At the end of the day, maximizing shareholder value and protecting our culture were the priorities., Better stewardship of your culture and firm legacy. your inbox. Greater access to capital and management expertise. "Architect has been an excellentpartner for ourcapital needs. Godspeeds expertise and experience in building AEC businesses offers founders and management a growth-oriented playbook that can deliver a more meaningful future realization opportunity, says Lake. While these situations make the news, this approach does not work in the AEC sector. Architect Equity was founded in 2018 by Jay Yook and Dionisio Lucchesi, who have a combined 30-year history investing in complex special situations with a time horizon of 24 to 48 months. At a minimum, AEC firms contemplating ownership transition should consider private equity as a viable option. We provide asset-based financing facilities to innovative companies worldwide. "He has perfected the balance between scalability, simplicity, and structure needed when you are raising your first $10 million to $40 million in debt funding. Here is why: Quicker payout for retiring members and higher exit valuation. Get the full list. Architect Equity Acquires Timec Oil & Gas From Ferrovial S.A. Architect Equity Acquires Oil Field Services Firm From Spanish Company. James knows very well what will make a deal work - for the fund and the company - and he both delivers that and focuses on it. At Godspeed we value management equity participation in any capacity, as we want management to think like owners while aligning incentives towards the execution of the long-term strategic plan.. NY, Miami, Since the inception of GCAs private funds group in 2014, the group has advised on transactions totaling approximately $5.5 billion. We had several good offersfrom private equity and strategic buyersbut when our partners met face-to-face, we all felt more comfortable with Godspeed, says Polino. The firm has also invested in Forum Brands, a U.S.-based E-Commerce marketplace aggregator and ADDI, a FinTech company that gives Colombian consumers access to fair and affordable credit through point-of-sale-financing. In May 2021, in a transaction coordinated by PSMJ, private equity firm Godspeed Capital announced a strategic investment in Prime Engineering, Inc. (Prime Engineering), an 80-person architecture, engineering, and surveying firm based in Atlanta. We were looking to merge, but not necessarily to be eaten up by a bigger firm. This is the sixth acquisition for Architect Equity, which was started in 2018 by Jay Yook and Dionisio Lucchesi, who both had previous positions that involved investing in companies with complex special situations. GCA is pleased to announce that our client, Architect Equity (Architect), has held the first and final closing on $50M of commitments for its first lower middle market special situations buyout fund, Architect Equity, LP (the Fund). This is a profile preview from the PitchBook Platform. The short-term investment impact offers the potential for stronger long-term performance., Concerns about private equitys role in AEC ownership transition may be exaggerated, but they are not entirely without merit. It is also often used as an alternative workspace by staff. Our team is principled, execution-focused, and exceedingly creative in structuring and providing the right solution. We had a lot of faith in the team because they had experience in our industry. El Segundo-based Architect Equity has acquired oil industry services firm Timec Oil & Gas, Inc. from Spanish infrastructure company Ferrovial, Architect Equity announced Dec. 1. Venture capital, for example, is highly dilutive and venture debt does not scale with assets. The CB Insights tech market intelligence platform analyzes millions of data points on venture capital, startups, patents , partnerships and news mentions to help you see tomorrow's opportunities, today. When it opens in 2026, diske is expected to be one of the largest library and archive facilities in the world.

