ESOP Owned Design and Engineering Firms Successfully Integrate Practices Through Merger

Overview

PDC Engineers (PDC) provides multi-disciplinary design services to governmental, industrial, institutional, educational and commercial sectors and has been 100% employee-owned since 2012. PDC has five offices in Alaska with more than 100 professional and technical staff members and focuses on project design in the Arctic and Sub-Arctic regions with unique capabilities to tackle the environmental challenges presented in the cold region. PDC is the product of the merger of six leading Alaska engineering firms with histories dating back to 1953.

Situation

PDC was approached by RESPEC, a 100% employee-owned firm headquartered in South Dakota, and looking to grow and expand its practice. PDC perceived advantages in combining with a larger, more resourced and more diversified firm and particularly the opportunity to continue to be part of an employee-owned company. Although the combined entity was expected to produce more value to both ESOPs because of the revenue enhancements, cost savings and geographic and service line diversity provided by the merger, the major challenge in completing a transaction was to have a robust and non-adversarial negotiation of the business and legal terms that would satisfy the trustees of both ESOPs as the sole shareholder of each respective company.

Solution

PDC engaged SES ESOP Strategies as its financial advisor and Stevens & Lee continued as its long-time ESOP counsel. SES helped accomplish a successful negotiation of the key business terms on behalf of PDC and its ESOP, significantly improving the outcome and making sure that PDC and its stakeholders received their share of the value enhancements created by the merger. SES professionals also helped overcome the unique challenges of having two different ESOPs as the sole shareholder of each respective company in the transaction. Stevens & Lee, as PDC’s counsel, helped assure PDC’s board that the complicated structure of the transaction was appropriate and would accomplish PDC’s business goals.

“We are very pleased with the outcome and the fact that our employees will remain part of an employee ownership culture,” said Matt Emerson, PE, President, PDC Engineers. “SES ESOP Strategies was incredibly helpful in ensuring our goals were met and guiding us through this complex process.”

For more information on this transaction, please contact SES ESOP Strategies’ Chairman Jim Steiker at 215.508.5643 or Mark Russell at 817.566.1013.