A Firm Foundation for Growth 

 June 11, 2019

By  Steve Nunn

Groundworks (https://www.groundworkscompanies.com/), headquartered in Virginia Beach, Virginia, acquired 6 businesses between 2016 and 2019. Their stated objective is to become the USA’s first nationwide building foundation services company – and they’re going about it in the right way.

Groundworks is acquiring a collection of businesses with different, but complimentary expertise. Not only that, but they’re acquiring across the country from east to west in a progressive, well-planned sequence.

There are a few ways to integrate an acquisition: Consolidate the businesses and Leave Autonomous are the two most common. With Leave Autonomous, you have a planned period of separation where you keep the businesses apart for an extended period. It gives time for both sides to become comfortable with the relationship and time for planning if, and what, is to be integrated.

When a parent company uses the Leave Autonomous approach to acquisition integration, there will still be decisions to be made later: including the sensitive decision on whether to keep the original company brand, or to consolidate it.

When Disney acquired Pixar, they used the Leave Autonomous approach: Pixar was left alone for two years, to preserve its different culture, creative spirit and to plan what integration they’d take on. After two years, Disney finally welcomed Pixar staff to the business and decided to make almost zero changes. There was no need to rename Pixar to Disney, as the Pixar brand was a globally known business that had a clear value.

With Groundworks each acquired business is being left autonomous. Looking into the future, it becomes almost impossible to create a nationwide company where every office has its own marketing team, HR, IT, invoicing, fleet management etc. At some point the burden of running e.g. 15 acquired vehicle fleets (my guess) becomes significant.

Similarly, it is hard to see all these business names remaining in 5 years’ time. I expect most of the businesses to eventually be renamed to Groundworks, with the strong brand names remaining unchanged. To be clear, at some point Groundworks is going to have to integrate their acquisitions in a Roll-Up with some level of consolidation.

Although it will be a lot of work, I do not expect Groundworks’ integration to be a significant problem for them: the biggest issue with integrations are associated with the people, and the people within this business are great. Looking at the public information on Groundworks, it is clear that this is a company with a strong, healthy business culture; they have been listed in the Best Places to Work in their region, five of the past six years. One of their board members, David Alexander, was formerly the CEO of TruGreen who were ranked 10th on the list of happiest companies in America (https://www.prnewswire.com/news-releases/trugreen-ranks-10th-on-list-of-happiest-companies-in-america-in-2018-300569137.html

Assuming the right integration team is put together with the right integration objectives, the future of Groundwork looks bright. They have a great foundation to build upon.

Image: Groundworks

Title image source: Mirko Blicke @mirkoblicke

This post was updated October 2020, to correct the role of David Alexander.


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