SR: Since taking control of Vulcain in 2014, you have greatly diversified the company’s portfolio – by sector and by geography. What has underpinned this strategy?
AG: Our mission is to support our customers in designing, building and maintaining infrastructure that will have a positive impact on the world. Currently 30% of our turnover is generated from nuclear power, which is a key asset in the energy transition that is necessary to combat global warming, and 25% comes from renewables, gas and related processes. Our other areas of activity are in the healthcare and pharmaceutical sector and in rail transport.
FG: We are an engineering consultancy, so we like things that we can change and enable. The status quo is not good for us.
SR: How are you balancing acquisitive and organic growth?
AG: We have clear platforms for growth so any acquisition must enable us to achieve critical size in a particular geography or build strength in an industry vertical in which there is sustainable growth. We want to become the number one or two supplier for some key customers and to that end we will be market consolidators.
Acquisitions occupy half of our daily work and thinking: in which geographies, disciplines and areas of technical expertise should we be next?
In France we have a long track record in engineering services and can access everybody. It is more complex in other markets, so Equistone has been helping us by opening contacts with local M&A boutiques and professional advisers.
We have made 15 acquisitions, with more in the pipeline. The size of these acquisitions has varied – some have had five employees and others more than 180 – and we are prepared to make bigger purchases.
FG: Size, though, is not our primary consideration; what is important is that we can see people capable of developing the company. The most important thing is for people to wake up and come to work motivated – and that is very true for an entrepreneur who is selling his business.
Thanks to Equistone and the trust that has been established, as an acquirer we provide an optimal mixed approach that combines that of an industrial buyer and private equity. We can create deals in which there is an upside for both parties.
We can retain talent with this approach; currently approximately 200 employees are shareholders in the group.
SR: As a skilled people business, how are you attracting and retaining the best people?
AG: In western countries, it requires the same level of education to become an engineer, but they are not paid as much as lawyers or business executives. The problem is not just pay, but social status; 20 years ago an engineer was highly respected, but that is no longer the case.
We have strong values and a clear mission. For young engineers, working for Vulcain provides an opportunity to address global warming or to create a better healthcare infrastructure. They can use their technical skills to make a positive impact. But we must also provide good incentives and bonus schemes.
Not enough people are entering engineering as graduates. We must extend the base of potential recruits – at present less than one-third of current engineering graduates are female. Every year more French engineers retire than graduate.
So, while it is good for us that governments are investing in nuclear and renewable energy, we must address the shortage of expertise and competencies to execute such projects.
FG: We are tackling this in each market in which we operate. For example, we have created our own graduate scheme in the UK to create an appetite among young people for engineering. We are very committed to the younger generation.
AG: The challenge for us is to keep this intelligence within our own countries. Other countries are creating hundreds of thousands of engineers and the long-term risk is that the innovation, design and intellectual content of products will transfer and no longer remain in Europe.
SR: How do you work together as co-CEOs?
AG: We share a nine square metre office, for a start. That’s a good way to make sure we share information. We each manage different functions, geographies and verticals. Frédéric is more involved internationally, in nuclear and pharmaceuticals; I am more involved in railway, gas and renewables. But it doesn’t mean I can’t meet a nuclear customer or Frédéric a railways customer.
Both of us can spend more time in the field, meeting clients, customers and employees. Having two CEOs has been a key success factor.
FG: There is strong mutual trust and confidence between us. We say the same things, so our messages are clear and coherent. People can’t play one of us off against the other.
AG: We know the type of decision we can make on our own and those decisions where we need to talk to each other before making it. That provides us with reassurance, but also challenge.
It’s like rugby; if one of us misses a tackle, the other one will make it and won’t complain. We are jointly accountable for everything.
SR: Equistone invested in the business in 2019. How has the firm supported your strategy and helped to add value to the business?
FG: There are many different types of private equity investors - from the silent to the aggressive. We wanted to have a financial partner who had the capacity to absorb the uncertainties and complexities of our business. Everything we learned about Equistone was very positive; their size, their European network, their solid reputation of being management friendly.
Acquisitions are Equistone’s business, so who better to help advise us? We have regular, transparent and exhaustive discussions with them about each transaction. We take a collective approach, often getting Equistone to meet the people beforehand.
We are making an acquisition in Germany and Equistone have been very helpful finding local professional advisers, saving us time and money.
SR: What are your priorities and ambitions for international growth?
FG: All our geographical markets are looking for innovation to help them in their energy transition and to limit the carbon footprint of their legacy infrastructure. The pandemic has shown Western nations the importance of having pharmaceutical production sites in their own countries.
AG: We are focused on getting to critical size in our key markets – the UK, the Nordic region, Germany and Canada. In 2021, we made two acquisitions in the UK and one each in Switzerland, Finland and France. We have just completed an acquisition in Toronto. We must remain agile, but we are confident about our medium to long-term growth prospects. ☐
A full version of this article appeared in PLATFORM 06, Winter 2021/22