Chairman and CEO Dickerson Wright discusses the firm’s sustained growth.
For the second year in a row, NV5 sits atop Zweig Group’s Hot Firm list of the 100 fastest-growing AEC firms in the nation. Powered by a 2,000-person workforce, a well-oiled system of mergers and acquisitions, and a global presence, NV5 is a company over which the sun never sets.
Amid a banner year — the firm reported first quarter (Q1) total revenues of $95.5 million — NV5 is active from Massachusetts to Macau, and is involved with projects in the multi-millions to the multi-billions. A publicly traded company, NV5 (NASDAQ: NVEE) competes with the industry’s titans — AECOM, Jacobs, and Hill International, to name a few — and is more than holding its own.
Dickerson Wright, the firm’s chairman and CEO since 2009, has been in the business for four decades, giving him a profound understanding of both his company and the industry at large. The Zweig Letter reached out to Wright with questions about various topics. Here is his response.
The Zweig Letter (TZL): NV5 was featured on the NASDAQ Tower Marquee at Times Square on June 12. How did this come about, and tell us about the feedback your firm received from clients, potential clients, and across your marketing and social media channels?
Dickerson Wright: There is a very interesting story behind our name appearing on the NASDAQ Tower Marquee. Actually, the catalyst was the Zweig Group Hot Firm award. NASDAQ contacted our internal public relations person, Jenna Carrick, and said they would like to display this on their marquee. Publicity is always positive, and we have been contacted and asked to do many interviews as a result.
TZL: Hot Firm No. 1 for the second year in a row. Tell us about the strategy that has fueled the firm’s sustained growth over the last few years.
Wright: We have a very simple strategy. We are an organization of key engineering consultants to our clients. Our best people must be the face to the client. When you are perceived to add value, you grow along with your clients.
TZL: There are currently over 100 job openings posted on the NV5 website. In a tight labor market, all firms are having trouble hiring the people they need. What are the key challenges in recruitment and retention for NV5, not just domestically, but globally?
Wright: We look at the openings as something positive. It is very basic: If you want to attract people, your organization must be attractive. We want partners, not just key employees. We therefore distribute stock as equity deep into our organization. Every employee has the readily available opportunity to be an owner of NV5.
TZL: NV5 had a fantastic Q1 — $95.5 million in total revenues, a 47 percent increase year-over-year. You mentioned two key indicators of why the firm was so successful and why the 2018 outlook was raised — cross-selling within existing offices and an optimized integration process for acquisitions. Can you elaborate on those two points and discuss how they work, and the processes that are in place that make cross-selling and acquisition integration so important for your business model?
Wright: Cross-selling is a key process of NV5, not only to drive organic growth, but to promote a team concept with all of our offices. We structure bi-weekly conference calls with all offices and the services they offer. Cross-selling is not only promoted but rewarded. The office with the highest organic growth through cross-selling is recognized and awarded.
Integration of new companies is essential to the success of NV5. Prior to the acquisition, the culture of the acquirer and the acquired must match. NV5 believes in a culture of partners and fellow shareholders aligned with the same goals.
TZL: NV5 acquired Butsko Utility Design Inc. in January and followed that up with the acquisition of CSA in February. In 2017, your firm reported seven acquisitions. Since at least 2015, the aggregate value of acquisitions has seen a dramatic increase. What is the M&A outlook for the rest of 2018 and 2019?
Wright: The M&A outlook for our market and sector remains robust. The valuation when the reduced tax rate is taken into consideration remains basically stable. There still tends to be a good market for viable buyers that do not require external financing. We envision this continuing through the remainder of 2018 and 2019.
TZL: Through Q1, the firm has also grown organically by 10 percent, a huge increase compared to organic growth through Q1 2017. Why has organic growth been so strong?
Wright: Our organic growth has been driven principally by three factors: our intentional integration of all our offices by a pragmatic cross-selling initiative; our purposefully flat organization that insists on our key leaders being the direct contact with clients; and benefits derived from a strong backlog and project weather delays that spilled over to Q1.
TZL: NV5 has specialized capabilities across five verticals: construction quality assurance; infrastructure; energy; program management; and environmental. What segment is the firm’s bread-and-butter? Which segment do you see increasing in the future, and what area might cool down?
Wright: Our organization is structured to embed ourselves with our clients. We feel that infrastructure design is the first interface with the client and feeds other support verticals. We see an increasing demand for infrastructure improvement projects. Infrastructure in turn supports the organic growth of all our verticals, in particular, program management and energy verticals. Some of our verticals will grow faster than others, but we do not see a decreasing or cooling down of our offerings.
