Valuation for A/E firms reaches new high
New data show valuation figures for A/E firms are at their highest point in years. According to ZweigWhite's recently released 2007 Valuation Survey of Architecture, Engineering, Planning & Environmental Consulting Firms, firms' value per employee has grown significantly over the past decade, steadily increasing every year for the last 10 years. This year, firms' median value per employee reached an all-time high of $43,590, a 50% increase since 1998.
The report, which is based on a consolidated three-year sample of more than 250 valuations of A/E firms, shows firms' value data compared to their staff size; net service revenue; backlog; EBITDA; pre-tax, pre-bonus profit; and book value. The report shows TIC (total invested capital) value, which is equivalent to the total value of the firm, or equity value plus interest bearing debt (if the firm has any), and equity value. To obtain the value per employee ratio, the TIC value was divided by the firm's staff size (the full-time equivalent of all employees, including management, design/technical, and administrative staff).
While five of the six value calculations included in the Valuation Survey are based on financial measures, staff size is also an important factor in determining value. A/E firms rely more heavily on staffers' time and experience than other industries, making employees one of their most valuable assets--more than employees in other types of businesses. Additional factors that may affect value for A/E firms include the firm's growth rate, the reason for valuation, who conducted the valuation, and the method of valuation.
The 2007 Valuation Survey of Architecture, Engineering, Planning & Environmental Consulting Firms is available from the publisher for $445, plus $8 shipping and handling. To order, contact Zweig White Information Services, One Apple Hill Drive, Suite 2, Natick, MA 01760, tel: 508-651-1559, fax: 508-653-6522, e-mail firstname.lastname@example.org, or visit our web site at www.zweigwhite.com.