Clients have reacted with a mixture of scepticism and anger to Aecom鈥檚 拢204m takeover of Davis Langdon, with one senior figure labelling the move 鈥渦nfortunate鈥� and a 鈥減ity鈥�
Their concerns centre on DL鈥檚 loss of independence and fears that service levels will drop once it is part of the 拢3.8bn-turnover US multidisciplinary consultant.
Peter Rogers (pictured), director of Stanhope, said: 鈥淭he deal is rather unfortunate. Davis Langdon would not be my favourite choice now. I鈥檓 a great believer in individuals and I like to have personal relationships inside the companies I work with. That鈥檚 possible with smaller organisations but tends not to be with very large ones. The deal marks a worrying trend towards bigger and bigger organisations. What鈥檚 happened is a pity.鈥�
Gary Wingrove, head of construction programme management at BT, where DL is an approved consultant, said he was 鈥渘ot a fan of鈥� the principle of larger consultants taking over smaller, ones because the buyer was likely to cut costs at the smaller firm, lowering service standards.
He said: 鈥淚f a business was doing well, it wouldn鈥檛 get taken over, so the firm buying it is bound to come in and make money-saving changes.鈥�
Rob Smith, senior partner at DL, has robustly countered such fears, He said the deal was 鈥渢ransformational鈥�, and outlined the benefits it would bring, including stronger procurement channels and more combined technical know-how.
Tony Jacob, head of construction at John Lewis Partnership, meanwhile, appeared to withhold judgment: 鈥淲e will work with DL and see what transpires. The key thing we鈥檝e asked for is continuity of service. We鈥檝e asked them to keep staff motivated and focused on their work. If they lose their service ethos they have lost what drives them.鈥�
But some rivals welcome deal鈥�
Tony Williams, chairman of consultant Watts, said the merger was an excellent deal for Davis Langdon and as a result other consultants could sell for a higher price. 鈥淒L鈥檚 price tag is 75% of its sales [based on Aecom鈥檚 figure of $430m, or 拢274m, for the 2009 calendar year]. I鈥檇 expect 100% in a bull market and 50% in a bear market. We鈥檙e not in a bear market but conditions are pretty difficult, so this is a good deal for DL.鈥�
In fact, he argues that it is a better deal than American engineer URS鈥� purchase of Scott Wilson for 拢223m, which was 66% of its sales. The result? 鈥淲e鈥檝e seen two deals where consultants have sold for well over 50%. So I鈥檇 say the benchmark is 70% for a decent business. Six weeks ago I鈥檇 have said 50-55% but now if I were a vendor I鈥檇 look for at least 60%.鈥�
Others welcomed the deal for rather different reasons. Richard Steer, senior partner at Gleeds, said: 鈥淚t may prove to be a good thing that a major competitor has been taken over by a multi-conglomerate monolith based in California.
The headhunters will already have been put on speed-dial by many previously loyal employees, who may wish to move back to practices with a British ethos.
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