase of Scott Wilson for Ā£223m, which was 66% of its sales. The result? āWeāve seen two deals where consultants have sold for well over 50%. So Iād say the benchmark is 70% for a decent business. Six weeks ago Iād have said 50-55% but now if I were a vendor Iād look for at least 60%.ā
Others welcomed the deal for rather different reasons. Richard Steer, senior partner at Gleeds, said: āIt may prove to be a good thing that a major competitor has been taken over by a multi-conglomerate monolith based in California.
The headhunters will already have been put on speed-dial by many previously loyal employees, who may wish to move back to practices with a British ethos.
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