TZL: The majority of NV5’s contracts originate in the public sector and the quasi-public sector. However, NV5 has also expressed an interest in obtaining more private work. What’s the broad-brush strategy to gain more private-sector clients?
Wright: We have found that a healthy mix of public and quasi-public and private clients allows for continuity of revenue and organic growth. However, we feel that public and quasi-public clients are not as susceptible to down cycles in the economy. We also strive to be an organization built on clients and client relationships, not just projects.
Having a strong civil engineering and survey practice as well as geotechnical and material testing gives visibility with the private sector client base.
TZL: For a firm like NV5, integration of acquired companies is crucial. Communications, logistics and marketing, employee morale, culture, client relationships, and geography all figure into the equation. Based on your experience, what is the single most difficult aspect of integrating an acquired firm?
Wright: Integration of acquired companies just doesn’t happen on its own. From experience, we know that you must have a process that is clearly understood by the acquired firm. We have to be perceived as approachable, as well as transparent, and convey that the integration is a collaborative effort.
The most difficult aspect is developing a relationship of trust, that we do not have all the answers, and that change that may include their recommendations would be positive.
TZL: As the owner of approximately 20 percent of the firm’s stock, you have a great amount of influence on the direction of the firm. What’s your leadership style?
Wright: I must convey to every employee that we are in this together. We are all shareholders and partners. I must be approachable. I find my No. 1 responsibility is to convey a message of inclusion to every employee of NV5.
TZL: NV5 went public in 2013. How has being a publicly traded company affected the firm’s access to capital and growth trajectory? Privately held firms have to play by a different set of rules than those with publicly traded stock. Would you recommend going public to other industry titans that are generating over $100 million in revenue?
Wright: A publicly traded company has much easier access to capital than a private company. We continually strive to utilize this capital to grow in a non-dilutive way. Publicly traded firms have many shareholders that are uniformly interested in growth and profitability, both of which are good for all companies.
Revenue of $100 million, though large for a private company, is considered relatively small for a public company. A company must want to grow if they wish to be publicly traded. Going public must be viewed as an entrance for a company, not a means for an exit.
2018 Best Firms To Work For List
Zweig Group’s Best Firms To Work For Awards honor outstanding workplaces at architecture, engineering, and environmental consulting firms. Firms that applied were evaluated on firm culture, workplace practices, employee benefits, employee retention rates, professional development, and more — from both management and staff perspectives. Rankings for the Best Firms To Work For are compiled in seven sub-markets/disciplines: Architecture, Civil Engineering, Environmental Services, Geotechnical Engineering, Landscape Architecture and Planning, Multidiscipline, and Structural Engineering.
Winners will be celebrated at the Hot Firm and A/E Industry Awards Conference
(https://zweiggroup.com/2018-hot-firm-conference), Sept 20-21, 2018 in Dallas. View the complete list of winners in each discipline at https://zweiggroup.com/2018-best-firms-to-work-for-winners.
2018 Hot Firms
At a black-tie awards ceremony during the 2018 Hot Firm and A/E Industry Awards Conference (https://zweiggroup.com/2018-hot-firm-conference), Sept 20-21, 2018 in Dallas, Zweig Group will honor the fastest-growing architecture, engineering, and environmental consulting (AEC) firms. The 2018 Hot Firm List ranks AEC companies on three-year growth in revenue, by both percentage and dollar growth.
“It is important for us to celebrate growth and success in this industry,” said Zweig Group CEO Chad Clinehens. “This list recognizes those firms that are achieving a real metric of business success: growth, which fuels job creation and builds the communities they serve.”
Following are the top 25 firms on the 2018 Hot Firm List:
- NV5 Global, Inc.
- Hargrove Engineers + Constructors
- McMillan Pazdan Smith
- Ware Malcomb
- Partner Engineering and Science, Inc.
- Hastings Architecture Associates, LLC
- VLK Architects
- LJA Engineering, Inc.
- Rincon Consultants, Inc.
- BKF Engineers
- Woolpert Inc.
- McClure Engineering Company
- Ross & Baruzzini, Inc.
- Maser Consulting P.A.
- EN Engineering LLC
- Patel, Greene and Associates, PLLC
- Long Engineering, Inc.
- Environmental Partners Group, Inc.
The complete list of winners is available at https://zweiggroup.com/about-hot-firm.
Richard Massey is director of newsletters and special publications at Zweig Group and editor of The Zweig Letter, from which this article is reprinted. He can be reached at email@example.com.