Baltimore Architecture firms keep merging

If one gets the impression that well known Baltimore architecture and engineering firms get merged into larger firms from outside the area, there are at least three examples, that support the observation: For many years Baltimore's largest architecture firm was RTKL until the firm sold itself to Callison in Seattle and become CallisonRTKL, all one word.  In April of this year Baltimore's Cho Benn Holback (founded as Cho, Wilks and Benn in 1979) merged with Quinn Evans in DC and became "Cho Benn Holback, a Quinn Evans Company". This week Marks Thomas announced in a press release, that it too will be bought by another firm and will likely loose its brand-name and status as a woman owned business enterprise.(WBE) .

Mark-Thomas 50 year anniversary celebration in June 2017
(Photo: Daily Record)

According to statistics, Tinder for architects and engineering firms is a hot item all across the country. with more than two thirds of all architecture firms indicated that they are considering acquisitions or mergers  according to a 2015 research by the Zweig Group.  In doing so A&E firms are not any different than start-ups or legacy companies that have been following the giant sucking sound of corporate concentration unimpressed by the counter slogan of "small is beautiful". Reasons to merge vary and go from the economic system to demographics and specific conditions in the A&E industry:

• Capitalism is based on growth and expansion and staying small is antithetical to business development
• Trends in the delivery of A&E services require broadening the model towards integrated services including engineering services provided by the same firm
• Baby boomers holding CEO and principal positions in smaller or midsize companies they founded some 30-40 years ago are reaching retirement age and try to leave with a transition plan in place

Or in the words of  FMI's "Trends in Mergers and Acquisitions in the Design and Construction Industry":

As project sizes grow, and as the share of megaprojects rises as a percent of total construction put in place, the demand for large, technically sophisticated firms has increased. Coupled with this is the continued integration of design and construction, both in terms of project delivery and business models. Both trends have led large E&C players to increase their acquisition activity, especially 3 FMI's 2017 M&A Trends for Engineering and Construction engineering and design firms.

Founder Paul Marks in discussion with
Principal Tom Liebel (2016)

Marks Thomas, according to Principal Magda Westerhout in an e-mail to Community Architect,  is very excited about the merger and sees it as the result of a strategically planned approach:

Moseley has a primarily institutional practice with a strong focus on public schools, colleges and universities, local government facilities, and senior living. We have recently partnered together in pursuing several school projects and were successful with projects awarded to our team. This has reinforced our conviction that our cultures are similar and we will enjoy working together. 

The two recent mergers at Cho Benn Holback and Marks Thomas involve two very similar sized firms (#11 and 12 in the local size rankings). Both will keep their local operations pretty much as they were before the merger. In both the management of the original firms became stakeholders in the new business entity without laying any staff off as a result of the mergers.

As the drivers for mergers of this kind usually are given synergy and the added resilience that comes from a broader geographic spread and added competencies. As Ms Westerhout explains:

 Marks Thomas has been looking for the last several years to expand our footprint to Richmond and beyond and are very pleased that we have found an excellent partner to help us achieve that goal. Their footprint currently includes offices in Virginia, North Carolina and South Carolina, and provides comprehensive architecture, engineering, interior design, high performance design, and construction administration services to clients worldwide.

The bulk of US architecture firms, a whopping 77.3% is still very small (1-9 employees) but manages to get only 17.3% of the total billings generated in the field whereas firms with 50 and more people represent only 5.1% of all firms but generate 44.9% of all billings. Marks Thomas currently has 51 employees (BBJ), the combined firms will grow to 275 after the merger.
Baltimore's largest architecture firm by billing is Hord Coplan Macht with 164 local employees (2016). Marks Thomas was ranked on spot 11 in the BBJ's 2017 list of firms.

The Marks Thomas designed Mary Harvin Resource Center in East
Baltimore, known for having burnt to the ground before completion as
part of the unrest in 2015 and getting rebuilt and completed in 2016

Marks Thomas is most known for its multifamily and elderly housing but the firm kept a broad portfolio including historic preservation. institutional work and urban planning. The original founders, Paul Marks and Gilbert Thomas are both retired. Principal Thomas Liebel chairs the City historic commission (CHAP). The firm celebrated its 50th anniversary in June of this year.

As rational as these mergers may be, they further the notion of Baltimore as a branch town, not one of headquarters.

Klaus Philipsen, FAIA

Official Mark Thomas statement