Read Our Newsletter (FREE). We have three partners slowly working their way out, all on different time frames. Weve promoted from within for our three market sectorsBob is already running our site departmentand we already had the future leaders for the other two. Lake says that reinvesting in the recapitalized firms strategic initiatives is imperative to driving long-term equity value creation. news, hottest trends, and most relevant research, delivered to We went down different paths with different firms, and when we realized the cultural fit wasnt right, we ended the process. By providing less dilutive capital that is complementary to equity capital, along with an array of other benefits, Architect Capital helps companies grow their impact and financial returns. AEC firm owners typically spend a substantial portion of their careersometimes the entirety of itguiding and trying to build a successful firm. Provided credit facility to Mexican Neobank to support growth of the company's tech-enabled consumer lending product. The firm seeks to invest in lower-middle companies based in North America. Architect Capital has invested in six companies since inception, including PayJoy, a company that delivers consumer financing and smartphone technology to customers in emerging markets. This global Venture Capital firm is distinguished by its active involvement with its investment companies. When it is time to cash out, it is only fair that these owners are compensated for the value that they helped to build. We were at this for several years, and it took a long time to get here, but we ended up realizing that private equity was the best fit for us.. When we started out, we really werent interested in private equity, says Bruce Sadler, P.E., Managing Partner. Architect Equity acquired 5 companies. We liked them and, six months into it, we still like them.. A lot of owners of A/E businesses are not very sophisticated financially so they undervalue their business, says Gambino. As an example, Godspeed acquired Richmond-based Austin Brockenbrough & Associates, LLC(Brockenbrough) simultaneously with Prime Engineering.

AEC firms contemplating ownership transition should consider private equity as a viable option. Architecture firms reported increasing demand for design services in June, according to a new report today from The American Institute of Architects (AIA). Each day, our editors assemble the latest breaking industry Architect Capital's team has a history of delivering a unique set of tailored facilities to early-stage companies. We wanted a fair employment agreement with staff, with no reductions, and we wanted a strategic plan in place to scale our workforce and infrastructure to address the growth in our core markets. If you invest in your people, culture, technology, and corporate infrastructure to enhance your support of your customers, while engaging your people with high-quality work and career advancement opportunities, you optimize the potential for growth and margin improvement over the long-term, he says. At Architect Capital, we are thrilled to be at the forefront of firms investing in the region as we approach an inevitable period of exponential growth.". Our product is less dilutive and expensive than equity, and more flexible than venture debt. The investment in Prime Engineering and Brockenbrough is Godspeed Capitals first AEC platform, which both firms regard as a positive. "I've known James for years, and he's my absolute first call whenever a startup asks me about debt financing," said Santiago Suarez, Founder and CEO of ADDI. There are a lot of moving chairs, and new opportunities with people moving up. Such leadership usually involves sacrifices and commitments that non-owners dont have to make (and may not even know about). Construction spending on buildings is projected to increase just over nine percent this year and another six percent in 2023, according to a new report from the American Institute of Architects (AIA). 2022 PitchBook. For more information, visit: https://www.architectcap.io/, Cision Distribution 888-776-0942 Our time horizon is five to seven years, says Lake. In order to position a platform for step function growth over the next five years, we may take EBITDA margins sideways or even slightly down by reinvesting the cash flow back into the business while taking a longer-term view. We have the capacity with our investor base and current investment program to focus long term. It was painful to start over again, but who youre working with is pretty important. There is great potential for generating EBITDA growth in smaller companies. Typically, the younger generation of management doesnt have the capacity or experience to execute a management buyout. HORIZONTV FEATURING BD+C: WATCH EPISODES ON DEMAND AT HORIZONTV. And even though it wasnt the most important factor, we wanted a fair and equitable price. GCA Advises Architect Equity on Its $50M Inaugural Capital Raise. While traditional forms of equity and debt financing in the venture ecosystem are still very much integral to the growth of these companies, traditional financing is not engineered to support the growth of a company's underlying financial products.

