One of the last remaining major British-owned consultants may not be safe from foreign takeover, a leading expert has warned.
Speaking at a NCE100 Club breakfast briefing last week, Association for Consultancy and Engineering (ACE) chief executive Nelson Ogunshakin was asked whether Britain’s two remaining major civils consultants Arup and Mott MacDonald were safe from takeover. Ogunshakin was positive that Arup was safe from such moves but less certain about Mott MacDonald.
“I think you have to look at the internal drivers, their make-up and their structures,” he said.
“With my knowledge, and what is in the public domain, I don’t think the structure of one in particular allows that to happen,” he said, clearly referencing Arup.
“It’s not owned by anyone in particular so I don’t think that would happen.”
Arup is trust-owned and has no individual shareholders or external investors.
Mott MacDonald is employee-owned and is therefore not beyond the reach of would-be suitors if the motivation to sell was there and the price was right, however New Civil Engineer understands that the firm has no motivation to sell.
“Any decision to sell the company would need 75% of the shareholding in agreement so is a decision that the board cannot take alone, given that ownership is highly dispersed,” said Mott MacDonald chairman Keith Howells. ”We would thus need agreement of the majority of shareholders who are spread all over the world, and in a company that values employee ownership and independence highly, that agreement would be very difficult to obtain.”
However, Ogunshakin also said he thought the takeover fever had reached a peak.
“I don’t believe the way forward can continue the way it has been at the speed it has been for the obvious reason that it’s all about demand and supply.”
He said the number of companies available for take over was diminishing and therefore the rate at which companies were being taken over would slow. He also issued a warning to companies considering a take-over.
”Is it sustainable?” he asked. “My comment to the industry is be careful what you wish for. The reality of it is that CEO’s take decisions on the basis that they have to deliver shareholder value, but I turn it round and say, it’s not just shareholder value, it’s stakeholder value. But if it’s all about the shareholder then you’ll annoy the employees and they’ll leave because they are people and they have feelings.”
“I think the danger is as companies get bigger and bigger, they become de-personalised, and if they really understand their stakeholder, shareholders, employees and clients, the best ones look after their employees so I believe we may be at a tipping point.”