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Messina Group Executes Sell-Side Carve-Out Mandate for AEC PortCo

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Client Profile & Challenge

Our client is an international professional service firm in the Architecture, Engineering, and Construction (AEC) sector with a wide range of clients. They provide engineering, forensics, environmental, and advisory services.

Challenge:

Our client had acquired their Managed Service Provider and was struggling with the overall fit, financial reporting, and cost impact. The MSP’s growth had come primarily from the parent company and while the quality of services provided was diminishing, costs increased. Our client was beginning to question the value this MSP was creating compared to the resources invested in it, so Messina was brought in to run a business assessment on this internal MSP acquisition.

Solution Overview

Messina’s team of experts ran analyses utilizing financial data from our client and their MSP acquisition. Our team executed a gap and capabilities analysis through a series of key stakeholder interviews to gather insights on the overall business and processes. We also reviewed key documents including project plans, client lists, and billing system data to assess the present business landscape. Using these elements, Messina gained an understanding of the MSP’s true historical financial performance. We also looked at their employee utilization by customer to determine the employee resources allotted to our client exclusively. Finally, we produced a Go Forward Roadmap recommending the appropriate path forward.

Solutions:

Business Advisory, M&A Advisory

“AFTER” BUSINESS VALUE CREATION

This analysis enabled Messina’s team to determine that the MSP was being supported largely (80%) by our client—they were the MSPs largest customer and highest margin producer. We also uncovered key themes related to other aspects of other immature business practices. For instance, SOP documentation was out of date and poorly maintained, resulting in a need for a suboptimal number of FTEs. In addition, we discovered a high cost of sale, limited new business development results, and opaque pricing bundles. 

Through this engagement, our client gained a deeper understanding of the value (or lack thereof) their MSP acquisition had brought and followed Messina’s recommendation to divest in the MSP.

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