Architect Equity has 1 fund, including Architect Equity Holdings. Join your AEC industry peers in Chicago, September 26-28, 2022, for the 7th annual Women in Design+Construction Conference, hosted by the BD+C editorial team and the 35-person WIDC Advisory Board. We were interested in not only ownership transition, but also leadership transition, says Sadler at Brockenbrough. Other valid concerns include holding at-risk rolled equity that you no longer control, disruption of the firms culture with too strong a focus on profit growth and through additional acquisitions, and reduced ownership transition opportunity when compared with an internal transition. With nearly 4,000 U.S. private equity firms holding approximately $2 trillion in available capitaldry powder is the industry termAEC firms desiring to make strategic investments can readily receive the capital they need to pursue ambitious goals that can pay off big down the line. Despite the desire to optimize value, many AEC owners hesitate to consummate a deal because they cant bear to see their hard-earned firm legacy and culture vanish when absorbed into a larger entity. San Francisco has overtaken Tokyo as the worlds most expensive city for construction, according to a new report from Turner & Townsend. Use of these cookies, which may be stored on your device, permits us to improve and customize your experience. Thomas Gambino, P.E., who started the firm in his house in 1990, said the private equity investor met his target price, while also committing to protect and grow the culture of excellence and legacy that Gambino had established. ABOUT THE AUTHOR This sector is all about human capital, and retaining employees and clients. A growing number of venture-backed businesses have been founded to provide financial products to a variety of these spaces.

For more information, visit gcaglobal.com. We also liked that we were their first acquisition as part of their vision to build an AEC platform as part of an organic and acquisition growth strategy.. We have some amazing people in the next generation, and I look forward to seeing them step up., Douglas T. Lake, Jr., Founder and Managing Partner of Godspeed Capital, says that a major focus of his firms investment strategy is to foster leadership transition. We are excited about building upon the existing core business as well as identifying opportunities for growth in adjacent energy markets that require highly skilled maintenance and construction services. Architect Equity is a private equity firm that specializes in acquiring small to mid-sized companies with revenues between $25 million and $500 million. Timec Oil & Gas parent company, Ferrovial, is an infrastructure services firm headquartered in Madrid. Sagan notes that, "while I have been investing in companies in Latin America over the last six years, we are still in the early stages of the area's FinTech story. The work style supported by their new office echoes the preferences of its technology clients flexible, collaborative, and transparent. Architect Equity has made 1 investments. Provided credit facility against receivables to tech-enabled consumer lender to support lender's mission of providing fair and simple credit to Mexican consumers. PitchBooks data visualizations quickly surface an investors historical investmentsshowing a breakdown of activity by industry, year and region. Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model. Timec is an excellent opportunity for Architect to partner with a highly qualified management team that is leading a proven business at a time when oil demand and supply is increasing, and energy operations are preparing for increased production in the coming years, Lucchesi, who is Architect Equitys managing director, said in the announcement. Architect Capital is a San Francisco-based asset manager that provides liquidity against novel, esoteric, and tech-enabled assets. The U.S. Supreme Courts ruling to limit the Environmental Protection Agencys power to regulate greenhouse gas (GHG) emissions from power plants dealt a significant blow to our ability to fight the climate crisis with federal policy. It builds and manages toll roads, manages airports and provides construction services. You can read more about your. The Fund was a uniquely structured vehicle that provides evergreen capital to pursue Architects strategy with committed capital, rather than on a deal-by-deal basis. This space is primarily focused on the visitor experience. Architect Equity Acquires Timec Oil & Gas From Ferrovial S.A. As always, with regard to evaluating any potential suitor in an ownership transition scenario, thorough due diligence is critical. Founded in 2018, Architect Equity is a private equity firm based in El Segundo, California. Private equity: An increasingly attractive alternative for AEC firm sellers, By Karl Wohler, Senior Mergers and Acquisitions Advisor, PSMJ Resources, Inc. The Godspeed Team believes in taking a patient approach. from 8 AM - 9 PM ET. Their latest investment was in The Pest Group as part of their Other Investors on . Fifth and Tillery, an adaptive reuse project, has revitalized a post-industrial site in East Austin, Texas.

Their latest acquisition was Ferrovial - Timec Oil & Gas on December 02, 2021. Other options include selling to a strategic buyer or recapitalizing with a different private equity firm. Karl Wohler is a Sell-side M&A Advisor for PSMJ Resources, Inc., the leading publishing, executive education, and advisory group devoted completely to improving the business performance of A/E/C organizations worldwide. The team at Architect Capital brings deep expertise in executing cross-border transactions, generating unique in-market insights, making long-lasting connections across the tech ecosystem, and working with early stage businesses across the globe.

