Live coaching session: scaling a multi-market engineering firm

Executive overview

CivTech is a 30-person transportation engineering firm operating across four markets, caught between growing public-sector complexity and under-built internal systems. The firm faces a classic mid-size inflection point: it must invest in overhead, process, and leadership before revenue catches up.

Cameron Herold works through the firm's specific pain points — accounting fragility, recruiter briefing gaps, acquisition strategy, and hidden IP — and offers concrete frameworks for each. The central thread: stop managing symptoms and start identifying the assets you can't see from the inside.

The biggest leverage point isn't fixing processes — it's finding the Rembrandts in your attic.

Current state and pain points

• Revenue split ~50/50 private and public sector; public work is tightly regulated with capped 10% profit margins and mandated overhead audits
• Arizona market losing traction while energy focused on newer offices in Washington and Dallas
• Accounting has a single point of failure — one person out and payroll scrambles
• R&D tax credit created an unexpected tax liability: $1.4M in qualifying wages treated as a taxable asset in the year claimed
• California avoided deliberately: too litigious, too bureaucratic, strong local competition

Fixing accounting and finance

• Move reconciliation and routine accounting to an external firm; keep project invoicing internal
• Hire a fractional CFO — the firm is at the size where this is no longer optional
• Add fractional legal for contract review
• Both roles can sit under professional services overhead and be billed to overhead codes the government recognises
• Offshore restrictions apply to some countries but not all — viable for overhead functions like these
• Main obstacle: the firm's core software (BQE Core) is niche and hard to staff around; treating this as an executive search problem, not a job-board problem, is the right frame

Briefing recruiters properly

• Most companies brief a search firm for 15 minutes and expect good results
• Treat recruiter onboarding like employee onboarding: multi-day immersion, lunches, walks, until they can tell your story better than you can
• They need to know your BHAG, vivid vision, core values, full team context, and why this specific role matters
• A booklet alone won't work — recruiters skim it; personal investment from the CEO is what makes them treat your role as a priority
• Recommended firms for Arizona senior talent: Y Scouts (culture-based, senior roles) and Cathy Colas

Acquisition strategy

• Baby boomer CEOs (60–80) want out but don't know how — they have a "golf course number" and want clean terms, not an earn-out
• Formula: average of (1x revenue) + (5x EBITDA), paid 70–80% upfront, remainder over three years at prime rate
• No earn-out, seller walks day one — removing these two friction points closes more deals than negotiating price down
• Seller finances the back 20–30% as a vendor take-back; banks (preferably small regional, relationship-based) fund the rest
• Approach the top three targets in each market and tell them directly: "I'm buying one of the three of you, or I'm opening my own location"
• Speed of deal flow matters more than squeezing price — 4 out of 5 at fair terms beats 3 out of 20 with drawn-out negotiations

Integrating acquired firms

• Only acquire companies that are already good — broken culture does not get fixed post-acquisition
• First six months: don't touch systems, focus entirely on culture integration — vivid vision, core values, more vacation time
• Fire people who don't meet core values; hire people who do
• Don't change the name for two years: keep the acquired brand with a "a CivTech Company" tag in the corner, in your colours
• Year one: equal billing for both names. Year two/three: full rebrand
• This protects employee trust, customer relationships, and government contract continuity during transition
• Changing signs three times costs ~$10K; losing one employee costs far more

Finding hidden value in the business

• "Rembrandts in the attic": the real value of a business is often in assets the owner can't see — IP, data, process, relationships
• CivTech collects significant transportation and traffic data; that data may be more valuable than the engineering services that generated it
• Engage M&A advisors not to sell, but to audit what assets and sellable products already exist
• Ask customers: "What are you buying that we're not selling you?"
• Look at adjacent businesses (e.g. Rhythm Engineering's predictive signal controls) for R&D-by-duplication opportunities
• Consider product development: a firm with deep domain expertise and recurring data can build software or data products that scale without adding headcount

AI and internal tools

• The only employees at risk from AI are the ones not using it
• "There's an AI for That" dashboard lists ~8,000 tools — assign engineers to explore and report back weekly with five-minute briefings
• Automating compliance reporting (e.g. labour distribution reports for government) is a near-term, high-ROI target
• Data infrastructure already being built for internal dashboards can be the foundation for external products

Broader growth framing

• At ~20–22 people the firm was at a comfortable equilibrium; pushing past that requires an overhead investment that temporarily compresses margins
• The goal is to reach an inflection point — invest now in systems, people, and acquisitions to get to 2–3x revenue within three years
• International expansion (Mexico as the obvious first step) is viable but requires understanding registration and licensing requirements market by market
• Rate of change outside the business must not exceed rate of change inside it — watch what engineering firms in other countries are doing, not just domestic competitors
• Example: a Delhi engineering firm profits more from real estate development (using advance knowledge of highway and off-ramp locations) than from engineering fees