Recession wake-up call spurred drive for merger
Progressive AE acquires design firm to become more resilient.
Progressive AE has served a diverse set of industries for decades, but the Great Recession showed the architecture and engineering firm’s leadership its Midwest connections were hampering growth.
Usually when the economy was in a down cycle, it would be limited to one or two industries or a region, CEO Brad Thomas said.
“Seldom do we see all markets cycle together, and in 2008 it was the first time we saw that,” Thomas said. “We realized we had a number of eggs in one basket, and even though we do work around the nation, most of the clients are based in the Midwest.”
As the economy turned around and projects started to roll in from pent-up client expansion needs, Thomas said the notion to expand its geographic presence for marketplace diversification, coupled with desire to attract talent from outside the region, led leadership to seek a partnership.
The search of five or so years led to the announcement of a merger with Charlotte, North Carolina-based ai Design Group.
The initial consideration in finding a partner was where in the United States to expand the firm’s physical presence, which had a lot to do with population growth, Thomas said.
“In our business, we design schools, churches, hospitals — those are all driven by population growth,” he said.
Additionally, the ideal location would be similar to West Michigan in being listed among great places to do business and raise a family, and “where millennials are moving,” Thomas said.
Finding a suitable business culture then shrank the potential merger areas further, Thomas said, citing Texas as a great example of a great growing market, but with a provincial business attitude that would make it tough to establish an operation from outside the region.
Meanwhile, Thomas said it was important to discern what they needed in a partner, which included some service overlap but also new services, and how large.
A consultant helped put together a short list as Thomas spent time in several markets to see which would fit the business culture they wanted. Eventually, he spent two days meeting with five firms in the Charlotte region.
As he searched for the right fit, he discovered there were two types of firms seeking a merger.
“One type we found was where the leadership was in their early 60s and were looking behind them and didn’t see succession and wanted to talk about exit strategies,” Thomas said. “The other was a firm where they are growing to a point in size and scale they needed support to get to the next level.”
Thomas said ai Design Group fit the latter description. As it neared 50 employees, leadership needed to figure out its next plan of action.
Both firms will continue to operate in their respective offices in Grand Rapids and Charlotte and keep their names, with ai Design Group now identified as “a Progressive AE company.”
“Making it past 50 employees and making it to 70 requires a lot of investment in human resources, IT, finance,” Thomas said. “Entrepreneurially, it’s not as exciting as why you get into the business, so that’s where they were. They’d grown and were healthy but needed to get to the next level.
“They have very strong leadership and can take that firm with our support and investment and continue to grow.”
Founded in 2003, ai Design Group is an architectural and interior design firm, which will help diversify Progressive’s portfolio of options for clients, as well as “deepen the bench” for services the firm already provides.
Together the two firms will have more than 200 employees working in the continental U.S. in architecture, engineering, interior design and more. The two firms will offer specialized service in health care, housing, industrial, education, retail, senior living, motorsports, hospitality, worship and automotive.