New Value Proposition Drives Kling, Stubbins Affiliation

June 15, 2003 · by DesignIntelligence

The Kling/Stubbins deal has important implications for firms across the country, large and small.

Kling, the 400-person A/E firm based in Philadelphia, Pa., and The Stubbins Associates, a 100-plus person design firm based in Cambridge, Mass., have formed an innovative new alliance.

Stubbins, formerly a 100 percent-owned ESOP organization, has been converted to a firm now owned by individual shareholders, some from Kling and some from Stubbins. The new Stubbins board will comprise five members (three from Stubbins and two from Kling), and the president & CEO of Stubbins will sit on the Kling board. This arrangement permits each firm to operate independently (with separate but affiliated boards) yet still gain the synergies of an integrated organization with deep specialization.

The unique deal was borne out of negotiations between the two firms that stretched over three months. “We were looking for a way to get the best of both worlds,” said Robert Thompson, Kling’s president & CEO. “This arrangement combines strength with strength, and both firms will benefit. In looking for a way to bring the two firms together, we thought of this as a design problem and structured the deal accordingly.”

The alliance could create significant new efficiencies and opportunities for cross-fertilization. For example, one liability insurance policy can cover both firms, and there will also be coordination in marketing, office-wide technology networks, financial management and accounting. The result could mean lower costs for clients while at the same time building deeper “bench strength” across the board. Combined, Kling and Stubbins now have 500 staff in six offices (Raleigh/Durham, Washington D.C., Philadelphia, New Jersey, Boston, and Las Vegas).

“We think the biggest winners will be our clients,” said Scott Simpson, FAIA, the new president & CEO of Stubbins (and also a board member at Kling). “With this new alliance we have a much bigger reach, both geographically and professionally. We have access to a greater talent pool, deeper resources, and significant economies of scale. Yet each firm retains its own brand identity and client base. It’s a truly unusual deal and we think it could change the paradigm of how firms will work together in the future.”

The mission of both firms is design-centered and their cultures are similar. Kling was founded in 1946 by Vincent Kling, a designer and entrepreneur who was among the first to recognize the benefits of combining architecture and engineering under one roof. Stubbins was founded in 1949 by Hugh Stubbins.

Famous for high profile projects such as the Citicorp Center in New York and the Berlin Congress Hall, Stubbins served as dean of Harvard’s Graduate School of Design and he was also an active real estate entrepreneur, long before it was fashionable for architects to operate as their own clients.

Both firms have a rich tradition of high quality work, having won numerous design awards; Stubbins is one of the few firms to have won the prestigious AIA Architectural Firm Award.

The Kling/Stubbins deal has important implications for firms across the country, large and small.

By providing a platform for compatible organizations to join forces without losing their identities or sacrificing their core values, it could well become a smart model for a new wave of mergers and acquisitions as design firms seek to gain the critical mass and agility needed to compete effectively in an uncertain economy.

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