For reprint and licensing requests for this article, CLICK HERE . Karl has a BS in Chemical Engineering from the University of Massachusetts and an MBA from Babson College. Private equity buyers can offer an attractive alternative to a large strategic buyer because their model creates new platforms that require the retention of key management and a legacy culture that helps ensure against employee departures. GCA acted as exclusive placement agent to Architect Equity in connection with this fundraise. The firm offers worldwide coverage with over 500 professionals in 24 locations across America, Asia and Europe. Another advantage that private equity offers is a growth opportunity for emerging leaders. Much of what people think they know is based on the corporate raiders who lay-off staff, close factories, and do a quick flip for a profit. As an added bonus, he genuinely cares and therefore contributes to improving operations and reaching scale. While Architect Capital has a global investment mandate, the firm is most active in Latin America, with a focus on supporting technology companies that are modernizing financial services, enabling E-Commerce growth, or disrupting other traditional industries in the region. Gambino says that other factors drove the decision to choose Godspeed over several other suitors, but getting fair market value for the firm that he and the other shareholders spent 30 years building was an important consideration. By continuing to browse our site, you agree to our. Provided multi-tranche facility to Colombian Buy Now, Pay Later company against consumer receivables to support the company's product expansion. When the private equity firm is ready to cash out its investment, which is usually in a five- to seven-year window, employees can conceivably purchase the firm back. All rights reserved. And, while both private equity firms and large strategic buyers in the AEC space typically pay market value as opposed to a discounted and prolonged internal transitionprivate equity firms tend to pay selling owners more up front with fewer restrictions. Outside Prague, the Sugar Factory, a mixed-used residential development with public space, marks the largest project to use the sustainable material Rebetong. With a focus on FinTech, E-Commerce, and SaaS companies in Latin America and the United States, Architect Capital's mission is to support innovative founders across the globe by structuring and delivering unique asset-based products complementary to traditional venture capital. Proliferation of information combined with a shift in consumer behavior has led to the disruption of traditionally asset-heavy industries, such as financial services, real estate, and retail. Win whats next. Architect Equitys latest acquisition, Houston-based Timec Oil & Gas, specializes in mechanical services, welding, repair and inspection at high temperatures in support services to oil production companies. SAN FRANCISCO, June 3, 2021 /PRNewswire/ --Architect Capital, an asset-based lender to early-stage technology businesses, announced that it has launched with over $100 million to provide non-dilutive or less-dilutive financing solutions to high-growth and technology-enabled businesses. Financial terms of the transaction were not disclosed. Get the full list, Youre viewing 5 of 11 team members. Private equity has a perception problem in the architecture, engineering and construction (AEC) world. Architect Capital was established with the goal of providing tailored and less dilutive funding to support the emergence of these novel, esoteric, and tech-enabled assets. The Federal Aviation Administration (FAA) will award nearly $1 billion to 85 airports of all sizes across the country to improve terminals. Its stating the obvious, but cultural fit is really important, says Polino. We had several good offers from really good companies, but when it all came together, it became easy to choose., Ability to offer more leadership and ownership incentives for key employees. You can read more about your cookie choices at our privacy policyhere. Theres a point in time when owners desire liquidity and a seamless transition of ownership. The CB Insights tech market intelligence platform analyzes millions of data points on vendors, products, partnerships, and patents to help your team find their next technology solution. The team at Architect Capital has built deep expertise within specialty finance and emerging markets, which has enabled us to offer bespoke asset-based solutions quickly and seamlessly. All rights reserved. "The global technology and startup industry is evolving quickly, and new forms of financing to fund novel and underappreciated assets are a necessary part of that evolution," says James Sagan, Founder and CEO at Architect Capital. Copyright 2022 Zonda Media, a Delaware corporation. CBI websites generally use certain cookies to enable better interactions