WSP plans staged integration with PB as £820M merger deal is concluded

Global engineering business WSP completed its £820M deal to buy Parsons Brinckerhoff from Balfour Beatty last week. UK managing director Mark Naysmith talked to Antony Oliver about the challenge ahead.

Mark Naysmith, WSP

Global consultant WSP started a new chapter in its short history last week with completion of the deal to buy Parsons Brinckerhoff from Balfour Beatty.

Update 26 Feb. 2015: WSP PB UK leadership restructure sees Mark Naysmith as UK chief operating officer

The combined business will be one of the largest global professional services firms in the industry, with approximately 31,000 employees across the world with combined annual net revenues of £2.3bn.

WSP estimates that £15M of cost savings can be achieved from the combined businesses within the first 24 months without, it said, considering any restructuring, integration expenses and transaction related costs and with half of these savings achieved in the first year.

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Clearly the PB purchase is a major opportunity for the combined business in 2015 and beyond. And with firms across the sector set on continuing their drive for growth, it is unlikely to be the last consolidation in the market.

So after logging a great post-recession period of growth, WSP UK managing director Mark Naysmith is acutely aware of the need to get this integration right.

The deal to buy Parsons Brinkerhoff completed last week. What challenges and opportunities does this merger bring?

Certainly the big challenge as we join with PB is to remain focused on delivery while integrating at the same time and capitalising on the coming together. The great thing about this merger of minds is that there isn’t a massive overlap in what we do and that is exciting. We have been looking at the revenue synergies between the two businesses so we can work out where the top ten revenue synergies are and focus on maybe the top five. We can let the rest of the business carry on doing what is it good at doing. 

Where would you say the synergies lie?

We both, for example, have strong businesses in rail but we do different things in the market – we (WSP) do the stations, PB does the systems and rail track. So the question is how can we bring these things together? There is a culture fit and a strategic fit – but we haven’t lifted the bonnet yet. 

With over 30,000 staff it will be a big business. How big might you get?

The global strategy is for us to be 40-45,000 strong by 2020 so that is another 15,000 on top of the PB acquisition. To me it is not all about big – big is not always beautiful. Going back to the success of WSP this year, yes we are big but we do still offer an element of boutique service and it is about trying to hold on to that as you become bigger. You want to be recognised as specialists in what you do. As you become bigger that specialism can often be drained.

How do you see the integration working in practice?

The secret with this is that the integration plan will be split in two – the front office, client facing integration plan and a back office  integration plan. The important thing is that one doesn’t trip the other up. That is easy to say but difficult to deliver – there are not many companies that have done it successfully. Particularly now in a rising market and when we are proud of our staff retention rate, if we muck this up we could find ourselves in a different place.

What will the name of the new firm be?

You can speculate until the cows come but for now we will continue to operate under our two existing brands. We are just completing our last integration in the UK with WSP's industrial business - previously WSP CEL, now just WSP. Cantor Seinek and Flack and Kurtz have also been dropped. There is definitely an incubation period [for deciding names] but "how long" is the question. For now it's business as usual."

As we emerge from recession how has WSP’s UK business been fairing? 

2014 will have been a very successful year for WSP in the UK. By the end of the year we will have grown by 20% in headcount which equates to about 15% revenue growth. One of the reasons that we have managed to achieve this is that we don’t have all our eggs in one sector basket – we are diverse across number of sectors.

With PB how do you see the strategy developing?

Part of our strategy is to play hardest where our skill sets intersect. And what that means is multidisciplinary working.  We also realise that not all our clients want this approach but on mega projects the multidisciplinary approach does bring benefit from co-located offices and businesses. 

For WSP, where have your specific successes come from? 

One of the sectors that we have been successful in is residential - in London but also regionally with the main house-builders. And that covers just about all our disciplines – infrastructure right through to environmental planning and structural engineering. The other big area for us is rail – still one of the fastest growing sectors in the UK. We are still relatively new in the market but we have some brilliant projects under our belt such as London Bridge station which is one of the biggest projects in the group. Outside London we have been successful in the CP5 programme and work is starting to flow from that. 

Presumably it is all part of the drive to move away from just being leaders in building structures?

Correct. But this is a true complement of skills across sectors. In rail for example, we can bring structures, world class planning, environmental sciences etc and although we are set up as streams we are good at working across the sectors. One of our successes is not being too hung up on sector focus. We are client focused. 

And staff retention?

Staff retention is a challenge – but I am pleased to say that our retention rate has improved month on month. A lot of it comes down to staff engagement – being clear about the strategy and the part people play in that. On recruitment we took a gamble and launched a profile building campaign in the national media. That brought a lot of attention externally and more than paid for itself. The challenge is to keep that going. 

What sort of people are you recruiting?

Across all disciplines. We have stopped talking about ourselves as being an engineering consultancy anymore because if you are an environmental scientist you don’t want to be seen as a slave to engineers. The one thing that is important at WSP is to make all the skills feel part of the crown jewels.

What are your biggest challenges as we move into 2015?

Our biggest challenge is to keep up with the rapid growth that we have been experiencing while maintaining quality. To keep up you become more selective about what you bid for. We are out of the recession mindset of bidding for everything. You really are only as good as your last project. 

If you would like to contact Antony Oliver about this, or any other story, please email