April 29, 2008

OGCA Symposium

Growth through acquisition gets mixed reviews from construction-industry panel

PATRICIA WILLIAMS

staff writer

While acquisitions may be in vogue in some circles as a springboard for corporate growth, this strategy got mixed reviews at a recent construction symposium.

“I think acquisitions are risky,” said Geoff Smith, president and chief executive officer of giant EllisDon. “It’s tough to merge cultures.

“When you start doing acquisitions, you get into a whole other level of complexity, trying to marry two firms together. Plus, there are the financial intricacies of buying companies.”

Smith made the comments during a panel discussion at the Ontario General Contractors Association’s 5th annual construction symposium.

Joint ventures, on the other hand, are a different kettle of fish, said Smith, who has headed EllisDon since late 1989 and who favors “organic” growth. “You don’t have to merge cultures.”

His comments struck a responsive chord.

Paul Cocker, chairman and CEO of McKay-Cocker Construction Ltd., also is not keen on acquisitions. His firm is intent on “controlled” growth.

“Growing our firm in a controlled manner would be easier for us than trying to acquire someone our size or smaller,” he said in an interview later.

Like Smith, Cocker is enthusiastic about teaming up with other companies on specific projects. McKay-Cocker has been involved in five or six joint ventures in Ontario.

Those projects include a Toyota plant in Woodstock and a Honda plant in Alliston.

McKay-Cocker also is part of a team that was recently prequalified to respond to a request for proposals to design, build, finance and maintain the new Bridgepoint Hospital in Toronto.

The company has found joint ventures “a great way to operate,” Cocker said later. This approach allows the company to tackle projects it couldn’t do on its own.

One firm that has had a positive experience with acquisitions, albeit at the subtrade level, is Mike Moore & Sons Construction Ltd. of Sault Ste. Marie.

A few years ago, it bought out a local concrete subcontractor.

“I wanted to expand the business,” said president Mike Moore. “Self-performing concrete work is a good match for a general contractor. I also felt this would give us more control over our projects and more flexibility on what we bid.”

Moore, who incorporated his construction company in 1989, took out a bank loan to purchase the concrete subcontractor.

“It went so well, I paid off the loan in the first year,” he said later.

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