with our sites and services. This deal adds to GCAs extensive track record as a leading financial advisor in the private funds sector, with multiple successful fundraisings for a variety of private equity strategies. Extensive glass surfaces at offices and conference rooms highlight the great views and distribute daylighting throughout the office. Work to convert the former Westside Pavilion Macy's department store in West Los Angeles to a mixed-use commercial campus recently completed. We also wanted help investing in our corporate infrastructure, in areas like marketing, IT, human resources, and recruiting,says Polino. This is important because the metrics we focus onbid and proposal activity, headcount growth, utilization, EBITDA growth, and backlogrequire investments in new business development, recruiting, technology, and other corporate infrastructure to drive outperformance over the long term.. Served as senior lender to U.S.-based E-Commerce marketplace aggregator to construct portfolio of cash-flow producing web assets. When typing in this field, a list of search results will appear and be automatically updated as you type. Architect Magazine: Architectural Design |ArchitectureOnline: The premier site for architecture industry news & building resources for architects and architecture industry professionals. A concierge style reception area immediately establishes a sense of arrival and a social setting with comfortable seating and an expansive view of the citys changing skyline. According to the company, the firms it acquires are generally undergoing some form of business transition at the company or industry level. Among Timecs oil giant clients: San Ramon-based Chevron Corp.; Irving, Texas-based ExxonMobil Corp.; the Hague, Netherlands-based Royal Dutch Shell; and San Antonio-based Valero Energy Corp. Most of the private equity (PE) firms active in the AEC sector work quietly in the background to partner with management, hold for longer periods, and build a win-win for investors and the firm. As it relates to future growth and prosperity, the primary advantage that a private equity firm brings to an AEC firm is the flexibility that a substantial amount of capital provides. The design team worked closely with company stakeholders to establish a design language that expresses understated elegance paired with a warm, hospitable vibe. A large board room the pitch room is neighbored by a more intimate meeting room conducive to closing the deal, a process they know all too well. Because PE deals are usually recapitalizationsmeaning that a percentage of the firms equity is rolled over (i.e., retained by some or all of the selling shareholders)employees can continue to hold ownership in the combined entity. This is when private equity can perform as a positive catalyst, says Lake, who has a nearly 20-year private equity career as an investor in Government & Engineering Services firms between his time at DC Capital Partners and Veritas Capital prior to founding Godspeed Capital in 2020. We felt comfortable with Godspeed, culture-wise. "We're excited to launch Architect Capital to help disruptive, asset-rich technology companies scale quickly.". Solid hemlock timbers provide a warm and natural counterpoint to sleek white walls and exposed concrete floors. Physical proximity to its client partners in the Bay Areas booming tech market was the key driver in the development of a new San Francisco office for the firm. The only way to make sure you get fair market value is to get bids from non-engineering firms. Use of these cookies, which may be stored on your device, permits us to improve and customize your experience. Dhaka, New York, Stay up to date on everything we're up to. AZ, Dhaka, Godspeed partnered with the engineering firms management to establish a premier, multi-discipline engineering and consulting services growth platform providing services globally to a wide range of public- and private-sector clients. CBI websites generally use certain cookies to enable better interactions with. ", Architect Capital is a San Francisco-based asset manager that supports innovative founders by lending against assets generated by technology companies worldwide, especially in the FinTech, E-Commerce, and SaaS spaces. And while deal fatigue can become a real factor in a prolonged process, owners should avoid settling for a flawed deal just because they spent time, money and emotional energy pursuing it. Besides its Houston headquarters and the oil-rich Gulf Coast, the company has continuous operating bases in California, the Pacific Northwest, North Dakota and the Rocky Mountains region. They bring an excellent balance of rigor and flexibility; an important combination for scaling in emerging markets," said Brad Pennington, President of Financial Products at PayJoy. What Happens After the Work is Completed? The journal of the American Institute of Architects, Tucson,