Local environmental consultancy Outback Ecology is seeking to tap into the opportunities presented by its merger with global giant MWH Global, despite acknowledging the current tough market conditions.
Announced in April, the deal between Outback and MWH was finally signed-off after nine months of negotiations during which the cultural fit of the two groups was assessed.
The merger was a significant shift from Outback’s previous history of organic growth at a steady annual rate of around 27 per cent – progress that earned it a Business News Rising Star award in 2010.
A factor in Outback’s to tie-up its consultancy with that of the global business was that MWH has a water-services division, something lacking from Outback’s product suite.
Selling the firm he’d built up over 23 years was far from an easy decision for Harley Lacy – his initial response was to tell MWH to “take a hike”.
“It was that sense of loss of control,” Mr Lacy told Business News of his initial reluctance.
“It was about defining our culture and being able to maintain that. There’s a sense that you can achieve that as a small group of Australian owners.”
But he said the more MWH pursued, the more evident the opportunities on offer became.
“MWH gives us the opportunity to go into a bigger market, whereas it would have been much slower for us – little old Outback – to go to global companies and say ‘oh we’ve got three offices in Australia and this is what we do’; it would’ve been a very long hard path,” Mr Lacy said.
“We were looking to expand across Australia and now in one fell swoop there are 10 Australian offices where there are opportunities.”
The April agreement initially prompted speculation that Outback was struggling financially and that MWH, a consultancy with offices in 35 countries, was the knight in shining armour.
“Nothing could be further from the truth,” Mr Lacy said. “It was a very considered decision and we were almost ignoring the market conditions as they evolved.
Outback is finding the going tough at the moment, however, with growth of only around 3 per cent for the 2012-2013 financial year.
“For us this is just a small change in the market conditions that we’ve seen in our lifetime … it’s just one of those things that a good business has to survive through,” Mr Lacy said.
MWH Global chairman Alan Krause sits in Mr Lacy’s camp, agreeing the current downturn is just the cyclical nature of resources.
“When we decided to merge with Outback it wasn’t because of the conditions that we saw today, it was focused on what the long-term prognosis was going to be,” Mr Krause said.
MWH Perth-based country manager for energy and industry, Australia, Christopher Sprod, said Outback was the pick of the environmental services firms on which it considered making a play.
MWH’s motivation was its lack of depth in environmental consulting in WA, and the acknowledgement that organic growth was too time-consuming and laborious.
And Mr Krause has satisfied Mr Lacy’s concerns about retaining a sense of control over Outback.
“When we do mergers, and we’ve done many in our existence, the goal is to preserve the leadership that we merge with,” Mr Krause said.
“So we want to leverage the quality of people that are coming from Outback.”
Mr Lacy has also taken pride in the employee share scheme he established within Outback Ecology, which has been transferred into MWH’s scheme.
“If MWH had been a public company we wouldn’t have even talked to them; we always said that if [a merger or sale] ever happens it would be to another employee-owned company,” he said.
