In contrast, Nelson–which started out as a three-person interior design firm–considers a merger when it sees an opportunity to quickly expand its presence in a city, as was the case with two New York firms. “Overnight, there was an opportunity to take two firms with similar cultures and diverse portfolios,” John Nelson says of the merger with Environetics and Furnstahl & Simon. No cash is involved with a merger; instead, Nelson assumes centralized infrastructure costs such as rent, human resources, and accounting in exchange for shared revenue (the New York mergers added $12 million to Nelson’s $65 million annual revenue). After a while, the merged firm sheds its own identity, but top employees are integrated.
As for conforming to a particular look, the company seeks merger partners that will meet the needs of clients, rather than forcing them into a predetermined style that the firm prefers. “If a potential merger partner had only one way of looking at design, if every project was very linear or looked like deconstruction, that would be a deal breaker,” Nelson says. Recent Nelson projects include a faux-Mediterranean gated community in Jacksonville, Fla., and Federal-style Wachovia branches nationwide.
By comparison, BBB’s move to China allows the firm, known for its work in preservation and housing, to experiment with new design possibilities. The firm’s Beijing office is also taking on more contemporary design projects. “You get typecast,” Bland says about the BBB’s reputation. “In China, we can build new buildings without the baggage and the branding.” The Beijing office hires local architects but augments their skills with BBB architects sent over from the United States.
Opening a new office can be a gamble even for a well-financed firm that already has an overseas network, like Skidmore, Owings & Merrill (SOM), which currently has five offices in the United States and another four abroad. Over the years it has opened and closed offices in Boston, Houston, Seattle, and Portland, Ore. The new operations often started with a specific project, and the firm tried to build from there. In Boston, however, “There was not a sustainable client base,” T.J. Gottesdiener, a managing partner at SOM, says about the closure. Moreover, SOM found that many of the young, fresh architects the firm likes to hire prefer to be in New York, Chicago, or San Francisco. Where there is no office–for example, in Qatar–SOM works with local firms but oversees the project from London, New York, or Chicago. One new SOM office did make it, in Washington, D.C. There, SOM took a more focused approach, targeting the limited market for federal projects rather than a broad range of design work.
SOM’s Shanghai office opened in 2003 after the firm won projects there and clients requested closer contact. To get started, SOM personnel migrated from Hong Kong, Chicago, and New York, and the staff was augmented with local hires. It is an approach, Gottesdiener says, that fosters teamwork and collaboration, allows for quality control, and underscores the firm’s American roots. In a new environment, it is also a way to maintain the SOM culture. “It’s hard to have local hires inculcated into our culture,” Gottesdiener says. “They might be talented and smart, but they don’t always understand how we do things.”
Maintaining corporate identity is a challenge that changes with each expansion scenario. The dynamics of a new office with existing employees in a familiar market is far different than the dynamics of a merger in the fast-paced world of acquisitions. But regardless of a firm’s particular strategy, one thing is undeniable: Firms are expanding at an unprecedented rate, and these issues will remain front and center in people’s minds during the coming years.
Ernest Beck is a New York–based freelance writer who contributes to publications including The New York Times, Worth, and SmallBiz.